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Facts
The Assessee appealed against the CIT(E)'s order dated 16/03/2023, which rejected its application for registration under section 12A of the Income Tax Act, 1961. The Assessee contended that it was not given a proper opportunity of being heard, and the rejection order was passed ex-parte as it was only posted on the e-portal and not communicated via email or physical address. The Tribunal condoned a delay in filing the appeal.
Held
The Tribunal observed that the CIT(E)'s order was passed ex-parte and the Assessee claimed a lack of timely e-portal verification. In the interest of justice and to ensure a fair hearing, the matter was remanded back to the CIT(E) with directions for the Assessee to participate in proceedings, and for the CIT(E) to decide the issue afresh after hearing the Assessee in accordance with law.
Key Issues
Whether the CIT(E) was justified in rejecting the registration application under section 12A without providing a reasonable opportunity of being heard and whether communication solely via the e-portal constitutes valid service, adhering to principles of natural justice.
Sections Cited
Section 12A of the Income Tax Act, 1961, Section 282(1) of the Income Tax Rules, 1962, Rule 127(1) of the Income Tax Rules, 1962, Section 12AA of the Income Tax Act, Section 11 of the Income Tax Act
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Income Tax Appellate Tribunal, DELHI BENCH: ‘E’ NEW DELHI
Before: SH. PRADIP KUMAR KEDIA & SHRI YOGESH KUMAR U.S.
This appeal is filed by the Assessee for the Assessment Year 2022- 23 against the order of the CIT Exemptions, Chandigarh, dated 16/03/2023.
“1. That the order passed by Ld. CIT (E) is bad in law and on the facts of the case. 2. That on the facts and in the circumstances of the case, the Learned Commissioner of Income Tax was not justified in rejecting the grant of ITBA/EXM/F/EXM45/2022- 23/10508499652(1) registration u/s 12A of the Income Tax Act, 1961;
That the provisions of section 282(1) and rule 127(1) of the Income Tax Rules, 1962 provides for a method and manner of service of notice and orders not complied;
That the provisions do not mention of communication to be 'presumed' by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a Company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc. The principles of natural justice are inherent in the income tax provisions and the same are required to be necessarily followed;
That the Honorable (IT (EXEMPTION) had issued the order of rejection of application of the registration under Form no. 10:4D dated 16-03-23 rejecting the application without providing a valid and reasonable opportunity to the applicant of being heard. As the rejection order are also not communicated to the applicant on the registered e- mail address of the Assessee, or mobile or physical address and only posted on e-proceeding section of the e- portal. So the appellant has never got the valid opportunity of being heard and providing the information sought.
Mohyal Housing and Welfare Association Vs. CIT(E) 6 Further, as per the provisions of Section 12AA the Honorable CIT (EXEMPTION) before granting registration refusing registration, has to satisfy himself about the objects of the trusts / institution and also has to satisfy that the activities of the trust or institution are genuine. Further, if CIT is not satisfied with the genuineness of the activities or objects of the trust, then before refusing to register under this section, he has to give reasonable opportunity to the Assessee of being heard, which the Commissioner has not provided. For one of the recent event with Singer machine on, Assessee required 12AA certificate before applying Section 11, then it learnt that rejection has been passed."
In view of the above, it is essential that before any action is taken, a communication of the notice must be in terms of the provisions as enumerated here in above. The provisions do not mention of communication to be "presumed" by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a Company is not expected to keep the e- portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc.. The principles of natural justice are inherent in the income tax provisions and the same are required to be necessarily followed,
Petitioner Referred following cases in support of their claim (Annexure.
a. [2024] 160 taxmann.com 629 (Punjab & Haryana) HIGH COURT OF PUNJAB AND HARYANA Munjal BCU Centre of Innovation and Entrepreneurship vai Housing & Welfare Association Vs. Commissioner of Income-tax (Exemptions) SANJEEV PRAKASH SHARMA AND MRS. SUDEEPTI SHARMA, JJ.” been filed by the Assessee contending that the Assessee was unaware of passing of the impugned order as the Assessee has not been served with the notice from the CIT(E) and the order impugned has been passed ex-parte, therefore there is a delay in filing the present Appeal, accordingly sought for condoning the delay in filing the present appeal. For the reasons stated in the affidavit for condoning the delay in filing the present appeal is condoned.
In the present Appeal, the Assessee challenged the order of CIT(E) in rejecting the grant of registration u/s 12A of the Income Tax Act, 1961 (‘Act’ for short). The Ld. Counsel for the Assessee submitted that the Assessee has not been provided with proper opportunity of being heard and the order of the CIT(E) is in violation of principles of natural justice.
Per contra, the Ld. Departmental Representative submitted that once the Assessee files Application for Registration u/s 12A of the Act, it is the duty of the Assessee to keep track on the e-portal and attend the proceedings before the CIT(E) failure to verify e- cannot be ground in finding the fault in the order of the CIT(E), thus sought for dismissal of the Appeal.
We have heard both the parties and perused the material available on record. Considering the fact that the order impugned has been passed ex-pare and the Assessee has claimed that e- portal has not been verified on time, which ultimately resulted in passing the ex-parte order, in the interest of justice and to render substantial justice, we remand the matter to the file of the CIT(E)
with a direction to the Assessee to participate in the proceedings and the CIT(E) is directed to decide the issue in accordance with law after hearing the Assessee.
In the result, the Appeal of the Assessee is partly allowed for statistical purpose.
Order pronounced in the open court on 17th October, 2024.
Sd/- Sd/- (PRADIP KUMAR KEDIA) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 17/10/2024