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Facts
The assessee-trusts applied for registration under section 12AB and approval under section 80G of the Income-tax Act. The CIT(E) rejected their applications and cancelled provisional registrations because the trusts failed to provide necessary documents and comply with notices, despite multiple opportunities and no adjournment requests.
Held
The Tribunal noted that the CIT(E) had passed ex-parte orders due to the assessee's non-compliance. However, considering that the principles of natural justice require a fair opportunity to be heard, the Tribunal decided to restore the matters to the file of the CIT(E).
Key Issues
Whether the CIT(E) was justified in rejecting the applications for registration and approval without granting adequate opportunity to the assessee, and if the principles of natural justice were violated.
Sections Cited
12AB, 80G(5)(iii), 12A(1)(ac)(iii)
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Before: SHRI PAWAN SINGH & SHRI BIJAYANANDA PRUSETH
to 1128/SRT/2024/AYs.2021-22 & 2024-25 Surat Diamond Cutting & Polishing, Bavangam N. B. C. C. Trust & Shree Aadinath E & C Trust आदेश / O R D E R PER BENCH: These six appeals emanate from the orders dated 22.10.2024, passed by the learned Commissioner of Income-tax (Exemption), Ahmedabad [in short, ‘CIT(E)’], wherein the CIT(E) rejected assessee’s application for registration of trust u/s 12AB of the Income-tax Act (in short, ‘the Act’) and also cancelled the provisional registration u/s 80G(5) of the Act. With consent of both parties, all appeals are clubbed and heard together and decided by a common order for the sake of convenience and brevity. The case of Surat Diamond Cutting and Polishing Cluster SVP Trust in is taken as the “lead case”.
The facts of the case in brief are that the assessee filed an application for registration/incorporation in Form No.10AB u/s 12A(1)(ac)(iii) of the Act. The assessee-trust had earlier been granted order for provisional approval. In respect of the application filed by the assessee-trust in Form No.10AB, the assessee-trust was asked by CIT(E) to file details/documents vide notice dated 23.07.2024 and 23.08.2024. The applicant did not file any submission nor sought any adjournment in response to the said notices. In absence of the requisite details, the requirements of Rule 17A(2) of Income-tax Rule, 1972 were not compiled with. Hence, the CIT(E) relied on the decision of Hon’ble Supreme Court in case of CIT, Ujjain vs. Dawoodi Bohara Jamat, Civil Appeal No.2492 of 2014 and M/s New Nobel Educational Society, in Civil to 1128/SRT/2024/AYs.2021-22 & 2024-25 Surat Diamond Cutting & Polishing, Bavangam N. B. C. C. Trust & Shree Aadinath E & C Trust Appeal No. 3795 of 2014 and observed that the applicant failed to file documentary evidences to enable him to satisfy about (i) genuineness of activities of the trust or institution, (ii) that the activities of trust or institution 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, the application filed in Form No.10AB was rejected and the provisional registration was also cancelled.
Aggrieved by the order of CIT(E), the assessee filed present appeal before the Tribunal. The learned Authorized Representative (ld. AR) submitted that order passed by the CIT(E) is an ex parte order, as the assessee could not file relevant documents and evidences before the CIT(E). He submitted that only two opportunities were granted and due to circumstances beyond control, assessee could not file the necessary details. He argued that principles of natural justice has not been adhered to. The ld. AR submitted that the assessee is ready to submit relevant documents and details before the CIT(E) and hence he requested that the matter may be remitted back to the file of the CIT(E) for fresh adjudication.
On the other hand, the learned Commissioner of Income-tax – Departmental Representative (ld. CIT-DR) for the revenue submitted that reasonable cost may be imposed, if the matter is remitted to the file of CIT(E). to 1128/SRT/2024/AYs.2021-22 & 2024-25 Surat Diamond Cutting & Polishing, Bavangam N. B. C. C. Trust & Shree Aadinath E & C Trust 5. We have heard both the parties and perused the record. We find that the CIT(E) has decided the matter ex parte due to non-compliance by the applicant to the two notices issued by him. There was also no adjournment request by the assessee. The ld. AR has contended that the assessee-trust is ready to submit all the details and evidences needed by the CIT(E). He requested that in the interest of justice, one more opportunity may be given to the assessee to plead its case, which is strong on merits. We are of the view that one more opportunity should be given to the assessee to file requisite documents and evidences before the CIT(E) and to plead its case before him. It is a settled law that the principles of natural justice require the affected party to be granted sufficient opportunity of being heard to contest his case. Therefore, in the interest of justice, we restore the matter to the file of the CIT(E) subject to payment of cost of Rs.10,000/- (Rupees ten thousand only) by the assessee to the credit of the “Gujarat High Court Legal Aid Authority” within 2 weeks from receipt of this order. Subject to payment of above cost, we set aside the order of CIT(E) and remit the matter to the file of CIT(E) with a direction to pass fresh order in accordance with law after granting adequate opportunity of hearing to the assessee. The assessee is directed to be more vigilant and diligent and to furnish all the details and explanations as needed by the CIT(E) by not seeking adjournment without any valid reasons. With these directions, the grounds of appeal
raised by the assessee are allowed for statistical purposes. to 1128/SRT/2024/AYs.2021-22 & 2024-25 Surat Diamond Cutting & Polishing, Bavangam N. B. C. C. Trust & Shree Aadinath E & C Trust
6. In the result, appeal of the assessee is allowed for statistical purposes.
(AY.2021-22): 7. Since the assessee did not file the requisite details, despite two notices issued by the CIT(E), the application filed in Form No.10AB for approval u/s 80G(5)(iii) of the Act was rejected and the provisional approval was also cancelled. Facts of the case are similar and the reasons given by the CIT(E) for rejecting the application are similar. We have already set aside the case of the appellant to the file of CIT(E) in respect of rejection of application for registration of the assessee-trust in decided above. Following the same reason, this case is also remitted to the file of CIT(E) for fresh adjudication after granting reasonable opportunity of being heard to the assessee.
In the result, appeal of the assessee is allowed for statistical purpose.
& 1126/SRT/2024 (AY.2024-25): 9. In these appeals, the CIT(E) has issued two notices of hearing which were not complied with. The assessee-trust had also not requested for adjournment. Hence, the application for registration filed in Form No.10AB u/s 12A(1)(ac)(iii) and the application filed in Form No.10AB for approval u/s 80G(5)(iii) of the Act were rejected and the provisional approval was also cancelled. Facts of the case and the reasons given by the CIT(E) for rejecting the application are similar as in , decided above. We have already set aside the above case to the file of CIT(E) in respect of to 1128/SRT/2024/AYs.2021-22 & 2024-25 Surat Diamond Cutting & Polishing, Bavangam N. B. C. C. Trust & Shree Aadinath E & C Trust rejection of application for registration of the assessee-trust in decided above. Following the same reason, these two appeals are also remitted to the file of CIT(E) subject to the cost of Rs.10,000/- (Rupees ten thousand only) to the credit of “Gujarat High Court Legal Aid Authority” within 2 weeks from receipt of this order. Subject to the payment of the above cost, we set aside the orders of CIT(E) and remit the matter to the file of CIT(E) for fresh adjudication after granting reasonable opportunity of being heard to the assessee. For the statistical purposes, these appeals are allowed for statistical purposes.
In the result, these appeals of the assessee are allowed for statistical purpose.
& 1128/SRT/2024 (AY.2024-25): 11. In these appeals, the CIT(E) has issued two notices of hearing which were not complied with. The assessee-trust had also not requested for adjournment. Hence, the application for registration filed in Form No.10AB u/s 12A(1)(ac)(iii) and the application filed in Form No.10AB for approval u/s 80G(5)(iii) of the Act were rejected and the provisional approval was also cancelled. Facts of the cases and the reasons given by the CIT(E) for rejecting the applications are similar as in , decided above. We have already set aside the above case to the file of CIT(E) in respect of rejection of application for registration of the assessee-trust in decided above. Following the same reason, these two