The Income Tax Appellate Tribunal, Delhi, has underscored the fundamental principle of natural justice in tax exemption proceedings. In a recent ruling, the Tribunal set aside an ex parte order passed under Section 80G(5)(ii) of the Income Tax Act, 1961, holding that the Commissioner of Income Tax (Exemptions) failed to provide the assessee a fair opportunity of hearing. The judgment reinforces that procedural fairness is non-negotiable, even in administrative proceedings under tax laws.
Background & Facts
The Dispute
The appellant, Shri Sanatan Gau Sewa Dham Samiti, a charitable organization registered under PAN AAJAS1375G, applied for approval under Section 80G(5)(ii) of the Income Tax Act, 1961. The organization is based in Village Bawani Khera, Bhiwani, Haryana, and is engaged in charitable activities, including cow protection and welfare. The appellant sought tax exemption benefits under the Act, which allows donors to claim deductions for contributions made to approved institutions.
Key Facts
- The appellant is a charitable trust registered under PAN AAJAS1375G
- The organization applied for approval under Section 80G(5)(ii) of the Income Tax Act, 1961
- The Commissioner of Income Tax (Exemptions), Chandigarh [CIT(E)] passed an order dated 21.01.2026 denying the approval
- The appellant contended that the order was passed ex parte, without affording a hearing or proper opportunity to present its case
Procedural History
- Date of Application: Not specified in the judgment, but the dispute arose under Section 80G(5)(ii)
- 21.01.2026: CIT(E) passed an ex parte order denying approval under Section 80G(5)(ii)
- Date of Appeal: The appellant filed ITA No. 3636/Del/2026 before the Income Tax Appellate Tribunal, Delhi
- 22.06.2026: Date of hearing before the ITAT
- 30.06.2026: ITAT pronounced the order, setting aside the CIT(E)’s order and restoring the matter for fresh consideration
Relief Sought
The appellant sought the following reliefs:
- Quashing of the ex parte order dated 21.01.2026 passed by the CIT(E)
- A direction to the CIT(E) to afford a fair opportunity of hearing and decide the matter on merits in accordance with law
- Restoration of the matter to the file of the CIT(E) for fresh adjudication
The Legal Issue
The central question before the Tribunal was whether an ex parte order passed under Section 80G(5)(ii) of the Income Tax Act, 1961, without affording the assessee a fair opportunity of hearing, violates the principles of natural justice and is liable to be set aside.
Arguments Presented
For the Appellant
The appellant, represented by Shri Lalit Mohan, CA, and Shri Ankit Kumar, Advocate, contended:
- The impugned order dated 21.01.2026 was passed ex parte, without affording any opportunity of hearing
- The denial of approval under Section 80G(5)(ii) was arbitrary and against the principles of natural justice
- The appellant was not given a chance to present its case or submit relevant documents before the CIT(E)
For the Respondent
The respondent, represented by Shri Yashvendra Singh, CIT-DR, did not present any substantive arguments during the proceedings, as the Tribunal focused on the procedural lapse in the impugned order.
The Court's Analysis
The Tribunal examined the record and observed that the impugned order was passed without affording the appellant a fair opportunity of hearing. The Tribunal emphasized that the principles of natural justice are sacrosanct and must be adhered to in all administrative and quasi-judicial proceedings, including those under the Income Tax Act, 1961.
"We observed that the impugned order made without hearing and proper opportunity of being heard much less a fair opportunity and as such the order passed is against the principle of natural justice. Ld. CIT(E) has passed ex parte order in violation of principle of natural justice."
The Tribunal further noted:
"From examination of record, it is crystal clear that principles of natural justice have not been followed by the appellant authority. Therefore, we direct Ld. CIT(E) to give an opportunity of being heard to the assessee and decide the issue on merit as per law."
The Tribunal held that the ex parte order was unsustainable in law and directed the CIT(E) to restore the matter for fresh consideration, ensuring that the appellant is afforded a fair hearing.
The Verdict
The Income Tax Appellate Tribunal allowed the appeal for statistical purposes. The Tribunal set aside the order dated 21.01.2026 passed by the Commissioner of Income Tax (Exemptions), Chandigarh, and restored the matter to the file of the CIT(E) for fresh adjudication. The Tribunal directed the CIT(E) to:
- Afford the appellant a fair opportunity of hearing
- Decide the issue on merits in accordance with law
- Ensure compliance with the principles of natural justice
The appellant was also directed to cooperate with the tax authorities and make proper submissions during the fresh hearing.
What This Means For Similar Cases
Procedural Fairness Is Non-Negotiable
This judgment reinforces that principles of natural justice are inviolable, even in administrative proceedings under tax laws. Practitioners must ensure:
- Assessees are afforded a fair opportunity of hearing before any adverse order is passed
- Ex parte orders are avoided unless absolutely necessary and justified by exceptional circumstances
- Proper notice and opportunity to present evidence are provided in all proceedings under Section 80G(5)(ii) and similar provisions
Restoration of Matter: A Remedy for Procedural Lapses
- The Tribunal’s direction to restore the matter for fresh consideration highlights that procedural lapses can be cured by affording a fair hearing
- Assessees aggrieved by ex parte orders can seek relief by demonstrating a violation of natural justice
- Tax authorities must ensure strict compliance with procedural requirements to avoid orders being set aside on technical grounds
Cooperation with Authorities: A Two-Way Street
- The Tribunal directed the appellant to cooperate with the tax authorities during the fresh hearing
- Assessees must actively participate in proceedings, submit relevant documents, and present their case effectively
- Failure to cooperate may weaken the assessee’s position, even if the initial order was procedurally flawed
