Case Note & Summary
The appellant, Uttar Bhartiya Education Society, is a trust/society running educational institutions. It applied for registration under Section 12AB of the Income Tax Act, 1961 for the assessment year 2018-19. The Assessing Officer issued a show cause notice dated 30-12-2024 proposing to reject the application on the ground that the appellant had not filed returns of income for three years. The appellant submitted a detailed reply on 31-12-2024 explaining that returns were filed but inadvertently not uploaded, and requested an opportunity to upload them. However, the Assessing Officer passed an order on 31-12-2024 rejecting the application without considering the reply. The appellant challenged this order before the Commissioner (Appeals), who dismissed the appeal on 31-01-2025, holding that the Assessing Officer had considered the reply. The appellant then filed the present appeal before the High Court. The High Court examined the order of the Assessing Officer and found that it did not mention the appellant's reply or give any reasons for rejecting it. The court held that the order was a non-speaking order and passed without application of mind, violating principles of natural justice. The court set aside the orders of the Assessing Officer and the Commissioner (Appeals) and remanded the matter back to the Assessing Officer for fresh consideration, directing that the appellant be given an opportunity of hearing and that a reasoned order be passed.
Headnote
A) Income Tax - Exemption Registration - Section 12AB, Income Tax Act, 1961 - Natural Justice - The appellant, an educational society, applied for registration under Section 12AB. The Assessing Officer issued a show cause notice proposing rejection, but the appellant's reply was not considered. The order rejecting registration was passed without application of mind and without giving reasons. Held that the order was unsustainable and remanded for fresh consideration after affording opportunity of hearing (Paras 1-14).
Issue of Consideration
Whether the rejection of the appellant's application for registration under Section 12AB of the Income Tax Act, 1961 was valid when the Assessing Officer did not consider the appellant's reply to the show cause notice and passed a non-speaking order.
Final Decision
The High Court allowed the appeals, set aside the orders of the Assessing Officer dated 31-12-2024 and the Commissioner (Appeals) dated 31-01-2025, and remanded the matter back to the Assessing Officer for fresh consideration. The Assessing Officer was directed to afford an opportunity of hearing to the appellant and pass a reasoned order in accordance with law.
Law Points
- Natural justice
- Speaking order
- Application of mind
- Opportunity of hearing
- Section 12AB registration
- Income Tax Act
- 1961
