SADBHAVNA TRUST-RAJKOT,RAJKOT vs. CIT(EXEMPTION), AHMEDABAD

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ITA 87/RJT/2024Status: DisposedITAT Rajkot23 January 20254 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that during the proceedings before the CIT(E), two notices of hearings were issued, and in one instance, the assessee sought an adjournment, while in the second instance, the assessee did not file the required documents and evidence. Consequently, the CIT(E) passed an ex-parte order rejecting the applications. Before the Tribunal, the assessee expressed readiness to file the required documents and evidence. The Tribunal, considering the principles of natural justice and fair play, particularly the right to be heard (audi alteram partem), found it fit and proper to set aside the order of the CIT(E). The Tribunal decided to remit the matter back to the file of the CIT(E) for adjudication afresh on merits. The assessees were directed to file the required documents and evidence as and when called upon by the CIT(E). For statistical purposes, both appeals were treated as allowed.

What were the facts?

The assessee trusts, Sadbhavna Trust and Ashirvad Education and Charitable Trust, filed applications in Form No. 10AB for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961. The Commissioner of Income Tax (Exemption), Ahmedabad (CIT(E)), rejected these applications by orders dated 18/12/2023. The CIT(E) stated that the trusts failed to provide documentary evidence to prove the genuineness of their activities and that their activities were not in consonance with their stated objects. The assessees appealed these orders to the Income Tax Appellate Tribunal (ITAT), Rajkot Bench. The appeals were clubbed and heard together due to identical issues.

What were the issues?

1. Whether the CIT(E) erred in rejecting the applications for registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, without properly examining the documents submitted by the assessees? Assessee's Contention: The assessee argued that the CIT(E) wrongly denied registration, claiming the required documents, trust deeds, objects, and other evidences were submitted via the departmental portal. The assessee contended that the CIT(E) failed to examine these documents and requested one more opportunity to explain their case before the CIT(E), seeking a remand for fresh adjudication. Revenue's Contention: The Revenue, through the CIT(DR), argued that the screenshot of the departmental portal did not provide a clear picture and showed a different date. The Revenue maintained that the assessees failed to provide relevant documents to the CIT(E) to prove the genuineness of their activities, and therefore, the CIT(E) was justified in denying registration. The Revenue highlighted that the CIT(E) had granted two opportunities of hearing (05.10.2023 and 20.11.2023) during which the assessee did not file any documents or evidence.

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT

Before: DR. ARJUN LAL SAINI & SHRI SIDDHARTHA NAUTIYAL

For Appellant: Shri Kamal Bhambhani, CA
For Respondent: Shri Sanjay Punglia, CIT(DR)
Hearing: 16/01/2025Pronounced: 23/01/2025

आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned two appeals filed by the two different assessees, are directed against the separate orders passed by the Learned Commissioner of Income Tax (Exemption)-, Ahmedabad [in short “the Ld. CIT(E)”] both, dated 18/12/2023, 1

1.

Sadbhavna Trust & others v. CIT(E) & 88/Rjt/2024 wherein Ld. CIT(E ) rejected application of both assessees- trusts, in Form No.10AB, u/s 12A(1)(ac)(iii) of the Act, stating that these trusts have failed to file the documentary evidences to prove the genuineness of the activities and activities of these trusts are not in consonance with objects of the trusts.

2.

These two appeals filed by the different assessees, contain identical and common issues, therefore, these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity.

3.

At the outset, Learned Counsel for the assessee, begins by pointing out that Ld. CIT(E ) has failed to provide registration and denied the registration stating that assessee -trusts, did not file the required documents and evidences before him. The Ld. Counsel submitted before the Bench a screenshot of the departmental portal and stated that assessee had submitted the required documents, trust deeds, objects of the trusts and other evidences before the Ld. CIT(E). Despite these facts, the Ld. CIT(E) denied the registration, which is not acceptable. The Ld. Counsel further submitted that ld. CIT(E) could not examine these documents and evidences, so submitted by the assessee, therefore, Ld. Counsel for the assessee, requested the Bench that one more opportunity should be granted to these assessees to explain their case before the Ld. CIT(E). Hence, Ld. Counsel prayed the Bench that these two appeals should be restored back to the file of Ld. CIT(E) for fresh adjudication.

4.

On the other hand, Ld. CIT(DR), on behalf of the Revenue, argued that the screenshot of the department-site does not give clear picture and shows other date. These assessees failed to provide relevant documents, to Ld. CIT(E), to prove the genuineness of the activities of the trusts, therefore, Ld. CIT(E) has rightly denied the registration. The Ld. CIT-DR took us through the order of the Sadbhavna Trust & others v. CIT(E) & 88/Rjt/2024 Ld. CIT(E ) and stated that Ld. CIT( E) has granted two opportunities of hearing viz: dated 05.10.2023, 20.11.2023, respectively, however, assessee did not file any documents and evidences, before the Ld. CIT( E ). Therefore, registration should not be granted.

5.

We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We note that during proceedings before Ld. CIT(E), two notices of hearings were issued on 05/10/2023 and 20/11/2023. However, in one instance, the assessee sought adjournment, and against the second notice, the assessee did not file the documents and evidences before the Ld. CIT(E). Therefore Ld. CIT(E) has passed an ex-parte order stating that assessee failed to prove the genuineness of activities of the trust and the activities are not in consonance with the objectives of the trust. Therefore Ld. CIT(E) rejected the application of these two assessee- trusts, filed in Form No. 10AB, u/s 12A(1)(ac)(iii) of the Income Tax Act,1961.

6. Before us, ld. Counsel for the assessee stated that now these assessees- trusts are ready to file required documents and evidences, such as, trust- deeds, objects, activities of the trusts and other documents, as may be required by the ld. CIT(E ), therefore we are of the view that in the interest of justice, one more opportunity should be provided to these assessee- trusts to file their required documents and evidences before the Ld. CIT(E ) and to plead their case before the Ld. CIT(E ).

5. We find that these assessees- trusts could not plead their case successfully before the Ld. CIT(E ). We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. We note that the Hon’ble Supreme Court in M.S.Gill vs The Chief Election Commission 1978 AIR SC 851 held “The dichotomy between administrative and quasi-judicial function

Sadbhavna Trust & others v. CIT(E) & 88/Rjt/2024 vis-à-vis the doctrine of natural justice is presumably obsolescent after Kraipak (A.K. Kraipak vs UOI AIR 1970 SC 150) which makes the water-shed in the application of natural justice to administrative proceedings. The rules of natural justice are rooted in all legal systems and are not any new theology. They are manifested in the twin principles of nemo judex in parte sua (no person shall be a judge in his own case) and audi alterem partem (the right to be heard). It has been pointed out that the aim of natural justice is to secure justice. Therefore, without delving much deeper into the merits of the case, we deem it fit and proper to set aside the order of the Ld. CIT(E) and remit the matter back to the file of the Ld. CIT(E) to adjudicate the issue afresh on merits. These two assessees are also directed to file the required documents and evidences as and when call by the Ld. CIT (E). For statistical purposes, both the appeals of the assessees-trusts are treated, as allowed.

6.

In the result, both appeals of the assessees-trusts are allowed for statistical purposes.

Order is pronounced on 23/01/2025 in the open court.

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