Case Law Details
Sohum Charitable Trust Vs CIT (ITAT Delhi)
Introduction: The case of Sohum Charitable Trust vs. CIT (ITAT Delhi) involves a critical issue related to a charitable trust’s claim for exemption under Section 80G of the Income Tax Act. The trust’s exemption claim was rejected due to their failure to respond to notices issued by the Commissioner of Income Tax (Exemption), Chandigarh [referred to as ‘ld. CIT(E)’]. This article provides a detailed analysis of the case, emphasizing the importance of due process and communication in such matters.
Detailed Analysis:
1. Background: Sohum Charitable Trust is a public charitable trust with objectives focused on relief for the poor, education, medical relief, and promoting yoga, among other welfare activities. The trust applied for permanent registration under Section 80G of the Income Tax Act in the appropriate format (Form 10AB) on May 18, 2022, through the income tax e-filing portal.
2. Communication Issue: The trust’s claim was met with notices from the ld. CIT(E) inquiring about specific details required for the grant of the 80G exemption. However, the trust did not receive these notices, and the primary contention was that the ld. CIT(E) did not fulfill the communication requirements mandated by Section 282 of the Income Tax Act. The trust claimed that they were neither informed through email nor received SMS alerts or WhatsApp messages regarding the notices.
3. Rejection of Application: Despite the trust’s claim that they were unaware of the notices, the ld. CIT(E) proceeded to reject the application for the 80G exemption. The rejection order was dated November 17, 2022. The trust maintained that they never had a reasonable opportunity to respond to the notices or provide the requested information.
4. Grounds of Appeal: In their appeal, the trust pointed out the lack of valid communication channels used by the ld. CIT(E) and emphasized the need for the Commissioner to provide a reasonable opportunity for the assessee to be heard before rejecting the registration.
5. ITAT’s Decision: The Income Tax Appellate Tribunal (ITAT) Delhi considered the trust’s argument regarding the inadequacy of communication and found that the notices were only uploaded to the income tax e-filing portal and not transmitted through other means as required by Section 282 of the Act. Recognizing that the trust had a valid reason for not responding to the notices, the ITAT decided to condone the delay in filing the appeal and admitted the case for adjudication.
6. Direction for Re-Adjudication: The ITAT held that, under similar circumstances, the Chandigarh Tribunal had restored an issue to the file of the ld. CIT(E) with directions to serve notices through both physical and electronic modes to ensure the assessee’s awareness and participation. In line with this approach, the ITAT Delhi ordered the case to be remanded to the ld. CIT(E) for a fresh adjudication following proper procedures.
Conclusion: The case of Sohum Charitable Trust vs. CIT (ITAT Delhi) underscores the importance of adhering to due process and communication protocols in tax matters. When assessing applications for exemptions and benefits, the tax authorities must provide sufficient opportunities for the assessee to respond and furnish necessary information. In this instance, the failure to adhere to these essential communication standards led to the rejection of the trust’s application, prompting the ITAT Delhi to restore the case for re-adjudication, ensuring fairness and adherence to legal requirements. This case serves as a reminder of the significance of proper communication and due process in tax-related matters.
FULL TEXT OF THE ORDER OF ITAT DELHI
1. The appeal in ITA No.1487/Del/2023 for AY 2022-23, arises out of the order of the Commissioner of Income Tax (Exemption), Chandigarh [hereinafter referred to as ‘ld. CIT(E)’, in short] in Appeal No. ITBA/EXEM/F/EXM45/2022-23/1047462961(1) dated 17.11.2022.
2. At the outset, there is a delay in filing the appeal by the assessee before us by 175 days. The ld AR pleaded that the order passed by the ld CIT(E) have been uploaded only in the e-filing portal and not served in the email of the assessee. Accordingly, the same does not constitute valid service of notice or communication in terms of section 282 of the Act. The assessee on coming to know that the order has been uploaded in the e-filing portal rejecting the claim of the assessee, had come forward to file this appeal with a delay condonation petition. We find that the assessee is having sufficient cause for not filing appeal before us in time and hence, the delay is hereby condoned and appeal of the assessee is admitted for adjudication.
3. The assessee has raised the following grounds of appeal:-
“1. That the appellant is a public charitable trust, having head Office at 2431, Sector 9 Faridabad 121006, Haryana. The objects for which The Trust is established are to carry out relief for the poor, Education, Medical Relief, Yoga as general welfare activities as well as advancement of objects of general public utility.
2. That the appellant had applied for the permanent registration of the Trust under sec 80G in Application Form 10AB dated 18/05/2022 along with all necessary documents on the income tax e-filing portal,
3. In response thereof, on 06/09/2022 the Honorable CIT (EXEMPTION). Chandigarh had issued a notice seeking additional details but the appellant did not get any communication from department about this notice neither on email nor through physical mode. Also, he never get intimation about such notice on mobile number either. As, he was not aware about the notice issued she didn’t file the reply
4. That the Honorable CIT (EXEMPTION) further issued notices to the appellant but she never get the same from any mode of communication. The officer just uploaded it on the portal which has not been checked by the appellant. So the appellant didn’t file any submission in response to the notice as he was not aware of it.
5. That the Honorable CIT (EXEMPTION) had issued the order of rejection of application of the registration under Form no. 10AD dated 17-11-22 rejecting the application without providing a valid and reasonable opportunity to the applicant of being heard. As the rejection order are also not communicated to the applicant on the registered e-mail address of the assessee, or mobile or physical address and only posted on e-proceeding section of the eportal. So the appellant has never got the valid opportunity of being heard and providing the information sought.
6. Further, as per the provisions of Section 80G/12AA the Honorable CIT (EXEMPTION) before granting registration/refusing registration, has to satisfy himself about the objects of the trusts / institution and also has to satisfy that the activities of the trust or institution are genuine. Further, if CIT is not satisfied with the genuineness of the activities or objects of the trust, then before refusing to register under this section, he has to give reasonable opportunity to the assessee of being heard, which the Commissioner has not provided. For one of the recent event with Singer machine on, Assessee required 80 G certificate before assuring 80G, then it learnt that rejection has been passed.”
4. We have heard the rival submissions and perused the materials available on record. The assessee is a public charitable trust created with the charitable objects of giving relief to the poor, providing education, providing medical relief, preaching yoga as general welfare activities. The assessee has applied for exemption of the trust u/s 80G of the Act in Form No. 10AB on 18.05.2022 through e filing portal. The ld CIT(E), Chandigarh had issued notice seeking further details from the assessee for grant of exemption u/s 80G of the Act. The assessee did not check the income tax e-filing portal and accordingly could not respond to the notice issued by the ld CIT(E). The ld AR of the assessee pleaded that no notice was ever sent to the assessee in email which is mandate of section 282 of the Act. No intimation in the form of SMS alert or whatsapp message was sent to the registered mobile of the assessee. The ld CIT(E) pointed out that since no response was made by the assessee by furnishing requisite details that were called for, he has no other option but to proceed to reject the claim of exemption u/s 80G of the Act by passing an order u/s 10AD of the Act dated 17.11.2022. Aggrieved, the assessee is in appeal before us.
5. We find that main grievance of the assessee is that the notice calling for certain details issued by the ld CIT(E) were uploaded only in the income tax e filing portal and the same were not sent to the assessee by email which is mandate of section 282 of the Act. Accordingly, the assessee could not respond to the various notices. Considering this fact, we deed it fit that assessee has sufficient cause in not responding to the notices issued by the ld CIT(E) and accordingly, we feel that assessee should be given one more effective opportunity to furnish the requisite details that were called for by the ld CIT(E). We find that under identical circumstances, the coordinate bench of Chandigarh Tribunal in the case of Sant Kabir Mahasbha Vs. CIT(E) in ITA No. 84/Chd/2023 dated 23.08.2023 has restored the issue to the file of ld CIT(E) with a direction to serve notice of hearing through physical mode as well as through electronic mode on the assessee. Accordingly, the case is restored to the file of the ld CIT(E) for de novo adjudication in accordance with the law. Respectfully following the same, the grounds raised by the assessee are allowed for statistical purposes.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 10/10/2023.
