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January 16, 2023

Section 12AA: No registration may be refused without a fair chance to appeal

by CA Shivam Jaiswal in Income Tax

Section 12AA: No registration may be refused without a fair chance to appeal

Fact and issue of the case

The appellant is a registered public trust under the provisions of Bombay Public Trust Act, 1950, has e-filed an application in Form No 10A on 11/01/2019 accompanying therewith a certificate of its BPT registration, financial statements & a copy of return of income filed for AY 2018-19 and note on the activities it engaged into. The Ld. CIT(E) in-order to verify the objects, activities and to ascertain the fulfilment of conditions for granting registration u/s 12AA of the Act, was put the appellant to a solitary notice dt. 27/02/2019 thereby calling upon additional documents, which remained unattended.

Without further notice, the Ld. CIT(E) rejected the application in the event of failure to comply with the first and solitary notice served. Aggrieved thereby, the appellant is in appeal alleging the action of Ld. CIT(E) as erroneous.

When the matter called up for hearing, none represented the assessee, mindful to the conduct of the appellant showing no appearance on many occasions, we in the interest of justice proceeded to adjudicate the matters following rule 24 of the ITAT‑ Rules, which empowers this Tribunal to decide the appeal filed by the appellant ex–parte on merits where the appellant does not appear in person or through an authorised representative and the same is done placing on record a no-objection from the respondent revenue. It is needless to mention further that, the proviso to the said rule carves out an exception by empowering the Tribunal to recall the ex–parte order, if the appellant appears afterwards and satisfies placing evidential material before the Tribunal that, there was sufficient cause for his non– appearance when the appeal was called for hearing and in the event of failure to substantiate the non‑ appearance, the recall exercise dies out.

Observation by the tribunal

1. The tribunal has heard the rival contentions of both the parties; and subject to the provisions of rule 18 of “ITAT Rules”, perused the material placed on record, case laws relied upon by the appellant as well the respondent and duly considered the facts of the case in the light of settled legal position forewarned to either parties.

2. First thing first, insofar as delay of 966 days in instituting present appeal is concerned, having regards to facts & circumstance, we find merits in the submission of the appellant in establishing sufficiency of reason in delayed filing, consequently in the light of decision of Hon’ble Apex Court in “Collector Land Acquisition Vs MST Katiji and Others” reported at 167 ITR 5 (SC) & Hon’ble Bombay High Court in “CIT Vs Velingkar Brothers” reported at 289 ITR 382 (Bom), we condone the delay in the larger interest of justice.

3. In the extant appeal, we vouched that, the Ld. CIT(E) after considering the preliminary submission had called for an additional evidential & complying documents inter-alia, copy of MOA, detailed note on activities of the Trust, NOC of Trust premises, declaration u/s 1 3(1 )(c), 2(1 5) and 11(5) of the Act etc., which the appellant meritoriously failed to make good by the due date, consequent to which, the Ld. CIT(E) without further opportunity rejected to grant 12A registration to the appellant trust.

4. In this context, the Tribunal makes a note that, the principle of “Audi alteram partem” is the basic concept of natural justice, and the expression implies that a person must be given an opportunity to defend himself, and principle is a sine qua non of every civilized society. The Hon’ble Supreme Court in its landmark decision rendered in “Maneka Gandhi Vs UOI” reported in AIR 1978 SC 597 has laid down that, the rule of fair hearing is necessary before passing any order, the opportunity of being heard should be real, reasonable and effective and same should not be for namesake, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard.

5. Apparently, the preliminary submission of the appellant did not productively prove its eligibility and claim for grant of approval for 1 2A, as a consequence the Ld. CIT(E) requisitioned additional documents by a notice dt. 27/02/219 and in the event failure, without further opportunity to the appellant, rejected the application in violation of principle of natural justice as commanded by proviso to section 1 2AA(1 )(b)(ii) of the Act, thus action of the Ld. CIT(E) suffered from sufficiency of reasonable opportunity to the appellant to refute the rejection vis-à-vis to comply with the requirements sought, thus for the reason, we without commenting on the merits of the case, deem fit to remand the matter back to the file of Ld. CIT(E) for according reasonable & effective opportunity to refute the rejection vis-à-vis to comply with the requirements sought.

6. Resultantly, the appeal of the appellant is ALLOWED FOR STATISTICAL PURPOSE in above terms. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Wednesday 30th day of November, 2022.

Conclusion

The tribunal has ruled in favour of the assessee and dismiss the appeal

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