M/S INDIAN RED CROSS SOCIETY ,JAMMU vs. COMMISSIONER OF INCOME TAX (EXEMPTIONS) , CHANDIAGRH

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. N.S. SAINI, ACCOUNTANT MEMBER AND SH. N.K.CHOUDHRY, JUDICIAL MEMBER ITA No.248 (Asr)/2017 Under Section 12AA(1)(b)(ii)

M/s Indian Red Cross Society Vs. CIT (Exemptions), (Jammu Region Branch) C.R. Building, 5th Floor Red Cross Bhawan Section 17-E, Chandigarh Kachi Chowni, Jammu-180001

[PAN/TAN:AAAT16543C] (Appellant) (Respondent)

Appellant by : Sh. Joginder Singh (CA) Respondent by : Smt. Parwinder Kaur (CIT, DR) Date of hearing : 14.05.2019 Date of pronouncement : 14.05.2019 ORDER PER N.K.CHOUDHRY, JM: The instant appeal has been preferred by the Assessee Society (hereinafter called as the Appellant) against the order dated 28.02.2017, impugned herein, passed by the Ld. CIT (Exemptions), Chandigarh, whereby the application for Registration u/s 12AA of the I.T. Act, 1961 (hereinafter called as ‘the Act’), has been rejected.

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submission of documents / clarification as enumerated in para 5 of the impugned order. The said show cause notice dt. 05/12/2016 was replied with documents by the appellant. Thereafter vide show cause letter dt. 09/02/2017, the Ld. CIT(E) sought further clarification/details by 16/02/2017 which was also replied by the appellant on dt. 27/02/2017 by filing reply with documents. After considering the replies of the appellant, the Ld. CIT(E) rejected the application for grant of Registration under section 12AA of the Act.

2) On the facts and in the circumstances of the case the Id CIT, (Exemptions ) has erred in rejecting the application of applicant trust for Registration u/s 12AA(1 )(b)(ii) on the following grounds:

(i) that the appellant is not registered separately as society or trust and also not having separate objects/ constitution. (ii) The trust/ society has not spent the requisite amount of its receipts towards the aims and objects of the applicant and accumulated the surplus more than the required limit. (iii) The activities of the society/ trust is not corroborated with the stated aims and objects given by the appellant in absence of Constitution & registration by the prescribed authority.

(iv) On the facts and in the circumstances of the case the order of Ld CIT. (Exemptions ) Chandigarh is bad in law as the order is passed in a mechanically without application of mind based on presumptions, assumptions, surmises and conjectures. 3) That the appellant craves to leave to add, amend, modify, delete any of the ground of appeal before or at the time of hearing and all the above are without prejudice to each other.

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contrary the Ld. CIT DR relied upon the order passed by the Ld. CIT(E) and submitted that the Ld. CIT(E) has passed the well reasoned order and therefore does not require any interference and consequently the appeal filed by the appellant is liable to be dismissed.

4.1 From the order it reflects that in para No. 3, the Ld. CIT (E) consciously observed that while considering the case for registration u/s 12AA of the Act, the objects of the Trust/Society and genuineness of the activities are to be examined.

4.2 From the order it also reflects that the Ld. CIT(E) sought certain explanations/documents, which have been specifically 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, the registration application was rejected.

4.3 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 Alteram Partem” 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 Alteram Partem 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

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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.

4.4 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:

Section 12AA of the Income Tax Act reads as follows: "12AA. Procedure for registration.--(1) The Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) of sub-section (1)of section 12A, shall-- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and

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(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he -- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the applicant: Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.

4.5 Coming to the instant case, admittedly before declining the registration u/s 12 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.

4.6 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 decision afresh. Consequently, the case is remanded to the file of the Ld. CIT(E) for decision afresh within 06 months of the receipt of this order, suffice to say due opportunities of being heard should be given to the Appellant. As we have decided to set aside the impugned order and remanded the case to the file of the Ld. CIT (E), hence not dwelling into the merits of the case. The Ld. CIT(E) shall be at liberty to re-consider all issues already raised or to be raised further and otherwise feel, fit and appropriate for consideration for proper adjudication of application for registration u/s 12AA of the Act.

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Order pronounced in the open Court on 14 day of May 2019.

Sd/- Sd/- (N.S. SAINI) (N.K.CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 14.05.2019 AG,Chd (On Tour). Copy of the order forwarded to:

(1) M/s Indian Red Cross Society (Jammu Region Branch) Red Cross Bhawan Kachi Chowni, Jammu-180001

(2) The CIT (Exemption), Chandigarh

(3) The SR DR, I.T.A.T., Amritsar