Chitra Venkataraman, J.@mdashThe following substantial questions of law are raised by the assessee in the present Tax Case Appeal filed as against the order of the Income Tax Appellate Tribunal, Madras ''A'' Bench dated 11.09.2009 in ITA. No. 2127/2008, confirming the order of the Commissioner of Income Tax, refusing to grant approval u/s 80G(5)(vi) of the Income Tax Act, 1961 to the assessee''s application for renewal/approval.
1) Whether on the facts and circumstances of the case, the Tribunal was right in upholding the denial of the benefit of Section 80G ?
(2) Whether on the facts and circumstances of the case, the Tribunal was right in upholding an order based upon material collected behind the back of the assessee and copies of which were not furnished to the assessee on the ground that the assessee had not objected to the same at any earlier stage ?
(3) Whether the Tribunal was right in holding that the exemption u/s. 80G ought to be denied on the ground that the Chairman of the Board of Trustees was found to be having undisclosed income without looking into his personal sources of income ?
On going through the papers filed before this Court, it is seen that the assessee is a Public Charitable Trust, created on 28.08.1996. The Trust was registered u/s 12A of the Income Tax Act, 1961 (hereinafter called as the "Act") and the approval was granted upto 31.03.2008 u/s 80G(5)(vi) of the Act read with Rule 11 AA of the IT Rules, 1962.
2. The assessee filed an application before the Commissioner of Income Tax, Central III, Chennai in Form No. 10-G for renewal of approval u/s 80G(5)(vi) of the Act read with Rule 11 AA of the Income Tax Rules effective from 01.04.2008.
3. It is a matter of record that there was a search in the premises of the assessee and the Trustee on 13.08.2007, during which, various books of accounts and documents were seized apart from certain cash. In the course of the proceedings before the Commissioner of Income Tax, the assessee made a specific request for inspection of the copies of the seized records as well as copies of the statement recorded from persons of the Trust viz., Chairman of the Board of Trustees. However, the request was not considered favourably and on the other hand, the seized documents were referred to during the proceedings. Once again, the assessee appealed before the Income Tax Appellate Tribunal and raised additional grounds alleging violation of principles of natural justice.
4. While considering the order of rejection of approval, the Income Tax Appellate Tribunal, however, held that in the reply to the show cause notice issued by the Commissioner of Income Tax dated 05.09.2008, Shri. Rajagopalan, Chairman of the Trust, submitted a detailed reply vide letter dated 10.09.2008, but, did not allege that the copies of his statement recorded u/s 132(4) of the Act and of the seized documents were not supplied to him. Even in the subsequent letter dated 24.09.2008, there was no whisper about the non-availability of the copies of the statements and of the seized documents and accordingly, the Income Tax Appellate Tribunal, considered that there was no merit in the contentions of the counsel for the assessee that the order of the Commissioner of Income Tax was in violation of the principles of natural justice. Aggrieved by this, is the present appeal by the assessee.
5. Learned Senior counsel appearing for the assessee submitted that after the rejection of the approval u/s 80G(5)(vi) of the Act, the petitioner was issued with seized materials of documents on 19.11.2009. The assessee is stated to have succeeded in the subsequent appeal before the Income Tax Appellate Tribunal.
6. There is no material to controvert the allegation of the assessee about the non-furnishing of the copies of the statement recorded as well as the records seized and in fact, it is a matter of record that the Income Tax Appellate Tribunal itself has pointed out about the non-furnishing of the copies of the seized records to the assessee-Trust.
7. Considering the facts that the order of rejection rested on the seized materials and non-furnishing of the copies of the same to the assessee relating to the search u/s 132 of the Act on 13.08.2007, in fairness to the contention of the assessee with regard to non-compliance of the principles of natural justice, the matter is remanded back to the Commissioner of Income Tax, Central-III, Chennai for de novo consideration in accordance with law. The Tax Case Appeal is disposed of accordingly. No costs.
