Denial of Hearing Opportunity: ITAT restores Registration u/s 12A matter [Read Order]

The Surat Bench of the Income Tax Appellate Tribunal (ITAT) set aside the order of the Commissioner of Income Tax (Exemptions) [CIT(E)] rejecting the registration of a trust under Section 12A of the Income Tax Act, 1961, citing that the assessee was not provided a reasonable opportunity to present its case.

Rotary Club of Gandevi (assessee) had filed an application for registration under Section 12AB. The CIT(E) rejected the application on two grounds, the assessee incorrectly filed the application under clause (iii) instead of clause (i) of Section 12A(1)(ac), and the trust was formed for the benefit of its members and not for charitable purposes.

Aggrieved by the order, the assessee filed an appeal before the ITAT. The counsel for the assessee submitted that a reply seeking adjournment was filed in response to the show-cause notice. However, the counsel highlighted that no further opportunity was granted, and the application was rejected without any additional hearing.

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The counsel placed reliance on ITAT decisions, including Dinshaw Daboo Charity Trust vs CIT(E) and Sunni Muslim Jamat Aamena Madressa Ebdatgah Waqf Committee vs CIT(E). The counsel argued that technical errors and isolated interpretation of objectives cannot be grounds for rejection.

The counsel for the revenue argued that sufficient opportunity was already granted to the assessee. The counsel also submitted that the CIT(E) had passed a detailed and reasonable order.

The two-member bench comprising Shri Pawan Singh (Judicial Member) and Shri Bijayananda Pruseth (Accountant Member) observed that the CIT(E) had rejected the application without granting a reasonable hearing after the adjournment request was submitted.

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The tribunal also observed that after seeking an adjournment request no fresh notice was served upon the assessee and the application for registration was rejected.

The tribunal held that the matter required reconsideration. Therefore, the tribunal restored the issue to the file of CIT(E) with directions to re-adjudicate the matter after granting the assessee an adequate opportunity to hear.

The tribunal also directed the assessee to cooperate fully and respond to notices issued in the proceedings. Thereby, the appeal of the assessee was allowed for statistical purposes.

To Read the full text of the Order CLICK HERE

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