NID FOUNDATION,CHANDIGARH V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), , CHANDIGARH

ITA 133/CHANDI/2025

AI Insights

The case involves NID Foundation appealing against the orders of the CIT (Exemptions), Chandigarh, which rejected their applications for registration under Section 12AB and Section 80G of the Income Tax Act, 1961. The primary contention was the improper service of notice, which was only uploaded on the e-filing portal without following the prescribed procedures under Section 282 of the Income Tax Act, 1961, read with Rule 127 of the Income Tax Rules, 1962. The Assessee argued that this method of notice delivery did not constitute proper service, especially as the email communication bounced and no further attempts were made to serve the notice through other valid modes. The Tribunal, referencing a judgment by the Hon'ble Punjab and Haryana High Court, found merit in the Assessee's arguments and remanded the case for a fresh hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397202 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2024-2025
• Other Referred Cases: Munjal BCU Centre of Innovation and Entrepreneurship vs. Commissioner of Income-tax (Exemptions) [2024] 160 taxmann.com 629 (Punjab & Haryana)
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KUSUM BA NSAL
• Assessee Lawyers: ASHOK GOYAL
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Procedural lapse
• Section: 12AA; 80G

Judgement Text

"आयकर अपीलȣय अͬधकरण, चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘B’, CHANDIGARH BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA Nos. 133 & 134/CHD/2025 Ǔनधा[रण वष[ / Assessment Year : 2024-25 (u/s 12AA and 80G) NID Foundation, SCO 119-120, Sector 43B, Chandigarh बनाम Vs. The CIT, (Exemptions), Chandigarh èथायी लेखा सं./PAN NO: AAETN0195R अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent ( HYBRID HEARING ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Shri Ashok Goyal, CA राजèव कȧ ओर से/ Revenue by : Smt. Kusum Bansal, CIT DR (Virtual mode) सुनवाई कȧ तारȣख/Date of Hearing : 27.05.2025 उदघोषणा कȧ तारȣख/Date of Pronouncement : 28.05.2025 आदेश/Order Per Krinwant Sahay, AM : Appeals in these cases have been filed by the assessee against the separate orders each dated 13.12.2024 of ld. CIT Exemptions [in short ‘CIT(E’)], Chandigarh. 133 & 134-chd-2025 NID foundation, Chandigarh 2 2. The Assessee in both the cases have raised identical common grounds. The common grounds of appeal raised by the Assessee in both the appeals are as under: 1. Whether mere uploading of notice on the e-filing portal without following the procedure established under section 282 of the Income Tax Act, 1961 read with Rule 127 of the Income Tax Rules, 1962 is bad in law and order passed thereafter is liable to be set aside in lieu of Judgement passed by the Hon'ble Punjab and Haryana High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship vs. Commissioner of Income-tax (Exemptions) [2024] 160 taxmann.com 629 (Punjab & Haryana)? 2. That the Ld. CIT(E) passed the assessment order in haste with a pre-conceived mind without providing the appellant a proper opportunity of being heard. 3. That the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off. 3. Brief facts of the case, as per the written submissions (in both the cases) filed by the Counsel of the Assessee, are as under; - 1. The assessee filed an application in Form 10AB on 27.06.2024 for conversion of its provisional 133 & 134-chd-2025 NID foundation, Chandigarh 3 registration into regular registration under Section 12AB of the Income Tax Act, 1961. 2. A show cause notice was initially issued by CIT (Exemptions), Lucknow on 10.10.2024, to which the assessee responded and also informed the Department about the change in its operational address, requesting transfer of jurisdiction. Accordingly, the case was transferred to CIT (Exemptions), Chandigarh on 04.12.2024 3. A final show cause notice was issued by the new jurisdiction on 06.12.2024, granting the assessee only 6 days to respond. The notice was merely uploaded on the e-filing portal, and the email communication bounced. No further effort was made to serve the notice through other valid and prescribed modes. 4. Despite this, an ex-parte order rejecting the application under Section 12AB was passed on 13.12.2024. The limited timeframe coupled with the failure of proper service resulted in the assessee being denied a fair and reasonable opportunity of being heard. 5. Consequently, the related application under Section 80G was also rejected on the same date without independent examination, solely on 133 & 134-chd-2025 NID foundation, Chandigarh 4 the ground that registration under Section 12AB had not been granted. 4. During appellate proceedings, the ld. Counsel for the Assessee filed written submissions on this issue and argued the case on the line of his written submissions it is as under: 1. The Ld. CIT (Exemptions), Chandigarh proceeded on an erroneous assumption that the show cause notice dated 06.12.2024 was duly served merely by uploading it on the e-filing portal. However, the Department's own records confirm that the corresponding email communication bounced, and no further attempt was made to effect service through other legally recognized and prescribed modes under Section 282 read with Rule 127. 2. The rejection order concluded that the assessee failed to respond or comply with the notice, overlooking the critical fact that no effective or valid opportunity was ever provided. A finding of non-compliance cannot be sustained in law when the service of the notice itself is defective or incomplete. 3. The Ld. CIT (Exemptions), Chandigarh assumed jurisdiction over the case following its transfer from CIT (Exemptions), Lucknow on 04.12.2024, and issued the final notice just two days later, on 06.12.2024, granting only 6 days to respond. 133 & 134-chd-2025 NID foundation, Chandigarh 5 During this brief period, the assessee was in the process of consulting its counsel in order to respond appropriately to the notice and compile the necessary documents. However, before any effective reply could be submitted, the rejection order was hastily passed on 13.12.2024. The order fails to appreciate that the extremely short response window, particularly in the backdrop of improper service rendered it practically impossible for the assessee to comply meaningfully or be heard in accordance with law. 4. The CIT (Exemptions) failed to acknowledge that no opportunity of being heard was granted and passed the order ex parte in contravention of the principles of natural justice, which are inherent to tax proceedings under the Act. 5. Despite these material procedural lapses, the Ld. CIT (Exemptions), Chandigarh proceeded to pass the impugned rejection order dated 13.12.2024 under Section 12AB(l)(b)(ii), solely on the basis of alleged non-compliance. This mechanical approach without ensuring proper notice and hearing renders the order unsustainable in law. 5. The ld. DR relied on the order of the CIT(E). 133 & 134-chd-2025 NID foundation, Chandigarh 6 6. We have heard the arguments of the Counsel of the Assessee and we have also gone through the written submissions filed by him. We have also gone through the order of the CIT(E) and the arguments of the ld. DR before us. We find that the only bone of contention is that since the matter was transferred from CIT(E) Lucknow to CIT(E) Chandigarh and all the notices issued on the I.T. Portal which were bounced back in both the cases. Thus, the Counsel of the Assessee has argued that notices were not property served on it. We also find that the Hon'ble Jurisdictional High Court in the case of ‘Munjal BCU Centre of Innovation and Entrepreneurship Vs. Commissioner of Income Tax (Exemptions)’, CWP-21028-2023 (O&M) dated 4.3.2024 has given its findings as under: “8. In view of the above, it is essential that before any action is taken, a communication of the notice must be in terms of the provisions as enumerated hereinabove. The provisions do not mention of communication to be \"presumed\" by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a Company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc. The principles of 133 & 134-chd-2025 NID foundation, Chandigarh 7 natural justice are inherent in the income tax provisions and the same are required to be necessarily followed. 9. Having noticed as above, this Court is of the firm view that the petitioner has not been given sufficient opportunity to put up his pleas with regard to the proceedings under Section 12A(l)(ac)(iii) of the Act of 1961 and as he was not served with any notice. Therefore, he would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter.” 7. Keeping in view the ratio laid down by the Hon'ble Jurisdictional High Court of Punjab & Haryana on the issue of issuance of notice on I.T. Portal and respectfully following the findings given by the Hon'ble Jurisdictional High Court on this issue, both the appeals of the Assessee are remanded back to the CIT(E) for adjudication afresh on merits, in accordance with law, on affording due and adequate opportunity of hearing to the Assessee. The Assessee, no doubt, shall cooperate in the fresh proceedings before the CIT(E). All pleas available under the law shall remain so available to the assessee. Ordered accordingly. The appeals of the Assessee are allowed for statistical purposes. 133 & 134-chd-2025 NID foundation, Chandigarh 8 8. In the result, both the appeals are allowed for statistical purposes. Order pronounced on 28.05.2025 Sd/- Sd/- ( LALIET KUMAR ) ( KRINWANT SAHAY) Judicial Member Accountant Member “आर.क े.” आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar "