In a recent ruling, the Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) set aside the ex-parte order due to a lack of fair opportunity provided to the Trust to present its case and directed the Commissioner of Income Tax ( Exemption ) [ CIT(E) ] to conduct a fresh hearing.
The assessee, Shree Sharvashram Jagruti Sansthan Trust’s application for provisional registration under Section 12AB of the Income Tax Act, 1961, was rejected by the CIT(E) by noting that the trust failed to submit complete documents to establish the genuineness of its activities, their alignment with its stated objectives, and compliance with relevant laws.
It is to be noted that the trust was issued two notices, one on 11-08-2023 and another on 5-10-2023. While the Trust partially responded to the first notice by submitting certain documents on 23-08-2023, it failed to comply with the second notice, which required a response by 9-10-2023.
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The assessee’s counsel contended that although the trust had begun collecting the requisite documents after receiving the second notice, the short timeframe to comply proved insufficient. Additionally, neither the trust nor its consultant sought an extension, inadvertently leading to non-compliance.
The counsel further submitted that on October 12, 2023, the CIT(E) issued an ex-parte order rejecting the application without granting any further opportunity to the Trust to rectify the deficiencies.
The bench observed that only two notices of hearing were issued by the CIT(E). It noted that the CIT(E) passed the order without providing the assessee with an opportunity for a fair hearing.
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The ITAT, comprising Judicial Member Siddhartha Nautiyal and Accountant Member Makarand Vasant Mahadeokar, set aside the ex-parte order and restored it to the file of the CIT(E) for de novo consideration. It also directed the CIT(E ) to give the assessee a due opportunity to present its case.
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