RAMNAGAR KOLEYPUKUR FRIENDS ASSOCIATION,HOOGHLY vs. CIT (EXEMPTIONS), KOLKATA, KOLKATA

Both these appeals preferred by the assessee society against the separate orders of Ld. CIT(E), Kolkata dated 26.07.2017 rejecting the application for registration u/s. 12A and approval u/s. 80G(5)(vi) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”).

The brief facts of the case as noted by ld CIT(E) is that the assessee Society came into existence as a Society vide Certificate of Registration dated 03.11.2003 and the society filed an application in Form 10G for approval of exemption u/s. 80G of the Act on 31.01.2017. The ld CIT(E) notes that during the course of hearing, assessee was asked specific questions regarding as to why it needs registration u/s. 12AA of the Act. After the discussions held with Shri Subhas Kundu (Member) and the Ld. AR of the assessee, the Ld. CIT(E), Kolkata was of the opinion that the it was not a fit case for registration u/s. 12AA of the Act. Hence, he rejected the assessee Society’s application for registration u/s. 12AA of the Act. In respect of application for approval u/s. 80G of the Act, the Ld. CIT(E) rejected the 80G application of assessee as the Ld. AR during the course of hearing withdrew the application for approval u/s. 80G of the Act. Aggrieved with the rejection of registration u/s. 12AA of the Act, and approval u/s. 80G of the Act, the assessee Society is before us.

We have heard rival submissions and gone through facts and circumstances of the case. We note that the assessee Society came into existence vide Certificate of Registration dated 03.11.2003. As per the impugned order of Ld. CIT (E), the society filed an application in Form 10G for approval of exemption u/s. 80G of the Act on 31.01.2017. The Ld. CIT(E) records that during the course of hearing, assessee was asked specific questions regarding why the Society needs registration u/s. 12AA of the Act. After the discussions held with Shri Subhas Kundu (Member) and the Ld. AR of the assessee, the Ld. CIT(E), was of the opinion that it was not a fit case for registration u/s. 12AA of the Act. Hence, he rejected the assessee Society’s application for registration u/s. 12AA of the Act. From the aforesaid action of the Ld. CIT(E), we do not decipher as to why he rejected the application for registration under sec. 12AA of the Act. In the impugned order, the Ld. CIT(E) says he asked the assessee why it requires registration u/s. 12AA; and then he had a discussion with Ld. AR ;and then he formed an opinion that it is not a fit case for registration u/s. 12AA of the Act. From the aforesaid cryptic order, we only understand the question of Ld. CIT(E) to AR of the assessee i.e. why they require registration u/s. 12AA of the Act. However, we do not understand from the impugned order, what was the answer of AR of assessee to the said query. Though Ld. CIT(E) recorded that he discussed with Ld. AR of the assessee, what he discussed with the Ld. AR, nobody knows because nothing is recorded. We do not understand how he came to the opinion that it is not a fit case for registration. Nobody knows other than Ld. CIT(E) because nothing is stated in the impugned order. So it is a clear case of non-application of mind while passing the non-speaking impugned order. It should be remembered that it is a settled legal proposition that not only administrative order, but also judicial/quasi judicial order must be supported by reasons recorded in it. Thus, while deciding an issue, the court is bound to give reasons for its conclusion. It is the duty and obligation on the part of the court to record reasons while disposing of the case. The hall mark of order and exercise of judicial power by a judicial forum is for the forum to disclose its reasons by itself and giving reason has always been insisted upon as one of the fundamentals of sound administration of the justice delivery system, to make it known that there had been proper and due application of mind to the issue before the court and also as an essential requisite of the principles of natural justice. The reason is the heart-beat of every conclusion. It introduces clarity in an order and without the same, the order becomes lifeless. Reasons substitute subjectivity with objectivity. The absence of reasons renders an order indefensible /unsustainable particularly when the order is subject to further challenge before a higher forum. Recording of reasons is principle of natural justice and every judicial/ quasi judicial order must be supported by reasons recorded in writing. It ensures transparency and fairness in decision making. The person who is adversely affected must know why his application has been rejected. (refer State of Orissa Vs. Dhaniram Luhar, AIR 2004 SC 1794). The omission to record reasons must, therefore, be treated as a serious defect. We note that the Ld. CIT(E) rejected the application for registration under section 12AA of the Act of the assessee without subscribing any reason and has passed a cryptic non-speaking order which is bad in law, so it needs to be set aside and we order accordingly.

Before we part, the Ld. CIT(E) has to keep in mind that so far as grant of registration u/s. 12AA of the Act is concerned, the Ld. CIT(E)’s jurisdiction is only to verify the objects of the Institution/Trust and look into the genuineness of the activities, meaning thereby that he has to satisfy himself that the objects are charitable in nature and the activities being carried on or to be carried on are genuine, meaning thereby that they are in consonance for achieving the charitable object and nothing else. The Ld. CIT(E) while discharging his duty for grant of registration u/s. 12AA of the Act has to restrict himself in the field which we have stated above. With the aforesaid observation, we set aside the order of the Ld. CIT(E) and remand the matter back to his file to consider de novo the grant of registration u/s. 12AA of the Act and approval u/s. 80G as stipulated by law and in accordance to law as per our aforesaid observations. Needless to say, assessee should be given reasonable opportunity of being heard. Appeals of assessee are allowed for statistical purposes.

In the result, the appeals of assessee are allowed for statistical purposes.