Case Law Details
Seth Bechardas Manchand Jain Shwet Amber Trust Vs CIT (ITAT Pune)
Introduction: The recent appeal by Seth Bechardas Manchand Jain Shwet Amber Trust against the Commissioner of Income Tax-Exemption’s (CIT(E)) order under section 80G(5) of the Income-tax Act, 1961, has garnered attention. The Income Tax Appellate Tribunal (ITAT) Pune examined the rejection, highlighting the lack of effective notice, violation of natural justice, and the subsequent remand.
Detailed Analysis:
1. Background of the Appeal: Seth Bechardas Jain Trust challenged the CIT(E)’s order, asserting their eligibility for 80G registration under the Act. The trust faced issues concerning the genuineness of its activities, leading to rejection by the CIT(E).
2. CIT(E)’s Actions and Lack of Compliance: The trust applied for 80G registration, and upon scrutiny, the CIT(E) issued notices on 19/05/2023 and 10/07/2023, seeking clarification and information to substantiate the trust’s activities. However, the trust failed to comply with the notices.
3. Notice Discrepancy and Absence of Opportunity: The ITAT Pune observed that the notices were sent to email IDs different from the one registered with the jurisdictional assessing officer. This discrepancy resulted in the trust’s non-compliance, indicating an absence of a reasonable opportunity.
4. Violation of Natural Justice: The ITAT Pune emphasized the importance of effective notice and opportunity in registration matters. Lack of proper notice violated the principles of natural justice, rendering the proceedings defective and against the law.
5. ITAT Pune’s Decision – Remand: In line with the principles of natural justice and citing the Hon’ble Rajasthan High Court’s precedent, the ITAT Pune set aside the proceedings and remanded the matter to the CIT(E). The directive is to provide a reasonable opportunity to the trust, serving notices to the correct email ID, and deciding on the 80G recognition afresh in three effective hearings.
Conclusion: The ITAT Pune’s decision in Seth Bechardas Jain Trust’s appeal underscores the significance of adherence to procedural norms, effective notice, and the principles of natural justice in registration proceedings. The remand provides the trust with an opportunity to present credible evidence, ensuring a fair and just evaluation of their eligibility for 80G recognition.
FULL TEXT OF THE ORDER OF ITAT PUNE
By present appeal the assessee trust challenged DIN & order No. ITBA/EXM/F/EXM45/2023-24/1054753345(1) dt. 31/07/2023 of the Commissioner of Income Tax-Exemption, Pune [for short ‘CIT(E)’] passed u/s 80G(5) of the Income-tax Act, 1961 [for short ‘the Act’]
2. We have heard rival contentions of both the parties; and subject to the provisions of rule 18 of ‘ITAT-Rules’, perused material placed on record.
3. We observed that, the appellant trust applied for 80G registration under clause
(iii) of first proviso to sub-section (5) of section 80G of the Act on 16/02/2023. Upon perusal of Form 1 0AB and accompanying documents, the Ld. CIT(E) by issue of notice dt. 19/05/2023 called upon the appellant to substantiate the existence and genuineness of its activities and to furnish certain information / clarification etc., however assessee trust failed to comply therewith. The assessee vide notice dt. 10/07/2023 was again granted one more opportunity to make good the shortcoming, however this notice also went futile. In the event of failure of appellant to place on records requisite material to enable to arrive at positive satisfaction, the Ld. CIT(E) proceeded on the basis of information on records, and concluded the activities of the appellant lacks genuinity and thus rejected its application.
4. Per contra, from page 5 and 10 of paper book filed by the appellant we observed that, both these former notices were sent by the Ld. CIT(E) on email-id’s which are different than the one registered with jurisdictional assessing officer, as evident form page 11 of paper book. Undisputedly, the non-compliance is attributable to lack of effective notice to the appellant, thus absence of reasonable opportunity.
Notice sent on email-id’s which are different than the one registered with jurisdictional assessing officer amounts to lack of effective notice & reasonable opportunity
5. In our view in the matter of registration, a reasonable and effective opportunity to the appellant is necessary to protect against arbitrary rejection by the registering authority. This also ensures that negative observations (if any) are negated by credible evidences by the appellant. Any proceedings culminated without effective notice and opportunity would be violative of principle of natural justice, which de-facto turns the proceedings bad in law and therefore deserving to be set-aside.
6. In view of the aforestated discussion and the ratio laid down by the Hon’ble Rajasthan High Court in ‘Sanatan Dharm Mahaveer Dal Vs CIT’ reported in 252 ITR 46, the impugned proceedings culminated in violation of principles of natural justice are in our considered view deserves to be set-aside as contra-legem. In the event, without offering any comment on merits of the case, we deem it fit to remand the matter back to the file of Ld. CIT(E) with a direction to accord a reasonable opportunity to the appellant by serving notice/s on such registered email-id and to decide the issue of grant of 80G recognition a fresh in accordance with law, preferably in three effective hearings.
7. Resultantly, the appeal is allowed for statistical purpose in above terms.
U/r 34 of ITAT Rules, order pronounced in open court on this Friday 27th day of October, 2023.
