2022 (3) TMI 1286 - AT - Income Tax

Grant of approval under section 80G - CIT (Exemptions) had rejected the application for grant of approval u/s 80G(5) observing that the applicant has not provided any material to fulfill the requirements as enumerated in the provisions of Rule 11AA of the Income Tax Rules thus there is no material available on record so as to form any satisfaction regarding the genuineness of the activities carried out - HELD THAT - CIT (E) has passed the order rejecting the application of the assessee for approval under section 80G of the Act in the absence of the assessee - we feel that one more opportunity should be given to the assessee to explain its case before the ld. CIT (Exemptions). We are of the view from the facts of the case that the assessee has not been given proper and sufficient opportunity before disposing of the application for approval by the ld. CIT (Exemptions). We therefore in the interest of justice set aside the order of the ld. CIT (Exemptions) and restore the matter to his file with the direction to consider and decide afresh the application of the assessee for approval under section 80G of the Act preferably within two months from the date of receipt of this order on affording reasonable opportunity of hearing to the assessee. The assessee is also directed to be present on the date of hearing and provide the material / clarification as asked for by the ld. CIT (Exemptions). Appeal of the assessee is treated as allowed for statistical purposes.

Summary

Issues: Delay in filing appeal, rejection of application for approval under section 80G(5)(vi) of the Income Tax Act, 1961

Delay in filing appeal:
The appeal was filed with a delay of 23 days, and the appellant sought condonation of the delay. The Tribunal, after considering the application and affidavit supporting the cause for delay, condoned the delay and admitted the appeal for hearing.

Rejection of application for approval under section 80G(5)(vi) of the Income Tax Act, 1961:
The assessee society had applied for approval under section 80G(5) of the Act, which was rejected by the ld. CIT (Exemptions) citing non-compliance with Rule 11AA of the Income Tax Rules. The CIT (E) observed that the application should have been accompanied by specific documents, including copies of the registration certificate under section 12A of the Act, notes on the institution's activities, and the institution's account details.

The main argument presented by the appellant was that the CIT (E) did not provide a proper opportunity for the assessee to be heard and passed an ex-parte order, violating the principles of natural justice. The appellant contended that most required details were already submitted during the registration process under section 12A and were on record with the Income Tax Department. The appellant requested the Tribunal to direct the CIT (Exemptions) to grant approval under section 80G(5) of the Act.

After hearing both parties, the Tribunal found that the rejection was based on the absence of material to fulfill Rule 11AA requirements. The Tribunal noted that the CIT (E) had passed the rejection order in the absence of the assessee, without providing adequate opportunity for explanation. In the interest of justice, the Tribunal set aside the CIT (E)'s order and directed a fresh consideration of the application, emphasizing affording the assessee a proper hearing and opportunity to present necessary materials within two months.

In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, emphasizing the importance of providing adequate opportunity for the assessee to present their case and fulfill the necessary requirements for approval under section 80G of the Act.