JAIN INTERNATIONAL TRADE ORGANISATION,,PUNE vs. PRINCIPAL COMMISSIONER OF INCOME-TAX (EXEMPTIONS),

Shri Neelesh Khandelwal appearing on behalf of the assessee submitted that the assessee is a charitable trust assessed as AOP. The assessee filed an application dated 15-02-2010 for grant of registration u/s. 12AA of the Act with Commissioner of Income Tax, Aurangabad. During the pendency of said application, the assessee filed its return of income for the assessment year 2010-11 on 30-07-2010 declaring total income as Nil. In scrutiny assessment proceedings, the Assessing Officer made addition of Rs.1,82,377/- i.e. the difference between gross receipts as per income and expenditure account Rs.43,50,020/- and the expenditure incurred on earning income i.e. Rs.41,67,643/-. Thereafter, the Commissioner of Income Tax initiated revision proceedings and the notice u/s. 263 was issued to the assessee on 16-01-2015. In response to the notice, the assessee filed written submission on 02-03-2015. Thereafter, the assessee requested for time to furnish further information as sought by the Commissioner of Income Tax. The ld. AR pointed that the assessee was simultaneously pursuing its application for grant of registration u/s. 12AA with Commissioner of Income Tax, Aurangabad. The impugned order was passed by the Commissioner of Income Tax (Exemptions) without affording proper opportunity of hearing to the assessee. The ld. AR prayed that the matter may be remitted back to the Commissioner of Income Tax for fresh adjudication. In support of his submissions, the ld. AR placed reliance on the following decisions : i. V. Selladurai Vs. Chief Commissioner of Income Tax (OSD), 295 ITR 303 (Madras); ii. Smt. Maltidevi Birbal Singh Vs. Income Tax Officer in ITA No. 2863/Mum/2010 for assessment year 2005-06 decided on 30-03- 2011.

Shri Rajeev Kumar representing the Department defending the impugned order submitted that the opportunity of hearing was granted to the assessee. The assessee filed written submissions. However, in the absence of answers to the relevant queries raised in the show cause notice u/s. 263 of the Act, the Commissioner of Income Tax rightly set aside the assessment order and directed the Assessing Officer to pass fresh assessment order in the light of discussion made in the order passed u/s. 263 of the Act.

We have heard the submissions made by representatives of rival sides and have perused the impugned order passed u/s. 263 of the Act. A perusal of the impugned order shows that the order has been passed in summary manner without affording proper opportunity of hearing to the assessee. As is evident from the records, the notice u/s. 263 was issued to the assessee on 16-01-2015. In response to the notice the assessee filed written submission on 02-03-2015 and without granting further opportunity of hearing to the assessee, the Pr. Commissioner of Income Tax (Exemptions) passed the impugned order on 30-03-2015. The manner in which the proceedings were hurriedly concluded by the Pr. Commissioner of Income Tax (Exemptions) indicates that the principles of natural justice were not followed.

The Hon’ble Madras High Court in the case of V. Selladurai Vs. Chief Commissioner of Income Tax (OSD) (supra) has held that where before passing the order, personal hearing was not granted to the assessee/appellant, it is clear case of violation of principles of natural justice. The Hon’ble High Court set aside the order passed u/s. 263 and remitted the issue back to the file of Chief Commissioner of Income Tax for fresh adjudication.

Similar view was taken by the Mumbai Bench of the Tribunal in the case of Smt. Maltidevi Birbal Singh Vs. Income Tax officer (supra). The Tribunal set aside the ex-parte order passed u/s. 263 of the Act by the Commissioner of Income Tax and remitted the file back to Commissioner of Income Tax with a direction to decide the same afresh after providing reasonable opportunity of hearing to the assessee, in accordance with law.

Thus, in the light of facts of the case and the decisions discussed above, we set aside the impugned revision order and restore the file back to Pr. Commissioner of Income Tax with a direction to pass fresh order, after affording reasonable opportunity of hearing to the assessee, in accordance with law.

In the result, the appeal of assessee is allowed for statistical purpose.