Fair Hearing Denied: Educational Institution's Exemption Claim Remanded for De Novo Adjudication

Fair Hearing Denied: Educational Institution’s Exemption Claim Remanded for De Novo Adjudication

Issue:

Whether the Assessing Officer was justified in denying the exemption under Section 10(23C)(iiiad) of the Income-tax Act, 1961, to an educational institution without providing a fair opportunity of hearing, and whether the matter should be remanded for a de novo adjudication by the Commissioner (Appeals).

Facts:

The assessee, an educational institution, filed its return of income for the assessment year 2019-20, claiming exemption under Section 10(23C)(iiiad) of the Income-tax Act, 1961. However, during the processing of the return under Section 143(1)(a), the Assessing Officer denied the benefit of this exemption. It was observed that the Commissioner (Appeals) had granted a very short time to the assessee to furnish necessary details, which prima facie suggested that a fair opportunity of hearing was not accorded to the assessee.

Decision:

Yes, the issue was restored to the file of the Commissioner (Appeals) for de novo adjudication. The court found that a fair opportunity of hearing was not given to the assessee, as evidenced by the very short time provided by the Commissioner (Appeals) to furnish details.

Key Takeaways:

Principle of Natural Justice: This case underscores the fundamental principle of natural justice, specifically the right to a fair hearing. Tax authorities must provide adequate opportunity to assessees to present their case and furnish necessary details before making a decision.
Denial of Exemption under Section 10(23C)(iiiad): The denial of exemption under Section 10(23C)(iiiad) without proper consideration of the assessee’s submissions or insufficient time for response can lead to the reversal of the decision.
Remand for De Novo Adjudication: When a fair opportunity of hearing is denied, higher appellate authorities are likely to remand the matter for a fresh (de novo) adjudication to ensure justice is served. This allows the assessee to properly present their case and for the tax authorities to reconsider the facts with due diligence.

IN THE ITAT PUNE BENCH ‘B’

Sai Shikshan Prasarak Mandal

Income-tax Officer

Dr. Manish Borad, Accountant Member
and Ms. Astha Chandra, Judicial Member

IT Appeal No. 2635 (PUN.) of 2024
[Assessment year 2019-20]

MAY 2, 2025

Bashiruddin Shaikh for the Appellant. Arvind Desai for the Respondent.

ORDER

Dr. Manish Borad, Accountant Member.- The captioned appeal at the instance of assessee pertaining to assessment year 2019-20 is directed against the order dated 11.09.2024 passed by ld. Addl.JCIT(A), Thiruvanantpuram u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’) arising out of the Intimation order dated 05.02.2021 passed u/s.143(1) of the Act.

2. Registry has informed that there is a delay of 33 days in filing the appeal before this Tribunal. Application for condonation along with affidavit and Medical certificate has been filed giving reasons for delay.

3. After hearing both the sides and considering the reasons giving rise to the delay and also placing reliance on the judgment of Hon’ble Supreme Court in the case of Collector, Land Acquisition v. Mst. Katiji (1987) 2 SCC 107 we find that there was ‘reasonable cause’ which prevented the assessee in filing the appeal within the stipulated time. We therefore condone the delay of 33 days and proceed for adjudication of appeal.

4. The issue raised by the assessee in the grounds of appeal is mainly regarding the denial of exemption u/s.10(23C)(iiiad) of the Act. Along with this ground it is stated that ld.CIT(A) has not provided fair opportunity and has dismissed the appeal without passing a speaking order

5. We have heard the rival contentions and perused the record placed before us. We notice that the assessee filed the return of income for A.Y. 2019-20 claiming deduction u/s.10(23C)(iiiad) at Rs.65,30,914/- thereby declaring Nil income. But in the return processed u/s.143(1)(a) of the Act dated 05.02.2021 benefit of exemption u/s.10(23C)(iiiad) was denied against which the assessee preferred appeal before ld.CIT(A) who has dismissed the assessee’s appeal for non-compliance. We notice that ld.CIT(A) gave very short time to the assessee to furnish the details and prima-facie it shows that fair opportunity of hearing was not given to the assessee. We therefore considering the prayer of the assessee and also in the larger interest of justice deem it proper to restore the issue raised on merits to the file of ld.CIT(A) for denovo adjudication. Assessee is directed to provide latest email id and contact detail to the department for receiving the notices from ITBA portal. Assessee is further directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the ld.CIT(A) shall be free to proceed in accordance with law. Findings of ld.CIT(A) is set aside and effective grounds of appeal raised by the assessee are allowed for statistical purposes.

6. In the result, appeal of the assessee is allowed for statistical purposes.