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Facts
The assessee trust applied for registration under Section 12A(1)(ac)(iii) read with Section 12AB of the Income-tax Act, 1961. The CIT(E) rejected the application for failure to comply with show cause notices and submit requisite documents, despite the assessee claiming documents were already on record.
Held
The Tribunal held that the rejection was based solely on non-compliance and that principles of natural justice required the assessee to be given another opportunity. The matter was restored to the CIT(E) for fresh adjudication.
Key Issues
Whether rejection of registration application under Section 12AB solely for non-compliance with show cause notices, without adjudicating on merits, violates principles of natural justice and substantive justice.
Sections Cited
12A(1)(ac)(iii), 12AB, Rule 17A
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide order dated 30.10.2025.
2. The assessee has taken the following grounds of appeal:
“1. That the Learned Commissioner of Income-tax (Exemptions), Ahmedabad has erred in law and on facts in rejecting the Appellant Trust’s application for registration under Section 12A(1)(ac)(iii) read with Section 12AB of the Income-tax Act, 1961, solely on the ground of alleged non-compliance with show cause notices, without adjudicating the application on merits.
That the impugned order is bad in law, arbitrary and unsustainable, inasmuch as all basic and mandatory documents required for verification under Section 12AB and Rule 17A, including the NO, Trust Deed, Trust registration certificate, NO, and undertaking of Kamdar (Bilkhiya) Parivar Na Kuldevi Amba Mata Trust-Juna Savar vs. CIT(E) Asst. Year –NA - 2– applicability of all provisions of income tax Act.1961 were already submitted along with Form No. 10AB at the time of filing of the application.
3. That the Learned CIT(E) failed to appreciate that only replies to the show cause notices were not submitted, whereas the foundational documentary evidence necessary to verify the objects, genuineness of activities and statutory compliance of the Trust was already available on record, and therefore the application could and ought to have been decided on the basis of the material already furnished.
4. That rejection of the application merely on account of non-reply to show cause notices, without examination of the documents already submitted, amounts to elevating procedural noncompliance over substantive justice, which is impermissible in proceedings relating to grant of registration to charitable 0R religious trusts.
5. That the Learned CIT(E) was fully empowered to examine and verify the documents already uploaded along with the application under Form No. 10AB and to record satisfaction 0R otherwise regarding the genuineness of activities and objects of the Trust, and mere non-response to portal-based notices could not have been treated as conclusive ground for rejection without such verification.
6. That in the absence of actual knowledge of issuance of show cause notices, no adverse inference ought to have been drawn against the Appellant Trust and passing of the impugned order without ensuring effective service amounts to violation of principles of natural justice.
7. That the non-submission of replies was neither deliberate nor with any intention to suppress facts 0R withhold information, and there is no finding in the impugned order disputing the charitable 0R religious nature of the objects 0R the genuineness of activities of the Trust.
8. That the impugned rejection has caused grave prejudice to the Appellant Trust and the same deserves to be set aside, and the matter be restored to the file of the Learned CIT(E) for fresh adjudication on merits after granting a reasonable and effective opportunity of being heard and permitting submission of replies and explanations, if required.
9. That the Appellant craves leave to add to, alter, amend 0R withdraw any of the above grounds at 0R before the time of hearing.”
Delay of 50 days in filing of the present appeal is hereby condoned in the interest of justice and looking into the smallness of period of delay causing no perceptible prejudice to the other side.
The brief facts of the case are that the assessee trust had filed an application in Form No. 10AB seeking registration/renewal under section Kamdar (Bilkhiya) Parivar Na Kuldevi Amba Mata Trust-Juna Savar vs. CIT(E) Asst. Year –NA - 3– 12A of the Income-tax Act, 1961 ("the Act"). The said application was examined by the CIT (Exemptions) in terms of section 12AB(1)(b) of the Act read with Rule 17A of the Income-tax Rules, 1962, which prescribes the procedure as well as the documents required to be furnished for the purpose of grant of registration. During the course of proceedings, the CIT (Exemptions) issued notices from time to time calling upon the assessee to furnish relevant details and documents necessary to verify the genuineness of its activities and the conformity of such activities with its stated objects. However, despite service of notices, the assessee failed to furnish any reply or supporting documents and did not even seek adjournment. In the absence of requisite information and documents as prescribed under Rule 17A(2), the CIT (Exemptions) recorded that he was not in a position to satisfy himself regarding the genuineness of the activities of the trust, the alignment of such activities with its objects, and compliance with other applicable laws. Accordingly, the application filed by the assessee in Form No. 10AB was rejected.
The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.
We have heard the rival submissions and perused the material available on record. It is observed that the application of the assessee has been rejected solely on account of non-compliance and non-furnishing of details before the CIT (Exemptions). Considering the nature of proceedings relating to grant of registration under section 12AB of the Act and the facts that only two notices of hearing were sent to the assessee, keeping in view the Kamdar (Bilkhiya) Parivar Na Kuldevi Amba Mata Trust-Juna Savar vs. CIT(E) Asst. Year –NA - 4– principles of natural justice, we are of the considered view that the assessee should be afforded one more opportunity to substantiate its claim by furnishing necessary documents and explanations.
Accordingly, in the interest of justice, we set aside the impugned order and restore the matter to the file of the CIT (Exemptions) for fresh adjudication. The CIT (Exemptions) shall grant adequate opportunity of being heard to the assessee and the assessee is also directed to fully cooperate and file all requisite details/documents as may be called for.
We further direct the assessee to deposit a cost of Rs. 5,000/- with the PM Relief Fund and produce proof of such payment at the time of the set aside proceedings before the CIT (Exemptions).
Subject to these directions, the appeal of the assessee is allowed for statistical purposes. This Order is pronounced in the Open Court on 27/03/2026