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Facts
SPIA Charitable Trust, registered under the Trust Act and approved under Sections 12AA, 12AC, and provisionally under Section 80G of the Income Tax Act, challenged the rejection of its 80G approval application by the CIT (Exemption) for AY 2024-25. The application was rejected because the Trust failed to respond to a show cause notice (SCN) within the short timeframe provided, despite requesting an extension.
Held
The tribunal held that the Commissioner of Income Tax (Exemption) denied the appellant a reasonable opportunity to respond to the show cause notice by granting an unreasonably short time, violating principles of natural justice and departmental SOP. Consequently, the tribunal set aside the order and remanded the matter back to the CIT (Exemption) for a fresh decision after providing the appellant a proper hearing.
Key Issues
Whether the Commissioner of Income Tax (Exemption) was justified in rejecting the assessee's application for 80G approval by denying a reasonable opportunity to respond to a show cause notice, thereby violating principles of natural justice.
Sections Cited
80G, 12AA, 12AC
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI GEORGE GEORGE K., VP & SHRI INTURI RAMA RAO, AM
O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Exemption), Kochi dated 29.04.2024 for Assessment Year (AY) 2024-25 u/s. 80G of Income Tax Act, 1961 (hereinafter "the Act").
Brief facts of the case are that the appellant is a public charitable trust duly incorporated under the Trust Act on SPIA Charitable Trust 94.09.2018. It was founded with the object of undertaking charitable activities relating to education, healthcare, social welfare, rehabilitation, disaster relief, rural development, environmental protection and empowerment of disadvantage individuals. The appellant trust was registered u/s. 12AA of the Act on 09.12.2020 and subsequently it was granted registration u/s. 12AC for a period of 4 years vide proceedings dated 31.05.2023 issued by Commissioner of Income Tax (Exemption), Kochi. The appellant trust was also granted provisional approval u/s. 80G, under clause (iii) of first proviso to sub-section (5) of section 80G of the Act in Form 10AB on 01.01.2023. The said application came to be rejected vide order dated 29.05.2024 on the ground that the appellant failed to offer explanation to the show cause notice dated 03.04.2024.
Being aggrieved, the appellant is in appeal before us in the present appeal.
At the outset we find that there is delay in filing the appeal by 26 days. The appellant had filed an affidavit seeking condonation of delay on the ground that the delay that occurred on account of hospitalisation of one of the trustees, Shri K.T. Mathews. In the absence of any material contrary to the averments made in the affidavit, we are of the considered opinion that it is a fit case to condone the delay and admit the appeal for adjudication on merits.
SPIA Charitable Trust 5. We have heard the rival contentions and perused the material available on record. We find that the learned CIT(A) issued a show cause notice dated 03.04.2024 requiring the appellant to submit explanation on the issued raised by him on or before 11.04.2024. On receipt of the said notice, the appellant filed a letter dated 11.04.2024 seeking extension of time to respond to the notice. However, the learned CIT(A) rejected the explanation and proceeded to reject the application vide order dated 23.04.2024. We had carefully perused the impugned order and find that the show cause noticed was issued on the appellant on 03.04.2024 requiring the appellant to file the explanation on or before 12.04.2024. From the material on record, it is not clear as to when the show cause notice was served upon the appellant. This would clearly indicate that no reasonable opportunity was given to the appellant to comply with the show cause notice by granting unreasonable short time to respond to the show cause notice. In terms of section SOP issued by the Department, minimum period of 15 days should be granted to the assessee to comply with any notice. Therefore, this order passed by the Commissioner of Income Tax (Exemption) is unreasonable and against the principals of natural justice. Therefore, the order of the Commissioner of Income Tax (Exemption) is set aside and matter remanded to the file of the Commissioner of Income Tax (Exemption) for de novo disposal in accordance with law affording reasonable opportunity of hearing to the appellant. We make it clear
In the result, appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 8th April, 2025.