2011 (2) TMI 343 - HC - Income Tax

Registration u/s 12A - Exemption u/s 10(23C)(vi a) - Ex-parte order - Rectification of mistakes - Notice may have been issued on 16th June 2008 for hearing fixed on 24th June 2008 but there is no proof of service or delivery - The petitioner filled that they did not receive the notice - The affidavit had been disbelieved and not relied upon in the order dated 19th August 2008 dismissing the application under Section 154 of the Act - It is difficult to accept that the petitioner was avoiding or deliberately avoided appearance - Decided in favour of the assessee by way of remand

Summary

Issues:
1. Remand for fresh consideration under Section 10(23C)(vi a) of the Income Tax Act, 1961.
2. Dismissal of application under Section 154 claiming non-receipt of notice.
3. Allegations of improper handling of the case by the Director General of Income Tax (Exemption).
4. Setting aside the impugned orders and remanding the matter for fresh decision.

Analysis:

1. The High Court observed that the case warranted a remand for fresh consideration under Section 10(23C)(vi a) of the Income Tax Act, 1961. The petitioner, a charitable trust running a hospital-cum-nursing home, had applied for exemption under the said section. Due to discrepancies in the handling of the application process, the Court deemed it appropriate to remand the matter for a fresh decision.

2. The petitioner had filed an application under Section 154 of the Act, claiming they were not served with a notice for a hearing, leading to the ex-parte rejection of their application. The Court noted that the application was dismissed based on the assertion that the notice was sent via speed post, and the petitioner failed to appear. However, the petitioner disputed receiving the notice, emphasizing the need for a fair opportunity to be heard.

3. The Court highlighted the improper handling of the case by the Director General of Income Tax (Exemption). Despite the petitioner's denial of receiving the notice, the authorities did not verify the delivery status with the postal authorities. The Court criticized the hasty and adverse nature of the ex-parte order, emphasizing the importance of providing a full and fair opportunity to the petitioner.

4. Consequently, the Court set aside the impugned orders dated 27th June, 2008, and 19th August, 2008. The matter was remanded for fresh decision by the Director General of Income Tax (Exemption), with directions for an expedited resolution. The Court directed the petitioner to appear before the authority for further proceedings, ensuring a fair consideration without influence from prior orders.

In conclusion, the High Court partially allowed the writ petition, setting aside the previous orders and emphasizing the need for a fair and thorough reconsideration of the petitioner's application for exemption under the Income Tax Act.