HANS RAJ MEMORIAL EDUCATIONAL SOCIETY,JALANDHAR V. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, JALANDHAR

ITA 62/ASR/2025

AI Insights

The case involves Hans Raj Memorial Educational Society, which appealed against the rejection of their application for approval under section 10(23C)(iii) of the Income Tax Act by the Commissioner of Income Tax (Exemption), Chandigarh. The rejection was based on a report from the Directorate of Investigation, alleging misuse of society funds. The society had previously reached a settlement with the Income Tax Settlement Commission, which was not considered by the CIT(E) in their decision. The Tribunal found that the CIT(E) had not adequately considered the settlement and the principles of natural justice, leading to the decision to set aside the CIT(E)'s order and remand the case for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772123 (ITAT-AMRITSAR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JIVANDEEP SINGH KAHLON LD
• Assessee Lawyers: ROHIT KAPOOR; V. S
• Keywords: Set aside; Document seized; Documents seized; Principle of natural justice

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL ‘DB’ BENCH, AMRITSAR HEARING THROUGH HYBRID MODE BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM AND HON’BLE SHRI UDAYAN DAS GUPTA, JM आयकर अपील सं. / ITA No. 62/ASR/2025 Hans Raj Memorial Educational Society Model Town Road, Jalandhar. बनाम/ Vs. DCIT Central Circle-1 Jalandhar ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAATH-3891-G (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Rohit Kapoor (Advocate) & Shri V.S. Aggarwal (ITP) – Ld. ARs ŮȑथŎकीओरसे/Respondent by : Shri Jivandeep Singh Kahlon (CIT) – Ld. DR सुनवाईकीतारीख/Date of Hearing : 03-07-2025 घोषणाकीतारीख /Date of Pronouncement : 28-08-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of an application seeking approval u/s 10(23C)(iii) vide order dated 12-12-2024 of Ld. Commissioner of Income Tax (Exemption), Chandigarh, [CIT(E)], the assessee is in further appeal before us. 2. The Ld. AR advanced arguments and drew attention to settlement arrived at by assessee-group before Hon’ble Income Tax Settlement Commission (interim board) (in short ITSC). On the basis of these documents, Ld. AR contended that the assessee would be eligible to lay claim on impugned deduction. The Ld. CIT-DR also advanced Printed from counselvise.com 2 arguments supporting rejection of application. Having heard rival submissions and upon perusal of case records, the appeal is disposed- off as under. 3. It emerges that the assessee-society was formed on 01-02-2000 and its activities had started long back. Under the new regime of registration, the assessee received provisional approval on 24-09- 2021. However, Ld. CIT(E) referred to report shared by Directorate of Investigation wherein the assessee-group was subjected to search / survey proceeding and it was alleged that the society was flouting the pre-conditions for grant of exemption. Considering the contents of the report, it was concluded by Ld. CIT(E) that the society money was used for personal and business purposes by the members of the society. Accordingly, the registration was denied. Aggrieved, the assessee is in further appeal before us. 4. It could be seen that the whole basis of rejection of approval is the report of Directorate of Investigation on the basis of which it has been concluded that there was misuse of society money. The Ld. AR has stated that requisite information as required by approving authority was duly submitted and no show-cause notice was issued to the assessee before rejecting the impugned application. No clarification is stated to have been sought from the assessee. It has further been stated that the assessee approached Hon’ble ITSC and an order was passed on 30-03-2023 u/s 245D(4) wherein no adverse inference was drawn on the basis of various material as impounded during the course of search / survey proceedings. The Ld. AR has placed on record point-wise Printed from counselvise.com 3 rebuttal to the findings relied upon by Ld. CIT(E) while denying the approval. 5. The perusal of order of Hon’ble ITSC order dated 30-03-2023 passed u/s 245D(4) would show that the said order covers AYs 2014- 15 to 2020-21 wherein all seized and impounded documents, including documents and information contained in pen drive, laptops and statements of various individual recorded on oath, has been considered and settled. This material forms the very basis of rejection of impugned application. All issues and observations of Ld. CIT(E) are gathered from ADIT report which are flowing only from the seized documents pertaining to period prior to 25-09-2019 which period stood covered in settlement application. The order so passed by Hon’ble ITSC would be conclusive in terms of provisions of Sec.245-I of the Act. It could also be observed that there is no adverse finding on any issues relating to any period after March, 2020 in respect of the assessee and the provisional approval has already been granted to the assessee in Form No.10AC on 24-09-2021. Therefore, this order, in our considered opinion, would have material bearing on the adjudication of Ld. CIT(E). 6. Apparently, the order of Hon’ble ITSC was not considered while adjudicating the fate of the application. Considering various plea of Ld. AR and keeping in mind the principles of natural justice, we deem it fit to set aside the impugned order and restore the impugned registration application back to the file of Ld. CIT(E) for de-novo adjudication in the light of various pleas as raised by Ld. AR and by considering the Printed from counselvise.com 4 settlement order. The assessee is directed to plead and prove its case forthwith. All the issues are kept open. 7. The appeal stand allowed for statistical purposes. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (UDAYAN DAS GUPTA) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28-08-2025 आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT AMRITSAR Printed from counselvise.com "