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Facts
The assessee's application for registration under Section 12A of the Income Tax Act was rejected by the CIT(Exemption) due to alleged non-compliance with notices and a prima facie finding that the assessee was collecting fees for services. The assessee contended that they had submitted a complete reply and sought an adjournment for voluminous documents, but the CIT(Exemption) passed the final rejection order prematurely.
Held
The tribunal quashed the CIT(Exemption)'s order, restoring the matter for a fresh decision. It directed the CIT(Exemption) to grant the assessee a further opportunity of being heard and to pass a reasoned order after considering all evidence, with the caveat that non-cooperation by the assessee would allow the CIT(Exemption) to proceed as per law.
Key Issues
Whether the CIT(Exemption) erred in rejecting the application for Section 12A registration without providing adequate opportunity of being heard and considering all submitted details.
Sections Cited
Section 12AB(1)(b)(ii)(B), Section 12A, Section 12A(1)(ac)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’, NEW DELHI
Before: MS. MADHUMITA ROY & SH. AVDHESH KUMAR MISHRA
Appellant by : Shri Tanpreet Kohli, C.A. Respondent by : Shri Binod Kumar, CIT-D.R. Date of Hearing 21.05.2024 Date of Pronouncement 27.05.2024 O R D E R PER MS. MADHUMITA ROY – JUDICIAL MEMBER :
The instant appeal filed by the assessee is directed against the order dated 14.03.2023 passed by the Commissioner of Income Tax (Exemption) –Delhi under Section 12AB(1)(b)(ii)(B) of the Income Tax Act, 1961 (hereinafter referred as to ‘the Act’).
The Learned CIT (Exemption) rejected the application for grant of registration under Section 12A of the Act made by the assessee as the assessee did not comply with the notice dated 23.12.2022 followed by Bhairvi Social Foundation vs. CIT(E) Asst.Year –NA - 2 - 01.02.2023. A final opportunity was further offered by and under the letter dated 03.03.2023 to file the details on 10.03.2023. Since, the same was not complied with, the application stood rejected on a prima facie finding that the assessee is providing services for which fee / charges are being collected and accordingly, the conditions for grant of registration in the case are not satisfied. The application filed in Form 10AB for grant of registration under Section 12A(1)(ac)(iii) of the Act has been therefore, rejected.
At the time of hearing of the instant appeal, Learned Counsel appearing for the assessee submitted before us, that the assessee by and under its reply dated 02.02.2023 provided a complete and exhaustive reply with all the details and documents. Moreso, on 23.02.2023, the assessee owing to voluminous nature of documents and more details to be filed, sought for an adjournment, which was also acknowledged from Income Tax Department, copy whereof, is attached to page No.149 of the paper book filed before us by the appellant. Moreso, the assessee sought for an adjournment on 13.02.2023 but on the very next day, i.e. 14.02.2023, the final order was passed by the Learned CIT (Exemption). Under these circumstances, he humbly prays for a further opportunity of being heard before the Learned CIT (Exemption) to represent his case effectively in support of the application for grant of registration under Section 12A of the Act. Such prayer has not been objected by the Learned DR with all his fairness. Bhairvi Social Foundation vs. CIT(E) Asst.Year –NA - 3 - 4. Having heard the Learned Counsel appearing for the parties, having regard to the facts and circumstances of the case, we find that in order to prevent miscarriage of justice, the assessee be given another opportunity of being heard to represent his case before the Learned CIT(A). Hence, we quash the impugned order and restore the issue to the file of Learned CIT(A) with a direction upon him to pass a reasoned order upon granting an opportunity of being heard to the assessee and upon considering the evidence on record or any other evidence, which the assessee may choose to file at the time of hearing of the matter. We also make it clear that in the event, the appellant fails to appear before the First Appellate Authority or does not Co-operate with the said authority, the Learned CIT(A) would be at liberty to proceed strictly in accordance with law.
In the result, appeal of the assessee is allowed for statistical purposes.