2022 (11) TMI 247 - HC - Income Tax

High Court overturns Tribunal decision, orders reevaluation of application under Income Tax Act, stresses fair hearing

The Commissioner of Income Tax, Chennai. Versus The Madras Medical Mission

The High Court of Madras set aside the Tribunal's order and directed the Appellant to reevaluate the Respondent's application under Section 80G after ... Deduction u/s 80G - reason for rejecting the application of the Respondent is that the Respondent was collecting capitation fees for allotment of medical seat etc., and was not properly accounting it and that later after a search proceedings was conducted, offered to pay tax - HELD THAT:- Though the present Appeal was admitted to answer the aforesaid substantial questions of law, we are of the view that the fundamental issue which goes to the root of the issue as to whether the Respondent was eligible for deduction u/s 80G will depend on the continuance of registration granted to the respondent Assessee u/s 12(A) (a) which is now subject matter of a show cause proceeding and is pending before the Appellant herein in terms of order [2019 (7) TMI 1958 - MADRAS HIGH COURT] We are therefore inclined to dispose of this Appeal without answering the aforesaid substantial questions of law raised as a decision has to be taken on facts and law and by the Appellant whether the respondent assessee is entitled to regularisation under Section 12(A) (a) - We are therefore inclined to quash the impugned order passed by the Tribunal and remit the case to the Appellant for passing a fresh order on the application filed by the Respondent u/s 80 G after further order is passed in the show cause notice dated 21.07.2008 seeking to cancel registration granted to the petitioner under Section 12(A) (a). The order passed by the Tribunal dated 12.12.2008 is set aside and the case is remitted back to the Appellant to pass a fresh orders on the application filed by the Respondent assessee dated 11.03.2008, after affording an opportunity of hearing to the Respondent assessee preferably, within a period of three months from the date of receipt of a copy of this order or under Section 12(A) (a) which ever is later. Issues:1. Jurisdiction of the Tribunal in entertaining the appeal against the rejection under Section 80G of the Income Tax Act.2. Entitlement of the assessee society for approval under Section 80G from a specific date.3. Continuance of registration granted to the assessee under Section 12(A) (a) of the Income Tax Act.Analysis:1. The Appellant challenged the Tribunal's order allowing the Respondent's appeal against the rejection under Section 80G of the Income Tax Act. The Appellant argued that the Tribunal lacked jurisdiction as the appeal was not against an order covered under the relevant section. The Appellant contended that the Tribunal erred in granting relief to the Respondent. The Respondent, on the other hand, claimed compliance with the Tribunal's order, rendering the appeal infructuous.2. The substantial questions of law admitted for consideration included the Tribunal's decision on the entitlement of the assessee society for approval under Section 80G from a specific date. The Appellant emphasized the importance of the registration granted to the assessee under Section 12(A) (a) of the Income Tax Act, which was subject to a show cause proceeding. The Court decided not to answer the substantial questions of law, directing the Appellant to determine the eligibility of the respondent for regularisation under Section 12(A) (a) before addressing the application under Section 80G.3. The Court quashed the Tribunal's order and remitted the case to the Appellant for fresh consideration. The Appellant was instructed to pass a new order on the Respondent's application under Section 80G after resolving the show cause notice seeking to cancel the registration granted to the petitioner under Section 12(A) (a) of the Income Tax Act. The Court specified a timeframe of three months for the Appellant to complete this process, emphasizing the need for a fair hearing for the Respondent.In conclusion, the High Court of Madras set aside the Tribunal's order, emphasizing the importance of resolving the registration issue under Section 12(A) (a) before addressing the application under Section 80G. The Court directed the Appellant to reevaluate the Respondent's application under Section 80G after addressing the pending show cause notice, ensuring a fair hearing for the Respondent within a specified timeframe.