“Reasonable and Effective Opportunities” should be given to Taxpayers during Income Tax Proceedings: ITAT [Read Order]

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While relying on the landmark judgment of the Apex Court in the case of Maneka Gandhi v. Union of India, the Income Tax Appellate Tribunal (ITAT), Pune bench has held that the assessee should be provided with “reasonable and effective opportunities” during the proceedings under the Income Tax Act, 1961.

The appellant is a registered public trust under the provisions of Bombay Public Trust Act, 1950, has e-filed an application in Form No 10A on 11/01/2019 accompanying therewith a certificate of its BPT registration, financial statements & a copy of return of income filed for AY 2018-19 and note on the activities it engaged into. The Ld. CIT(E) in-order to verify the objects, activities and to ascertain the fulfilment of conditions for granting registration u/s 12AA of the income Tax Act.

The ITAT bench comprising Shri S.S. Godara, Judicial Member and Shri G. D. Padmahshali, Accountant Member, in an ex-parte order, found that the CIT(E) passed the order without further opportunity and rejected to grant 12A registration to the appellant trust.

Stressing on the need of complying with the natural justice principles, the ITAT noted that “In this context, the Tribunal makes a note that, the principle of “Audi alteram partem” is the basic concept of natural justice, and the expression implies that a person must be given an opportunity to defend himself, and principle is a sine qua non of every civilized society. The Hon’ble Supreme Court in its landmark decision rendered in “Maneka Gandhi Vs UOI” reported in AIR 1978 SC 597 has laid down that, the rule of fair hearing is necessary before passing any order, the opportunity of being heard should be real, reasonable and effective and same should not be for namesake, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard.”

“Apparently, the preliminary submission of the appellant did not productively prove its eligibility and claim for grant of approval for 12A, as a consequence the Ld. CIT(E) requisitioned additional documents by a notice dt. 27/02/219 and in the event failure, without further opportunity to the appellant, rejected the application in violation of principle of natural justice as commanded by proviso to section 12AA(1)(b)(ii) of the Act, thus action of the Ld. CIT(E) suffered from sufficiency of reasonable opportunity to the appellant to refute the rejection vis-à-vis to comply with the requirements sought, thus for the reason, we without commenting on the merits of the case, deem fit to remand the matter back to the file of Ld. CIT(E) for according reasonable & effective opportunity to refute the rejection vis-à-vis to comply with the requirements sought.”

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