Tribunal grants appeal for fair hearing, directs reevaluation under Section 10(23C)(vi)

The tribunal allowed the appeal for statistical purposes, directing the Commissioner of Income Tax (Exemptions) to reconsider the application, ensuring a fair hearing for the appellant. The decision was made on the grounds that the denial of exemption under Section 10(23C)(vi) was not justified, the jurisdiction of the CIT(E) was appropriate, and the appellant was not given a reasonable opportunity to be heard. The case was remanded back to the CIT(E) for a fresh decision within three months.

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Issues Involved:
1. Denial of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961.
2. Lack of proper and reasonable opportunity to be heard.
3. Jurisdiction of the Commissioner of Income Tax (Exemptions).

Issue-wise Detailed Analysis:

1. Denial of exemption under Section 10(23C)(vi) of the Income Tax Act, 1961:
The appellant challenged the order dated 29.09.2017 by the Commissioner of Income Tax (Exemptions), Chandigarh, which refused to grant approval for exemption under Section 10(23C)(vi) of the Income Tax Act, 1961. The appellant argued that the order was against the facts of the case and untenable in law. The CIT(E) declined the approval on the grounds that the applicant society had several object clauses not related to education, thus not meeting the criterion of being "solely for education."

2. Lack of proper and reasonable opportunity to be heard:
The appellant contended that no proper and reasonable opportunity of being heard was provided before refusing the exemption. The CIT(E) had issued a letter on 17.08.2017, fixing the hearing for 04.09.2017, and the appellant responded on 08.09.2017. However, the CIT(E) still declined the approval without further engagement, which the appellant claimed was a violation of their right to a fair hearing.

3. Jurisdiction of the Commissioner of Income Tax (Exemptions):
The CIT(E) refused the exemption partly on the grounds that the application was filed in the wrong jurisdiction, as the applicant society was registered in Chennai and had its registration under Section 12AA from the Exemption Office at Chennai. The tribunal examined the jurisdiction issue and referred to the notification specifying the territorial jurisdiction of various CIT(Exemptions). According to the notification, the CIT(E), Chandigarh, had jurisdiction over cases in Punjab, where the appellant's school was located and regularly assessed.

Tribunal's Findings:

1. Solely for Education:
The tribunal referenced a similar case, Sutlej Educational Charitable Trust v. CIT(E), where the ITAT Amritsar directed the grant of approval under Section 10(23C)(vi) for an institution existing solely for education and not for profit. The tribunal found that the appellant's trust, despite having multiple objects, had filed an affidavit stating its sole engagement in educational activities. Thus, the reason for rejection by the CIT(E) was not upheld.

2. Jurisdiction:
The tribunal clarified that the CIT(E), Chandigarh, had the jurisdiction to grant approval under Section 10(23C)(vi) since the appellant's school was located in Punjab and regularly assessed there. The notification and the rules under Form No.56D supported this jurisdiction.

3. Opportunity to be Heard:
The tribunal noted that the CIT(E) did not provide a reasonable opportunity for the appellant to substantiate its case after the initial response. This lack of opportunity was against the principles of natural justice. Therefore, the tribunal found it appropriate to remand the case back to the CIT(E) for a fresh decision within three months, ensuring a reasonable opportunity for the appellant to be heard.

Conclusion:
The appeal was allowed for statistical purposes, with the tribunal directing the CIT(E) to reconsider the application afresh, providing a fair hearing to the appellant. The order was pronounced in the open court on 06.09.2018.

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