Case Law Details
Manav Seva Mandir Vs CIT (Exemption) (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT) Ahmedabad has recently ruled in the case of Manav Seva Mandir Vs CIT (Exemption), remanding the order issued by the Commissioner of Income Tax (Exemption) (CIT(E)). The CIT(E) had previously rejected the application for registration under Section 80G(5) of the Income Tax Act, 1961, on September 20, 2023.
Background of the Case
The appeal was lodged by Manav Seva Mandir against the CIT(E)’s rejection of its application for tax-exempt status under Section 80G(5). The assessee raised several grounds, primarily focusing on procedural deficiencies in the rejection order. The organization claimed that the CIT(E) failed to consider all relevant facts before making a decision and noted that it had not received any communication or notice regarding the hearing.
The petitioners argued for a fair chance to present their case and sought the opportunity to modify their grounds of appeal. They expressed concern over the rejection of their registration application and requested the tribunal to instruct the CIT(E) to reconsider their case.
Delay in Filing the Appeal
In addition to the grounds of appeal, the assessee filed a request for condonation of a delay of 129 days in submitting the appeal. The delay stemmed from the organization not receiving notifications concerning their application status, which was crucial for compliance with the given notices dated August 4, 2023, and August 31, 2023.
During the hearing, it was confirmed by the Departmental Representative (DR) that the CIT(E) office had not delivered notices to the assessee due to technical issues with their email system. The DR provided an email confirmation from the CIT(E)’s office indicating that the organization’s email ID could not be retrieved, which hampered proper notice delivery. However, the DR also pointed out that the organization could have checked the e-portal for notifications.
Tribunal’s Observations
The tribunal closely examined the grounds of appeal and the evidence presented, including an affidavit from one of the trustees of Manav Seva Mandir. This affidavit clarified that the delay in filing was not intentional but rather a result of inadequate communication from the tax department.
The ITAT found the email confirmation from the CIT(E) particularly telling, highlighting that the failure to serve the notices constituted a procedural lapse. Citing the precedent set in Collector, Land Acquisition, Anantnag and Anr. v. Mst. Katiji and Ors. (AIR 1987 SC 1353), the tribunal noted that the term “sufficient cause” should be liberally interpreted to facilitate justice.
Decision of the ITAT
Taking into account the facts of the case and the technical issues acknowledged by the CIT(E), the ITAT ruled that the delay in filing the appeal should be condoned. Furthermore, the tribunal pointed out that the organization had not been given an adequate opportunity to present its case before the CIT(E) made the decision to reject the registration application.
The principle of natural justice dictates that all parties must be granted a fair opportunity to be heard before any adverse decision is made. The tribunal emphasized that proper procedures must be followed, ensuring transparency and fairness in tax assessments.
Consequently, the ITAT set aside the CIT(E)’s order dated September 20, 2023, and directed the CIT(E) to reconsider the matter afresh. The tribunal instructed the CIT(E) to provide Manav Seva Mandir with a reasonable opportunity to present their case and to determine the registration application on its merits.
Conclusion
The ruling by the ITAT Ahmedabad in the case of Manav Seva Mandir Vs CIT (Exemption) underscores the importance of procedural fairness in tax administration. It illustrates that technical errors and lapses in communication can significantly affect an organization’s ability to comply with regulatory requirements.
The tribunal’s decision to remand the case back to the CIT(E) serves as a reminder that tax authorities must ensure that applicants receive adequate notice and opportunities to be heard. This ruling is expected to have implications for similar cases where procedural lapses may affect the outcome of tax exemption applications under Section 80G.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
This appeal has been preferred by the assessee against the order dated 20/09/2023 passed by the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”], rejecting the application for registration under section 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
2. The assessee has raised the following grounds of appeal:
1. It is the duly of office to consider all the facts while passing the order for 80G(5), which is not done in our case. Due to that reason, we have applied for appeal before your honor.
2. The Ld. CIT (exemption) has passed order for rejection u/s. 80G(5).
3. The assessee hasn’t received any notice or communication for hearing via email, message and by post from the department.
4. We may be allowed to add or alter or modify the ground of appeal.
PRAYER
1. To instruct the Ld. CIT (exemption) to give opportunity for being heard and allow for registration process u/s 80G(5) .
2. We may be allowed to add or alter or modify the ground of appeal.
3. To give such other relief as may be necessary.
3. The assessee has also filed an application for the condonation of delay of 129 days in filing this appeal. The explanation provided is that the assessee was unaware of the notices uploaded on the e-portal by the CIT(E) due to not receiving any communication by email, message, or post. Consequently, the assessee could not comply with the notices dated 04/08/2023 and 31/08/2023, resulting in the rejection of the application under section 80G(5).
4. During the course of the hearing, the Departmental Representative (DR) confirmed that the office of the CIT(E) did not serve the email notice to the assessee due to a technical error. The DR submitted an email confirmation from the CIT(E)’s office, stating that the email ID of the assessee could not be fetched due to a technical issue when the order was sent. Consequently, the rejection order could not be served on the assessee’s email. However, the DR also pointed out that the assessee could have logged into the e-portal to access any notices or orders and would have received alerts on the registered mobile number regarding such communications.
5. We have carefully considered the grounds of appeal, the facts of the case, the affidavit filed by the trustee, the application for condonation of delay, and the submission made by the DR. The affidavit affirms that the delay was not due to any ill motive but due to a lack of communication from the department.
6. In light of the email confirmation from the CIT(E)’s office, it is evident that the assessee was not properly served with the notice or order via email, which constitutes a significant lapse in the process. We find support from the decision of the Hon’ble Supreme Court in the case of Collector, Land Acquisition, Anantnag and Anr. v. Mst. Katiji and Ors. [AIR 1987 SC 1353], where it was held that the expression “sufficient cause” under Section 5 of the Limitation Act, 1963, should be interpreted liberally to serve the ends of justice.
7. Considering the facts and circumstances of the case, including the technical error acknowledged by the CIT(E)’s office, we are of the view that the delay in filing the appeal should be condoned.
8. On the merits of the case, we observe that the assessee has not been provided with an adequate opportunity to be heard before the rejection of the application under section 80G(5). Natural justice demands that the assessee should have been given a fair opportunity to present their case.
9. In light of the above, we set aside the order of the CIT(E) dated 20/09/2023 and restore the matter back to the file of CIT(E) with a direction to decide the issue afresh on merits after providing a reasonable opportunity of being heard to the assessee.
10. In the result, the delay is condoned, the order of the CIT(E) is set aside, and the matter is remanded back to the CIT(E) for a fresh decision on merits.
11. The appeal is allowed for statistical purposes.
This Order pronounced in Open Court on 20/08/2024
Author Bio
