Section 12AA Application cannot be rejected without affording opportunity of being heard to assessee

Sri Sahasra Lingeshwara Mahakali Devasthana Vs CIT (E) (ITAT Bangalore)

Conclusion: As CIT(E) rejected assessee’s application for registration ex-parte under section 12AA without affording reasonable opportunity of being heard to assessee in terms of section 12AA(1)(b)(ii), therefore, the matter was restored back to the file of the CIT (Exemptions) for fresh examination and adjudication.

Held: Assessee filed its application for registration under section 12AA on 7-11-2016. CIT (Exemptions) vide letter dated 28-4-2017 raised  various queries and details/clarifications sought  after 5 months, which assessee was asked to comply with by 15-5-2017. CIT (Exemptions)’s view that assessee filed incomplete details/clarifications on 11-5-2017 and therefore in the absence of details, the application for registration had been dismissed ex-parte. Assessee was afforded one opportunity only and the CIT (Exemptions), after no apparent action for more than 5 months from the date of the assessee’s application for registration under section 12AA, dated 7-11-2016; in less than a month proceeded to call for details, examine them and reject the assessee’s application ex-parte vide order dated 22-5-2017.  It was held the apparent reason for this hurried disposal of assessee’s application by CIT (Exemptions) with undue haste was because as per section 12AA(2) of the act, order for grant or rejection of registration was to be passed before the expiry of 6 months from the end of the month in which the application for registration was received; i.e., in the case on hand the CIT (Exemptions) was bound to pass the order on or before 31-5-2017. The proviso to section 12AA(1) clearly provides that no order under sub clause (ii) of clause (b) of section 12AA(1) shall be passed unless the applicant has been given reasonable opportunity of being heard. In the factual matrix of the case, it was noted assessee had not been provided adequate and reasonable opportunity, as was required under the proviso to section 12AA(1)(b)(ii), and in the interest of substantial justice,  the matter of the assessee trust’s application for registration was restored back to the file of the CIT (Exemptions) for fresh examination and adjudication thereon after affording the assessee reasonable opportunity of being heard.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal by the assessee is directed against the ex-parte order of CIT (Exemptions), Bangalore, passed under section 12AA(1)(b)(ii) of the Income Tax Act, 1961 (in short ‘the act’) dated 22-5-2017, rejecting the assessee’s application for registration.

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