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Facts
The assessee filed an application for approval under Section 12A of the Income-tax Act. The CIT(E) rejected the application ex-parte without granting sufficient opportunity to the assessee. The assessee failed to provide requested details and documents to the CIT(E) within the stipulated time.
Held
The Tribunal held that the CIT(E)'s ex-parte order violated the principles of natural justice. The Tribunal restored the matter to the file of the CIT(E) for de novo adjudication, subject to the assessee paying a cost of Rs. 5,000.
Key Issues
Whether the CIT(E) erred in rejecting the application ex-parte without providing sufficient opportunity to the assessee and whether the assessee failed to provide necessary documents.
Sections Cited
12A, 12AB
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Before: SHRI SANJAY GARG & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal emanates from the order passed dated 21.06.2025 by the learned Commissioner of Income-tax (Exemption), Ahmedabad [in short, “the CIT(E)”], wherein Ld. CIT(E) rejected assessee’s application filed in Form No.10AB electronically for grant of approval under Item-B to sub clause (ii) of clause (ac) of sub section (1) of section 12A of the Income-tax Act (in short, ‘the Act’).
Grounds of appeal
raised by the assessee are as under: “1. On the facts and in circumstances of the case as well as law on the subject, the learned CIT(E) has erred in passing ex-parte order without giving reasonable and sufficient opportunity of being heard.
2. Even otherwise on the facts and in circumstances of the case as well as law on the subject, the leamed CIT(E) has erred in rejecting the application of assessee for registration u/s. 12AB of the I.T. Act, 1961.”
3. It is therefore prayed that order of CIT(E), passed u/s. 12AB of the I.T. Act, 1861 may be set aside and he may be directed to pass fresh order granting approval u/s. 12AB.
4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
3. The fact of the case in brief are that the assessee filed an application in Form No.10AB electronically for grant of approval under Item-B to sub clause (ii) of clause (ac) of sub section (1) of section 12A of the Act. In respect of the application filed by the assessee-trust in Form No.10AB, the Ld. CIT(E) asked the assessee-trust to file certain details and documents vide notices dated 26.11.2024 and 04.02.2025. In response to the said notices, the assessee neither filed any response nor sought any adjournment. In absence of the requisite details, the Ld. CIT(E) decided the case based on materials available on record. At para 4, the Ld. CIT(E) has mentioned that note on activities of the applicant had not been furnished by the assessee. Therefore, the Ld. CIT(E) could not verify the objects as well as activities of the assessee-trust. The Ld. CIT(E) at para 7 of his order has stated that assessee failed to file documentary evidences to enable him to satisfy about: (i) genuineness of the activities of the trust or institutions, (ii) that the activities of trust or institutions are in consonance with the objects of the trust or institution and (iii) that other laws material for the purpose of achieving objects are complied with. Hence, relying on the judgments delivered by the Hon’ble Supreme Court in the case of ‘Commissioner of Income tax, Ujjain Vs. Dawoodi Bohara Jamat’ in Civil Appeal No. 2492 of 2014 and in another case of ‘M/s. New Noble Educational Society’ in Civil Appeal No. 3795 of 2014, the CIT(E) rejected the assessee’s application filed in Form No. 10AB u/s 12A(1)(ac)(iv)- Item(B) of the Act, vide his order dated 21.06.2025.
Aggrieved by the order of Ld. CIT(E), the assessee has filed present appeal before the Tribunal. Since the case has been decided without considering the merit of the case, the ld. AR requested that the matter may be set aside to the file of Ld. CIT(E) for considering the case on merit. The ld. AR submitted that the ex parte order by CIT(E) is clearly violative of the principles of natural justice. He, therefore, requested that in the interests of justice, one more opportunity should be given to the assessee to plead its case on merit before the Ld. CIT(E).
On the other hand, Ld. CIT-DR for the revenue did not have any objection if the matter is remitted back to the file of the Ld. CIT(E) for fresh adjudication. He, however, stated that appropriate cost may be imposed on the assessee.
We have head both parties and perused the materials available on record. The Ld. CIT(E) issued two notices on 26.11.2024 and 04.02.2025 but there was no compliance from the assessee. The Ld. CIT(E) has observed that the appellant failed to file documentary evidence to enable him to satisfy about the genuineness of the activities of the trust and whether the activities are in consonance with the objects of the trust. The ld. AR has contended before us that the appellant is ready to submit all details and evidences needed by the Ld.CIT(E) and one more opportunity may be given to the assessee. We find that assessee could not pursue its case before the Ld. CIT(E) by filing necessary evidences and documents. Hence, we are of the view that one more opportunity should be given to the assessee to file relevant documents/evidences and to plead his case before the CIT(E). It is settled law that principles of natural justice requires that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore, without delving much into the merits of the case, in the interest of justice, we restore the matter back to the file of Ld. CIT(E) for de novo adjudication and to pass a speaking order after hearing the appellant subject to payment of cost of Rs.5,000/- (Rupees five thousand only) by the appellant to the credit of the “PM National Relief Fund” within 3 weeks from receipt of this order. Subject to payment of above cost, we set aside the order of Ld. CIT(E) and remit the matter back to the file of Ld. CIT(E) with a direction to pass de novo order in accordance with law after granting adequate opportunity of being heard to appellant. The appellant is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the Ld. CIT(E) by not seeking adjournment without