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Facts
The assessee, a charitable trust running educational institutions, applied for provisional registration under Section 12AB. The Ld. CIT(E) rejected the application due to non-compliance with notices. The assessee explained that its General Secretary was stationed at a school in a remote area of Ladakh without internet access, which prevented him from receiving and responding to the emails from the Ld. CIT(E).
Held
The Tribunal found the assessee's explanation for non-compliance bona fide, establishing a reasonable cause. It held that the assessee was effectively denied a reasonable opportunity of being heard, violating principles of natural justice. Consequently, the Tribunal set aside the Ld. CIT(E)'s order and remanded the matter for fresh consideration with a direction to provide the assessee an adequate opportunity of hearing.
Key Issues
Whether the CIT(E) erred in rejecting the provisional registration application under Section 12AB without affording a reasonable opportunity of hearing, particularly when the non-compliance was due to a lack of internet connectivity in a remote area, thus constituting a denial of natural justice.
Sections Cited
12AB(1), 12A(1)(ac)(vi), 80G
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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI ANIKESH BANERJEE & SHRI PRABHASH SHANKAR
O R D E R Per: Anikesh Banerjee (JM): The instant appeal of the assessee was filed against the order of the Learned Commissioner of Income-tax (Exemption), Mumbai [hereinafter, “Ld.CIT(E)”] order passed U/s 12AB(1) of the Income tax Act, 1961 (for brevity, the “Ld. AO”), date of order 25/06/2025.
The brief facts of the case is that the assessee is a Charitable Trust established in 1963 registered under the Bombay Public Trusts Act, 1950, and is /Mum/2025 Academy of Fine Arts & Crafts running various educational institutions under name AFAC. The various educational institutions run by AFAC are recognized by Mumbai Municipal Corporation and Government of Maharashtra. The education is imparted to the needy students who generally are from economically and socially backward categories across India. The assessee also runs a School in Ladakh in the name of Turtuk Valley School, Ladakh. The said school is recognized by the Government of Ladakh (Union Territory). This institution is purely a social cause to impart education at par of urban level. The assessee is registered for CSR activities under the Ministry of Corporate Affairs, under section 80-G of the Act and also under Minority Act as well. The assessee commenced its first school in Mumbai in the year 1964 and since then running nine schools with over 3,800 students in six sections namely Pre Primary, Primary English, Primary Marathi, Secondary Marathi, Secondary English and Junior College. From year 2020, the assessee has taken up a social project in very hard to reach place named ‘Turtuk’ Village in Karakoram region of Ladakh (U/T) about 7 hours journey from Leh city, exactly at Indo Pak Border. The Turtuk Valley School is committed to providing quality education in one of the most remote regions of Ladakh. The assessee submitted the application in Form 10AC u/s 12A(1)(ac)(vi) for provisional registration u/s 12AB. The Ld.CIT(E) issued notice for hearing, but there was no compliance from the end of the assessee. The Ld.CIT(E) observed that the registration u/s 12AB is to be granted in terms of provisions of section 12AB(1)(b) of the Act only after being satisfied about the objects of the trust or institution, the genuineness of the activities, and the compliance of any other law for the time being in force as are material for the purposes of achieving its objects. In the absence of compliance
The Ld. AR argued the matter and filed a paper book comprising pages 1 to 72, which has been taken on record. The Ld. AR also submitted an affidavit duly affirmed by the General Secretary of the assessee-trust, Mr. Jitendra Madanlal Mandlecha, executed on 26/11/2025. In the affidavit, it is stated that he was visiting their school, “Turtuk Valley School,” Ladakh. The said school is located approximately 200 kilometers from Leh and is situated near the India-Pakistan border. The area has no internet connectivity. Consequently, he was unable to access emails due to the unavailability of internet facilities and, therefore, could not respond to the notices issued by the Ld. CIT(E) through email. In view of these circumstances, the Ld. AR prayed that the matter may be restored to the file of the Ld. CIT(E) with a direction to afford the assessee a reasonable opportunity of being heard for submitting the requisite documents.
The Ld.DR argued and stands in favour of the order of the Ld. CIT(E).
We have heard the rival submissions and perused the material available on record. We note that the assessee is a long-standing charitable trust established in 1963, registered under the Bombay Public Trusts Act, 1950, and engaged in running various educational institutions under the name “AFAC.” These institutions are recognised by the Mumbai Municipal Corporation and the Government of Maharashtra and cater largely to students from economically and socially weaker sections. The assessee also operates the “Turtuk Valley School” in /Mum/2025 Academy of Fine Arts & Crafts Ladakh, recognised by the Government of Ladakh (Union Territory), which is situated in a remote border region lacking basic internet connectivity. The trust is also registered for CSR activities under the Ministry of Corporate Affairs, holds approval under section 80G of the Act, and is recognised under the Minority Act. The assessee had applied for provisional registration under section 12AB by filing Form 10AC in terms of section 12A(1)(ac)(vi). The Ld. CIT(E) issued notices seeking information; however, due to the assessee’s non-compliance, the application was rejected on the ground that the authority was unable to satisfy itself regarding the charitable objects, genuineness of the activities, and compliance with other applicable laws as required under section 12AB(1)(b). Before us, the Ld. AR submitted a paper book (pages- 1–72) and an affidavit affirmed by the General Secretary of the assessee-trust, Mr. Jitendra Madanlal Mandlecha, explaining that he was stationed at the “Turtuk Valley School” during the relevant period, where no internet connectivity exists. Consequently, he was unable to access the emails containing the notices issued by the Ld. CIT(E). This fact explains the reason for non-compliance and establishes a reasonable cause. In our view, the explanation offered is bona fide and constitutes a reasonable cause for the failure to respond. Thus, the assessee was effectively denied a reasonable opportunity of being heard, amounting to a breach of the principles of natural justice. Accordingly, we set aside the impugned order of the Ld. CIT(E) and restore the matter to his file with a direction to consider the assessee’s application afresh, after affording an adequate and reasonable opportunity of hearing. The assessee is also directed to remain diligent and co-operative in the set-aside proceedings.