12A and 80G Renewal Rejection Quashed; Lack of Examination Violates Natural Justice

12A and 80G Renewal Rejection Quashed; Lack of Examination Violates Natural Justice

Issue: Whether the Commissioner (Exemptions) is justified in rejecting an assessee-trust’s application for renewal of registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii) on the ground of non-compliance of notices, when the assessee had submitted all required information and documents within the due date.

Facts:

• The assessee, a public charitable trust, filed applications for renewal of registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii).
• The Commissioner (Exemptions) issued a notice requiring the assessee to furnish certain details.
• The assessee submitted all required information and documents within the due date mentioned in the Commissioner’s notice.
• The Commissioner (Exemptions) rejected the assessee’s applications on the ground of non-compliance of notices.

Decision:

• The court held that since the assessee filed its response within the due date mentioned in the Commissioner’s notice, the rejection on the ground of non-compliance was incorrect.
• The court held that since the Commissioner (Exemptions) did not examine the documents submitted and rejected the application on incorrect factual grounds, such an approach violates natural justice.
• The court directed that both matters be restored back with the direction that the Commissioner (Exemptions) shall duly consider the assessee’s submission and decide the matter afresh.

Key Takeaways:

• Natural Justice: The principles of natural justice require that administrative authorities provide a fair hearing and consider all relevant evidence before making a decision.
• Examination of Documents: The Commissioner (Exemptions) has a duty to examine the documents submitted by the assessee before rejecting an application.
• Incorrect Factual Grounds: Rejection of an application on incorrect factual grounds is arbitrary and invalid.
• Opportunity to Be Heard: Assessees must be given a fair opportunity to present their case and have their submissions considered.
• Remand for Fresh Consideration: When an order is passed in violation of natural justice, the matter should be remanded for fresh consideration.
• The court is reinforcing the need for tax authorities to properly review evidence, and to follow the principles of natural justice.