Case Law Details
Society of Educational Assistance and Training Vs CIT (Exemptions) (ITAT Amritsar)
Introduction: The Income Tax Appellate Tribunal (ITAT) Amritsar, in a recent case of Society of Educational Assistance and Training Vs CIT (Exemptions), has ordered reconsideration of the rejection of a charitable trust’s registration application. The order came after it was established that the assessee was not given a fair hearing opportunity before rejecting its application under Section 12AA of the Income Tax Act.
Analysis: The assessee, an educational trust, had applied for registration under sections 12A(1)(ac)(iii) and 80G(5) of the Act. The ld. Commissioner of Income Tax (Exemption) [CIT(E)] rejected both applications citing noncompliance of notice and non-submission of evidence.
However, the assessee argued that it was denied a reasonable opportunity to submit necessary documents. The ITAT found the claim to be valid and observed that the trust, serving without any caste or creed distinctions, was indeed involved in charitable activities.
The case brings to the forefront the importance of a fair hearing in the application process. Despite the CIT(E)’s argument of having provided three opportunities to the assessee, ITAT noted that a reasonable opportunity was denied, necessitating the case’s remittance back to the ld. CIT(E) for de novo adjudication.
Conclusion: The case of Society of Educational Assistance and Training Vs CIT (Exemptions) reiterates the importance of due process in the registration of charitable trusts. It underscores that fair opportunities for hearing and submission of evidence are integral to the process. The ITAT’s decision serves as a reminder for the authorities to ensure justice and adherence to due process, fostering trust and transparency in the system.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
The assessee filed two appeals against the order of the ld. Commissioner of Income Tax (Exemption) Chandigarh,[in brevity the ‘CIT (E)’] order passed u/s 12AB (1) (b) and 80G(5) of the Income Tax Act 1961 [in brevity the ‘Act’], for A.Y. 2022-23.
2. At the outset both the appeals are related to application for registration u/s 12A(1)(ac)(iii) and u/s 80G(5) of the Act of the same assessee.3. Considering both the parties ITA No. 227/Asr/2022 is taken as lead case. The assessee has taken the following grounds:
“1. The ld. CIT(E) erred in rejecting the registration u/s 12AA of the Income Tax Act in an arbitrary manner.
2. The ld. CIT(E) erred in not giving a reasonable opportunity of being heard while rejecting the application made under section 12AA(1)(b)(ii) of the Act.
3. Assessee craves right to add, alter or modify any grounds of appeal before or at the time of hearing of the appeal.”
4. Brief fact of the case is that the assessee applied for registration before the ld. CIT(E) u/s 12A(1)(ac)(iii) and 80G(5) of the Act for registration of assessee-trust. The assessee-trust is educational society and providing the education and training to economically weak students of the society and overall the people of the society. The trust is registered on 05/11/2013 by a registered trust deed. The ld. CIT(E) rejected both the application for noncompliance of the notice and non- filing of the evidence before the authority. The assessee filed an appeal by challenging the orders of the ld. CIT(E) before us for further adjudication.
5. The ld. AR filed a written submission which is kept in the record. The ld. AR placed that the assessee is an educational trust and providing the training and education without considering any caste and creed. The trust deed was duly registered on 05/11/2013& is annexed with the submission of APB page nos. 4 to 11 and deed of rectification dated 10.11.2018 APB page 12 to 14. The ld. AR further argued that the reasonable opportunity was denied, and the revenue had not allow sufficient time to submit the documents before the revenue authorities.
6. The ld. DR vehemently argued and invited our attention in page no. 5 of the order of the ld. CIT(E) which is extracted as below:
“5. In view of the above discussions, the present application of the assessee filed in Form 10AB u/s 12A(1 )(ac)(iii) of the Act is disposed of as being deficient in factual evidences in the absence of the requisite submissions and appearances of the assessee at the scheduled hearings. This is despite the granting of at least three opportunities as above. It is pertinent to mention here that it is mandated by the provisions of Section 12A(1)(ac)(iii) of the Act that where the trust or institution has been provisionally registered u/s 12AB it has to make an application for registration u/s 12AB within six months of commencement of activities. In the absence of any submission from the applicant it is not possible to ascertain the objects and activities carried out by the applicant. Accordingly, the application filed by the applicant for registration u/s 12AB of the Act is hereby rejected, which rejection and consequent lack of registration will apply from this F.Y. 2022-23 onwards and also supersede any registration granted u/s 12AB or 12AA of the Act by any authority at any earlier time.”
7. We heard the rival submission and relied on the documents available in the record. From the evidence filed by the assessee, it is clear that the assessee is a charitable organisation and providing education to the people without considering any caste or creed. The assessee was denied the reasonable opportunity to submit the documents before the revenue authorities. We remit back the matter to the ld. CIT(E) for further adjudication de novo and allow the assessee a reasonable opportunity for hearing for submitting the evidence in set aside proceeding. That the decision taken by us in ITA No. 227/Asr/2022 shall apply mutatis mutandis in the ITA No. 228/Asr/2022 also and follow accordingly.
8. In the result, the appeal of the assessee bearing ITA Nos. 227 & 228/Asr/2022are allowed for statistical purposes.
Order pronounced in the open court on 22.05.2023
