SHRI TRIMBAKESHWAR DE vs. THAN TRUST,NASHIKVS.COMMISSIONER OF INCOME TAX (EXEMPTION), PUNE, PUNE

We have heard the rival contentions of both parties; subject to provisions of rule 18 of Income Tax Appellate Rules, 1963 [‘ITAT Rules’ hereinafter] perused material placed on records.

ITAT-Pune Page 1 of 5

We note that; 3.1 The assessee is public trust registered u/s 50(3) of the Maharashtra Public Trust Act, 1950 [‘MPT Act’ hereinafter] as ‘Religions Trust’ and has been holding a certificate of registration u/s 12A of the Act since 03/12/1973.

We observed that, after careful consideration of records the Ld. CIT(E) has noted certain categorical findings which in his opinion de-fact were sufficient to cancel the provisional registration granted earlier and to reject the application made for regular registration/approval u/s 80G(5) of the Act. The matter of fact as solidified by the Ld. DR from point 10 placed at page 1 of impugned order is that, while doing so the appellant was never called upon to refute these negative findings by the Ld. CIT(E).

Note well, in terms of clause (ii)(b)(B) of 2nd proviso to 80G(5) of the Act r.w. proviso to rule 11AA(5) of the Income Tax Rules, 1962 the Ld. CIT(E) was duty bound to provide an opportunity in the form of show cause before he could reject application and cancel the provisional registration previously granted to the assessee. Admittedly in the present case, the appellant was never confronted with negative findings on the basis of which its application is rejected and provisional registration is cancelled by the Ld. CIT(E).

It is a trite law as laid down by Hon’ble Supreme Court in case ‘Chandra Kishore Jha Vs Mahavir Prasad’ reported in 8 SCC 266 (SC), that ‘if a statute provides for a thing to be done in a particular manner, then it has to be done in that manner and in no other manner’. And this proposition we find been followed their Lordships from ‘UP Vs Singhara Singh’ reported in AIR 1964 SC 358.

The clause (ii)(b)(B) of 2nd proviso to 80G(5) of the Act r.w. proviso to rule 11AA(5) of the Income Tax Rules, 1962 specifically provided the manner in which application for registration can be rejected and provisional registration granted can be cancelled. As per this mandate the registering authority was under obligation to put the assessee to notice as soon he arrives at a negative conclusion while exercising his jurisdiction over application for registration. Therefore, his action of rejection without following the forgoing mandate, in our considered view is contra-legem as it suffered from sufficiency of reasonable opportunity to the appellant to refute the findings.

The mandate of providing an opportunity before rejecting the application is to safeguard the appellant against arbitrary rejection by the registering authority. This opportunity of being heard to the assessee should be real, reasonable and effective and same should not be empty formalities, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action as no person shall be saddled with a liability without being heard.

In the light of decision of High court of Patna in ‘St. Paul’s Anglo Indian Education Trust (2003) 262 ITR 377 (Pat)’ we hold that, rejection of application is unjustified as the assessee deprived of reasonable opportunity and time to produce all relevant documents to refute negative findings and to substantiate its eligibility and claim for registration /recognition of 80G of the Act.

Faced with the situation, without commenting on the merits of the case, we deem it fit to remand this matter back to the file of Ld. CIT(E) for according effective opportunities to the assessee to represent and refute the reasons of rejection of its application and cancellation of provisional registration granted to it.

In result, the appeal is ALLOWED FOR STATISTCIAL PURPOSE. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Monday 20th day of November, 2023.