BHAI DAYA SINGH JI BHAI DHARAM SINGH JI,LUDHIANA vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

This appeal has been preferred by the Assessee against the order dated 21-09-2020 impugned herein, passed by the Ld. CIT(E), Chandigarh u/s. 12AA(1)(b)(ii) of the Income Tax Act, 1961 (hereinafter called as the ‘Act’) for the aforesaid assessment year, whereby the Ld. CIT(E) dismissed the application of the Appellant for registration under section 12A of the Act.

It appears from the impugned order that the application for registration u/s 12A of the Act was filed on 06-03-2020 which was taken into consideration and questionnaire was issued through online portal on 29-05-2020 with the request to provide clarifications to the queries raised by 15-06-2020. The Appellant replied online on ITBA which was taken into consideration by the Commissioner and it was noticed that financial statements submitted by the Appellant is not clearly scanned and half portion of the financial statements is cut out in the process of scanning of papers. It was further observed by the Ld. Commissioner that the other annexures submitted by the appellant are also not opening. Ultimately the Ld. CIT(E) Ld. CIT(E) rejected the application for grant of registration u/s 12A of the Act, while observing that in absence of proper financial statements and documentary proof of existence of expenses in the form of bills & vouchers regarding activity of the society, there is no way the genuineness of activities of the society can be corroborated with the stated aims and objects.

Having heard the parties and perused the material available on record. From the order it also reflects that the Ld. CIT(E) sought certain explanations/documents, which have been clarified and replied by the Applicant by filling the relevant information and documents. Thereafter, no opportunity was provided to the applicant either for corroboration/ confrontation and/or for establishing its case for grant of registration, however on the basis of the reply itself which was found incomplete by 3 Bhai Daya Singh Ji Bhai Dharam Singh Ji V. CIT(E)

It is trite to say that every person has the right to speak and be heard when allegations are being put towards him or her. If no opportunity has been given to the party effected, then it shall amount to violations of the principles of natural justice, which embedded in latin words “Audi AlteramPartem” which means ‘hear the other side’, or ‘no man should be condemned un-heard’ or ‘both the sides must be heard before passing any order’. The principle of Audi AlteramPartem is the basic concept of the principle of natural justice and has not evolved from the constitution but evolved through civilization and mankind and is the concept of common law, which implies fairness, reasonableness, equality and equity. In India, the principles of natural justice are the grounds of Article 14 and 21 of the Constitution. Article 14 enshrines that every person should be treated equally. In the landmark case of ‘Maneka Gandhi vs. The Union of India’ (1978 AIR 597), it has been held by Constitution Bench of the Apex Court that the law and procedure must be of a fair, just and reasonable kind. The doctrine ensures a fair hearing and fair justice to both the parties. Under this doctrine, both the parties have the right to speak. The aim of this principle is to give an opportunity to the parties to defend themselves. Before the court, both the parties are equal and are entitlement of equal opportunity to represent them. If the order is passed by the authority without providing the reasonable opportunity of being heard to the person affected by it adversely will be invalid and shall be liable to be set aside.

As per the provisions of section 12AA of the ACT, before passing the order for refusing to register the trust or institution, a reasonable opportunity of being heard is required to be given, for the sake of brevity and ready reference the provisions are reproduced herein below:

Coming to the instant case, indisputably before declining the registration u/s 12A of the Act, no reasonable opportunity of being heard was provided to the Appellant, which is mandatory, hence on this ground itself, the order under challenge is liable to be set aside.

In our considered view, to meet the substantial justice, appropriate course would be to set aside the order impugned and remand back the case to the file of the Ld. CIT(E) for a decision afresh. Consequently, the case is remanded to the file of the Ld. CIT(E) for decision afresh, suffice to say due opportunities of being heard should be given to the Appellant.

We also feel it appropriate to direct the Appellant to extend its full co-operation and participation in the proceedings before the Ld. CIT(E) as and when would be required and in case of further default, the Appellant shall not be subjected to any leniency.

In the result, the appeal filed by the Appellant is allowed for statistical purposes. Order pronounced in the open Court on 25.11.2020.