Rejection of Trust Registration without Due Process Unsustainable: ITAT Remands Matter for Fresh Consideration [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi Bench has allowed the appeal challenging the orders of the Commissioner of Income Tax Exemption (CIT(E)) rejecting the application for registration under Section 12A and approval under Section 80G of the Income-tax Act, 1961.

The applicant is a charitable organization which had filed applications for registration under Section 12A and approval under Section 80G. Both these applications were, however, dismissed by the CIT(E) on the ground that the applicant failed to provide the necessary documents in compliance with the notices sent out in the course of the proceedings.

Being aggrieved by the orders, an appeal was preferred before the Tribunal on the ground that the orders were made without giving proper hearing.

At the hearing, there was no representation made by the assessee.However, the Departmental Representative fairly submitted that the matter could be restored to the file of the CIT(E) for fresh adjudication. It was argued that the rejection was primarily based on non-submission of details, and therefore, an opportunity may be granted to the assessee to present its case.

The Bench comprising Mahavir Singh [Vice President] and Brajesh Kumar Singh [Accountant Member] found that the CIT(E) denied the claims without giving adequate opportunity to the assessee to prove its status.

The Tribunal held that the doctrine of natural justice is of paramount importance and hence the case was remanded to give the assessee an opportunity to defend his stance along with providing any other necessary document in support.

Accordingly, the ITAT set aside the impugned orders and remanded the matter back to the file of the CIT(E) for fresh adjudication in accordance with law. It was also mandated that the assessee must fully participate in the proceedings.

Hence, the appeals were allowed for statistical purposes, reinforcing that procedural fairness is a cornerstone in adjudication of tax exemption claims.

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