Dadri Madresa Ibadatkhana & Kabrastan ... vs Assessee

IN THE INCOME TAX APPELLATE TRIBUNAL " B " BENCH, AHMEDABAD (BEFORE SHRI SHAILENDRA Kr. YADAV, J.M. & SHRI ANIL CHATURVEDI, A.M.)

I.T. A. No. 2974 /AHD/2014 (Assessment Year: N.A. )

Dadri Madressa Ibadatkhana V/S The CIT-II, Room No. 227, & Kabrastan Trust Dadri, Second Floor, Aaykar Tarsadi, Post: Kosambha Bhavan, Majura Gate, Surat- (RS), Tal: Mangrol, 395002 Dist: Surat -394120

(Appellant) (Respondent)

PAN: AABTD7084J

Appellant by : Shri S.N.Divetia, A.R. Respondent by : Shri Sanjay Agarwal, CIT/DR

(आदे श)/ORDER

Date of hearing : 09-04-2015 Date of Pronouncement : 24-04-2015

PER SHRI ANIL CHATURVEDI,A.M.

1. This appeal filed by the Assessee is against the order of CIT-II, Surat dated 26.09.2014.

2. The relevant facts as culled out from the material on record are as under.

3. Assessee is a charitable trust registered with Charity Commissioner, Surat. It had applied to the ld. CIT for registration u/s. 12A(a) of the Act. The application for registration was rejected by ld. CIT vide order dated 2 ITA No 2974/AHD/2014

26.09.2014 for the reason that on the basis of evidences collected by ld. CIT, he was of the view that the trust was working for only Muslim Community and not for the benefit of public at large and therefore the trust does not satisfy the conditions laid down u/s. 12A of the Act and thus the application for approval of registration was rejected u/s. 12AA(1)(b)(ii) of the Act. Aggrieved by the aforesaid order of ld. CIT, Assessee is now in appeal before us and has raised the following grounds;-

1.1 The order passed u/s.12AA(l)(b)(ii) on 26-09-2014 by CIT-II, Surat refusing registration to the appellant trust is wholly illegal, unlawful and against the principles of natural justice.

1.2 The Ld. CIT has grievously erred in law and or on facts in not allowing, any opportunity, much less reasonable, before declining registration u/s. 12AA(1), though the proviso to this sub-section expressly allows it, apart from the rules of natural justice.

2.1 The Ld.CIT has grievously erred in law and on facts in refusing registration u/s. 12AA(l)(b)(ii), though the activities of the appellant trust were found to be genuine after making due inquiry through AO. 2.2 That in the facts and circumstances of the case as well as in law, the Ld.CIT ought not to have rejected the application for registration u/s. 12AA(1) of the Act on the ground that the activities were carried on for the benefit of one particular community, though it could not be a ground for rejection u/s. 12AA of the Act.

4. Before us, ld. A.R. submitted that the only issue is with respect to denial to registration u/s. 12A of the Act. He submitted that ld. CIT carried out the inquiry with the A.O with regard to the activities of the trust and on the basis of the report of the A.O concluded that the Assessee was working only for 3 ITA No 2974/AHD/2014

one particular community and not for the benefit of public at large and thus the application for registration was rejected. Ld. A.R. further submitted that the Assessee was neither given the copy of the report submitted by the A.O nor any show cause notice was issued on the basis of report and thus there was gross violation of principle of natural justice. He therefore submitted that Assessee be granted an opportunity to present its case before ld. CIT and therefore the matter may be set aside to the file of ld. CIT. Ld. D.R. on the other hand supported the order of ld. CIT.

5. We have heard the rival submissions and perused the material on record. We find that the application for registration u/s. 12A was rejected for the reason that the ld. CIT on the basis of the report submitted by the A.O concluded that the Assessee trust was working for only one particular community and not for the public at large. Before us, it is assessee's contention that the report of the A.O was not made available to the Assessee nor any show cause notice was issued to it and therefore the Assessee was not granted reasonable opportunity of being heard before rejecting the application for registration. Before us no material has been placed on record by the Revenue to controvert the aforesaid submissions made by ld. A.R. It is a settled law that the principles of natural justice are applicable to the proceedings under the Income Tax Act and the elementary principle of natural justice is that the Assessee should have knowledge of the material that is going to be used against him so that he may be able to meet it. In view of the aforesaid facts, we feel that in the interest of justice one more opportunity needs to be granted to the Assessee to present its case before ld. CIT. We therefore remit the issue back to the file of ld. CIT for him to decide the issue afresh in accordance with law and after giving reasonable 4 ITA No 2974/AHD/2014

opportunity of hearing to the Assessee. We thus direct accordingly. In the result, the grounds of Assessee are allowed for statistical purposes.

6. In the result, the appeal of Assessee is allowed.

Order pronounced in Open Court on 24 - 04 - 2015.

Sd/- Sd/- (SHAILENDRA Kr. YADAV) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad. TRUE COPY Rajesh Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) - 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad