Fair hearing required before rejecting charitable registration and linked approval; both matters were remanded for fresh consideration.
Rejection of charitable registration for alleged lack of genuineness could not stand where the assessee had produced supporting material but was not given a reasonable and adequate opportunity of hearing; the matter was set aside for fresh adjudication after hearing. Because approval under section 80G(5) was dependent on the registration outcome, the refusal of that approval was also set aside and remanded for reconsideration. The governing principle is that adverse action affecting charitable registration or related approval must follow a fair opportunity to explain the case and file material.
Issues: (i) Whether rejection of registration under section 12A of the Income-tax Act, 1961 for want of proof of genuineness of activities was sustainable in the absence of adequate opportunity of hearing. (ii) Whether the refusal of approval under section 80G(5) of the Income-tax Act, 1961 could survive once the registration issue was restored for fresh consideration.
Issue (i): Whether rejection of registration under section 12A of the Income-tax Act, 1961 for want of proof of genuineness of activities was sustainable in the absence of adequate opportunity of hearing.
Analysis: The assessee had produced documents and supporting material to establish the genuineness of its charitable activities. The order under challenge did not reflect that a reasonable and adequate opportunity had been afforded before rejecting the application. In these circumstances, the matter required reconsideration after proper hearing.
Conclusion: The rejection of registration was set aside and the matter was remanded to the CIT(E) for fresh adjudication after granting adequate opportunity of hearing.
Issue (ii): Whether the refusal of approval under section 80G(5) of the Income-tax Act, 1961 could survive once the registration issue was restored for fresh consideration.
Analysis: The approval under section 80G(5) was linked to the outcome of the registration proceedings. Since the registration issue itself was restored for fresh determination, the approval issue also required reconsideration by the same authority.
Conclusion: The refusal of approval under section 80G(5) was also set aside and remanded for fresh consideration.
Final Conclusion: The common order resulted in restoration of both matters to the CIT(E) for fresh decision after hearing the assessee, and the appeals were disposed of as allowed for statistical purposes.
Ratio Decidendi: Where an authority rejects registration or related approval without granting a reasonable and adequate opportunity to explain the case and file supporting material, the proper course is to set aside the order and remand the matter for fresh consideration.
TaxTMI 
AI Drafter ✕
TaxTMI 
