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of <h1>Registration rejection under section 12A(1)(ac)(iii) and 80G set aside; remanded for fresh consideration after factual errors</h1> <h3>Arya Samaj Temple Society Sector-11, Dwarka Versus CIT (Exemption), Delhi</h3> ITAT DELHI - AT set aside the CIT(E)'s order rejecting registration under section 12A(1)(ac)(iii) and approval under section 80G, finding the Ld. CIT(E) ... Rejection of registration u/s 12A(1)(ac)(iii) and approval u/s 80G - trust/society was created on 12.05.2015 and it was not registered under Old Regime of Income Tax Act - eligibility to apply for provisional certificate - HELD THAT:-The purpose of granting registration under section 12A of the Act and granting approval under section 80G of the Act is to provide/enhance the socio-economic welfare to achieve the directive principles of the state policy. We are of the considered opinion that the objectives for which the appellant/assessee existed have not been properly appreciated by the Ld. CIT(E) and the reasoning for rejection of registration under section 12A(1)(ac)(iii) of the Act is based on the incorrect & incomplete facts. Thus, we are setting aside the impugned order and restoring the matter back to the file of the Ld. CIT(E) for deciding the issue of registration under section 12A(1)(ac)(iii) of the Act afresh - Assessee appeal is allowed for statistical purposes. ISSUES PRESENTED AND CONSIDERED 1. Whether rejection of an application for registration under section 12A(1)(ac)(iii) on the basis that the trust/society was not registered under the 'Old Regime' and had obtained registration by misrepresentation of facts was supported by correct and complete findings of fact. 2. Whether a finding that registration was obtained by 'misrepresentation of facts' - and an attendant statement that cancellation proceedings will be initiated - could stand where the assessing authority's conclusion rests on incorrect or incomplete factual premises. 3. Whether the matter should be remitted to the Commissioner of Income Tax (Exemption) for fresh decision in light of complete and correct facts and after affording a reasonable opportunity of hearing, and what interim or consequential treatment should be given to earlier registrations/approvals (notably existing registration under section 12AA and approval under section 80G) pending fresh consideration. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of rejection of registration under section 12A(1)(ac)(iii) based on finding of non-registration under the Old Regime and 'misrepresentation of facts.' Legal framework: Registration under section 12A (and its sub-clauses) is the statutory mechanism to recognise entities for tax-exempt status; section 12AA (and prior regime provisions) govern registration; section 80G governs donor deduction approvals. The purpose of these provisions is to further socio-economic welfare objectives and the directive principles of state policy. Precedent Treatment: The judgment does not cite or apply any prior judicial precedent; the Tribunal's analysis proceeds on statutory purpose and fact-based review rather than authority-driven distinction or overruling. Interpretation and reasoning: The Tribunal examined the record and found that the Commissioner's rejection rested on an asserted factual finding - that the trust/society 'was not registered under Old Regime' and therefore had applied under an incorrect sub-clause and 'obtained the order for registration by misrepresentation of facts.' The Tribunal held that these factual conclusions were incorrect and incomplete on the material before the CIT(E). Given the remedial and welfare purpose of sections 12A/12AA and 80G, the Tribunal found that the objectives for which the entity existed were not properly appreciated by the CIT(E) and that the rejection was premised on mistaken factual assumptions. Ratio vs. Obiter: The finding that the rejection is unsustainable for want of correct factual foundation is ratio decidendi as it directly determines the legality of the impugned order. Conclusion: The rejection of the application under section 12A(1)(ac)(iii) on the stated ground of non-registration under the Old Regime and misrepresentation is set aside as being based on incorrect and incomplete facts. Issue 2 - Legitimacy of the 'misrepresentation' finding and the statement that cancellation proceedings will be initiated. Legal framework: Administrative action to cancel registration (or to treat earlier registration as obtained by misrepresentation) requires a proper factual and legal basis, and natural justice - including an opportunity to be heard - before adverse consequences are imposed. Precedent Treatment: None applied in the text; Tribunal relies on principles of correct fact-finding and fairness in administrative exercise of power. Interpretation and reasoning: The Tribunal observed that the CIT(E)'s declaration that registration had been obtained by misrepresentation and the consequential statement about initiating cancellation proceedings flowed directly from the incorrect factual premise identified above. Because the underlying fact finding was flawed, the Tribunal concluded the misrepresentation finding could not be sustained without re-examination of the complete facts and without affording the assessee a reasonable opportunity of hearing. Ratio vs. Obiter: The requirement that adverse findings of misrepresentation be founded on correct facts and fair procedure is part of the operative reasoning (ratio) supporting the direction for fresh consideration; any ancillary remarks about cancellation procedure are obiter to the extent they presage steps taken without adequate fact-finding. Conclusion: The finding of misrepresentation and the stated intention to initiate cancellation proceedings cannot be sustained on the record and must be reconsidered after correct/inclusive fact-finding and fair hearing. Issue 3 - Whether the matter should be remitted for fresh decision and the scope of remit (opportunity to be heard; treatment of earlier orders/approvals). Legal framework: Where an administrative decision is based on incorrect or incomplete facts, the competent tribunal may set aside the decision and remit the matter for fresh adjudication in accordance with law and fair procedure. The statutory purpose of sections 12A/12AA and 80G informs the approach to remedial decisions. Precedent Treatment: No specific authorities were relied upon; the Tribunal applies administrative law principles and purposive interpretation of tax-exemption provisions. Interpretation and reasoning: Balancing the remedial purpose of the exemption/approval regime with the need for accurate fact-finding and fair procedure, the Tribunal found it appropriate to set aside the impugned order and restore the matter to the file of the CIT(E) for a fresh decision on registration under section 12A(1)(ac)(iii). The Tribunal expressly required that the CIT(E) decide the issue afresh in light of complete and correct facts and after affording a reasonable opportunity of being heard to the assessee. The Tribunal's direction imports two concrete requirements for the remand: (a) reconsideration on the full record, and (b) observance of audi alteram partem. Cross-reference: This remit is directly linked to Issues 1 and 2 - because the rejection and misrepresentation finding were factually flawed, a fresh adjudication that meets procedural fairness is necessary. Ratio vs. Obiter: The order to remit for fresh decision with directions on procedure is ratio decidendi of the Tribunal's disposition. Conclusion: The impugned order is set aside and the matter remitted to the CIT(E) for fresh decision on registration under section 12A(1)(ac)(iii) after full consideration of correct facts and after affording a reasonable opportunity of hearing. The appeal is allowed (for statistical purposes) and restored to the file of the CIT(E). Ancillary / Procedural Outcome The Tribunal emphasised the purposive nature of the exemption and approval regime (section 12A/12AA and section 80G) - aimed at socio-economic welfare - and accordingly directed that the CIT(E) reassess the registration question in that light. No specific direction was issued in the judgment as to interim validity or immediate revival of any earlier approvals; rather, the Tribunal's remedy is remittal for a fresh, fair adjudication. The appeal is allowed for statistical purposes and the matter stands restored to the CIT(E) file for fresh decision.
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