2023 (3) TMI 720 - AT - Income Tax

Appellant Society Appeals Granted for Registration Issue | Fair Hearing Ordered

The Tribunal allowed the appeals of the appellant Society against the orders of the ld. Commissioner of Income Tax (Exemptions), directing the ... Denial of reasonable opportunity / violation of principles of natural justice - technical glitch in electronic submission as ground for setting aside ex parte order - registration under section 12AB/12A and registration under section 80G(5)(ii) - de novo consideration and remand with direction to afford hearingDenial of reasonable opportunity / violation of principles of natural justice - technical glitch in electronic submission as ground for setting aside ex parte order - Whether the ex parte rejection of the applications for registration was vitiated by denial of reasonable opportunity due to alleged non-receipt of notices and technical glitches in electronic filing - HELD THAT: - The Tribunal found on the material before it that the assessee had attempted to respond and had sought adjournment, and that technical difficulties prevented timely electronic submission. The income-tax authority had proceeded ex parte by rejecting the registration applications without considering the assessee's belated but proximate submission. In these circumstances the assessee was deprived of a reasonable opportunity of hearing and the principles of natural justice were breached. The Tribunal therefore concluded that the impugned ex parte orders could not stand.Impugned ex parte rejections set aside as vitiated by denial of reasonable opportunity; matter remanded for fresh consideration.Registration under section 12AB/12A and registration under section 80G(5)(ii) - de novo consideration and remand with direction to afford hearing - What relief should follow upon finding breach of natural justice in respect of the registration applications under 12AB/12A and 80G - HELD THAT: - On finding that the applications under section 12A(1)(ac)(iii)/12AB(1) and under the second proviso to sub-section (5) of section 80G were not properly considered because the assessee was denied a fair opportunity, the Tribunal directed the Commissioner (Exemptions) to reconsider the applications de novo. The reassessment must be conducted in accordance with law and after affording the assessee a reasonable opportunity of hearing; the Tribunal observed that the applications should be granted or refused on merits in the reconsideration, following applicable legal standards.Directed de novo consideration of the registration applications by the CIT(E) with a reasonable opportunity of hearing and in accordance with law; appeals allowed for statistical purposes.Final Conclusion: The Tribunal set aside the ex parte cancellations of the registration applications as resulting from denial of reasonable opportunity (including due to alleged technical glitches), and directed the Commissioner (Exemptions) to reconsider the applications under section 12A/12AB and section 80G(5)(ii) de novo after affording the assessee a reasonable hearing; appeals allowed for statistical purposes. Issues involved:The judgment involves appeals against orders of the ld. Commissioner of Income Tax (Exemptions) related to rejection of applications for registration under sections 12A(1)(ac)(iii) and 80G of the Income Tax Act 1961.Issue 1: Registration under section 12AB(1)(b) of the ActThe appellant Society challenged the rejection of their application for registration under section 12AB(1)(b) by the CIT(E) citing non-compliance issues. They argued that there was a lack of adverse findings regarding the aims, objects, and genuineness of their activities. The appellant contended that they should be granted registration under section 12AB(1)(b).Issue 2: Registration under Clause (ii) of second proviso to sub-section (5) of section 80GSimilarly, the appellant Society contested the rejection of their application for registration under Clause (ii) of the second proviso to sub-section (5) of section 80G, asserting non-compliance on the part of the assessee. They highlighted issues with notices not being served, requests for adjournment not being granted, and technical glitches preventing timely submission of documents.Judgment Details:The appeals were filed against the orders of the ld. CIT(E) regarding the cancellation of registration under section 12A(1)(ac)(iii) and application under section 12AB(1). The appellant, a welfare society, had applied for registration under section 12A(1)(ac)(iii) and for registration under section 80G. The ld. CIT(E) rejected both applications ex parte as the assessee did not appear for the hearing.During the appeal, the appellant's counsel argued that notices were not served, and technical issues prevented timely submission of documents. The counsel emphasized that the appellant was not given a reasonable opportunity to present their case. The documents supporting the appellant's claims were submitted after the hearing date due to technical glitches.After considering the submissions, the Tribunal found that the appellant was not afforded a fair opportunity to present their case. It directed the ld. CIT(E) to reconsider the applications for registration under sections 12A(1)(ac)(iii) and 12AB(1) and grant registration as per law, ensuring the appellant receives a reasonable opportunity for a hearing.The Tribunal noted that similar facts applied to other cases and ordered accordingly. Ultimately, the appeals of the assessees were allowed for statistical purposes, with the order pronounced in open court on 15.03.2023.