Tribunal Overturns Order, Grants Assessee Fresh Hearing for Section 80G(5) Approval, Emphasizes Fair Process. The tribunal allowed the appeal in favor of the Assessee, setting aside the impugned order denying approval under section 80G(5) of the Income Tax Act, ...
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The tribunal allowed the appeal in favor of the Assessee, setting aside the impugned order denying approval under section 80G(5) of the Income Tax Act, 1961. It directed a fresh adjudication by the competent authority, emphasizing the need for a speaking order with clear reasons. The Assessee was granted a reasonable opportunity to be heard, with a personal hearing request accommodated under the faceless scheme protocol. The tribunal highlighted the importance of procedural fairness and adherence to legal provisions, ensuring applications are considered on merit to prevent undue hardship.
Issues: Appeal against denial of approval under section 80G(5) of the Income Tax Act, 1961.
Analysis: The judgment pertains to an appeal by the Assessee challenging the denial of approval under section 80G(5) of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax. The Assessee had already obtained approval under section 12AA of the Act, following a two-step process introduced by the Taxation and Other Laws Act. The Assessee, a trust set up in memory of a deceased son, sought provisional approval under section 80G(5)(iv), which was granted for a two-year period. The denial of approval under section 80G(5) can only be based on non-satisfaction of conditions specified in the Act and the Income Tax Rules. The Counsel for the Assessee argued that the denial lacked merit and the CIT-DR failed to counter the contentions effectively.
The impugned order rejecting the application for approval under section 12AB lacked clarity and did not reference section 80G or the relevant rules. The order did not acknowledge the provisional approval granted earlier. The tribunal found the order to be careless and unfortunate, deserving cost imposition. Consequently, the tribunal set aside the impugned order and directed a fresh adjudication on merits by the competent authority, ensuring a speaking order with clear reasons provided. The Assessee was granted a reasonable opportunity to be heard, with a request for a personal hearing made by the Counsel, subject to the faceless scheme protocol.
The tribunal emphasized the importance of due consideration on merits for the Assessee's application, highlighting the need to prevent undue hardship caused by non-consideration. The appeal was allowed in favor of the Assessee, with the order pronounced under the relevant rules. The judgment underscores the significance of procedural fairness and adherence to legal provisions in matters of tax approvals and denials, ensuring that applications are duly considered based on merit and in accordance with the law.
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