MAHAKALI AYYAPPA SEVA SANGH,MUMBAI vs. CIT EXEMPTIONS, MUMBAI

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ITA 4774/MUM/2026Status: DisposedITAT Mumbai31 July 2026AY 2026-2710 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee should be given an effective opportunity to present the required documents, as the merits of the application were not examined and the non-compliance was explained. Consequently, both rejections were set aside.

What were the facts?

The assessee's application for renewal of registration under section 12AB and approval under section 80G were rejected by the CIT(E) for non-compliance with a notice. The assessee explained the non-compliance was due to unforeseen personal circumstances of the person responsible for submitting documents.

What were the issues?

Whether the rejection of applications for renewal of registration and approval was justified solely on grounds of non-compliance with a notice without examining the merits, especially when a reasonable explanation for non-compliance was provided.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE

For Appellant: Shri Amar Sharma
For Respondent: Shri Rajdeep Singh CIT-DR

IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT AND SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE JUDICIAL MEMBER ITA No. 4774 and 4775/MUM/2026 (Assessment Year 2026-27) MAHAKALI AYYAPPA SEVA CIT (Exemptions), SANGH Mumbai 001 DHOLKIA APARTMENTS, NEAR POONAM NAGAR, ANDHERI EAST 400093, MAHARASHTRA PAN NO. AACTM2030L Assessee by Shri Amar Sharma Revenue by Shri Rajdeep Singh CIT-DR Date of Hearing 24 / 07 / 2026. Date of Pronouncement 31 / 07 / 2026.

ORDER PER: SHRI MAKARAND VASANT MAHADEOKAR : These two appeals by the assessee are directed against two separate orders, both dated 01.03.2026, passed by the learned Commissioner of Income Tax (Exemptions), Mumbai [“CIT(E)”], in Form No. 10AD. ITA No. 4774/Mum/2026 arises from the rejection of the assessee’s application for renewal of registration under section 12AB of the Income-tax Act, 1961 [“the Act”], whereas ITA No. 4775/Mum/2026 arises from the rejection of its application for renewal

2 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) of approval under section 80G of the Act. Since the applications are connected and the rejection under section 80G is founded upon the rejection under section 12AB, both appeals were heard together and are being disposed of by this common order. 2. The assessee is stated to be a charitable trust registered under the Bombay Public Trust Act, 1950 on 18.02.2008 bearing registration No. F- 35008 (Mumbai). According to the written submissions, the assessee has carried on charitable activities since inception and has enjoyed registration and approval under the Act. The assessee states that it applied for provisional registration in 2021 and was granted registration for assessment years 2022-23 to 2026-27. 3. On 30.09.2025, the assessee filed an application in Form No. 10AB under section 12A(1)(ac)(ii) seeking renewal of registration under section 12AB. On verification, the CIT(E) found that the application was incomplete and that all documents required to accompany it had not been furnished. A notice dated 21.01.2026 was issued requiring the assessee to furnish the complete set of documents and details contemplated under Rule 17A(2). 4. The CIT(E) observed that the assessee had not complied with all the terms of the notice. He further observed that, in the absence of the

3 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) necessary compliance, he was unable to record satisfaction regarding the objects of the assessee, the genuineness of its activities and compliance with other laws material for achieving its objects. The application for renewal of registration under section 12AB was accordingly rejected by the impugned order dated 01.03.2026. 5. The assessee had also filed Form No. 10AB on 30.09.2025 under clause (ii) of the first proviso to section 80G(5) seeking renewal of approval under section 80G. In the order concerning section 80G, the CIT(E) noted that the application for renewal of registration under section 12AB had been rejected by order dated 01.03.2026. Referring to the condition prescribed in section 80G(5)(i), the CIT(E) held that the application under section 80G had thereby become untenable and rejected it by a separate order of the same date. 6. Aggrieved, the assessee is in appeal before us. The grounds raised in ITA No. 4774/Mum/2026 are: 1. The Ld. CIT (Exemptions) erred in rejecting the Application in Form 10AB u/s 12A(1)(ac)(ii) seeking renewal of registration under section 12AB of the Income Tax Act on the ground of non- compliance to all the terms of notices issued to the Applicant. 2. The Ld. CIT (Exemptions) erred in rejecting the Application in Form 10AB u/s 12A(1)(ac)(ii) seeking renewal of registration

4 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) under section 12AB of the Income Tax Act without giving adequate opportunity for complying to the notice. 3. The Order of the CIT (Exemptions) is against the weight of equity, good conscience and natural justice. 4. All of the above grounds are without prejudice to each other. The Appellant craves leave to add, alter, modify, delete or amend any grounds of appeal on or before the final hearing. 7. The grounds raised in ITA No. 4775/Mum/2026 are: 1. The Ld. CIT (Exemptions) erred in rejecting the Application in Form 10AB u/s 80G seeking renewal of approval under section 80G of the Income Tax Act on the ground of non-compliance to all the terms of notices issued to the Applicant seeking renewal of registration u/s 12A(1)(ac)(ii) of the I T Act. 2. The Ld. CIT (Exemptions) erred in rejecting the Application in Form 10AB u/s 80G seeking renewal of approval under section 80G of the Income Tax Act merely on the ground of rejection of 12A registration and without affording adequate opportunity of hearing. 3. The Order of the CIT (Exemptions) is against the weight of equity, good conscience and natural justice. 4. All of the above grounds are without prejudice to each other. The Appellant craves leave to add, alter, modify, delete or amend any grounds of appeal on or before the final hearing. 8. The learned Authorised Representative [“AR”], reiterating the written submissions, submitted that only one notice dated 21.01.2026

5 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) was issued in the proceedings and that the applications were rejected without any further notice, reminder, show cause notice or opportunity of personal hearing. It was submitted that the non-compliance was neither deliberate nor intentional. The person entrusted with collating the records and uploading the documents on behalf of the assessee had, during the relevant period, suffered the demise of his father and was required to leave Mumbai immediately to attend the last rites and other family obligations. Owing to these unforeseen circumstances, the documents could not be compiled and uploaded within the time allowed.

9.

Further, the learned AR submitted that the order under section 12AB contains no adverse finding that the objects of the assessee are not charitable or that its activities are not genuine. The rejection was stated to be solely on account of non-compliance with the solitary notice. It was submitted that the assessee had acted bona fide, had filed Form No. 10AB within the prescribed time and was ready and willing to produce all documents and details required by the CIT(E). It was accordingly prayed that the order under section 12AB be set aside and the

6 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) application be restored to the file of the CIT(E) for fresh consideration after granting a reasonable and effective opportunity of hearing.

10.

As regards the application under section 80G, the learned AR submitted that the CIT(E) had recorded no independent finding that the assessee failed to satisfy any condition prescribed under section 80G. Its rejection was merely consequential to the rejection of the application under section 12AB. It was therefore prayed that the order under section 80G also be set aside and that application be restored for fresh consideration.

11.

The learned Departmental Representative relied upon the impugned orders of the CIT(E).

12.

We have considered the rival submissions and perused the material placed on record. The application under section 12AB was rejected because the CIT(E) could not record the requisite satisfaction in the absence of compliance with the notice dated 21.01.2026. Row 10 of Form No. 10AD also records 21.01.2026 as the date on which an opportunity was afforded. No further notice or opportunity is identified in the impugned order. Although the concluding paragraph of the

7 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) annexure uses the plural expression “notices”, the order does not identify any notice other than the notice dated 21.01.2026.

13.

We further find that the impugned order states generally that the application was incomplete, that all documents required to accompany it had not been furnished and that the terms of the notice had not been complied with. The order, however, does not identify the particular documents or information that remained outstanding, nor does it record any examination on merits of the material stated to have accompanied the application, the objects of the assessee or the genuineness of its activities. Thus, the merits of the application remain unexamined.

14.

The assessee has explained the circumstances that prevented compliance with the notice and has expressed its readiness to furnish all requisite documents and information. The explanation placed before us is that the person responsible for compiling and uploading the documents had to leave Mumbai following the demise of his father. Having regard to the consequences of rejection, the absence of any examination on merits and the specific explanation for non-compliance, we are of the considered view that the assessee should be afforded one effective opportunity to place the requisite material before the CIT(E).

8 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) 15. Accordingly, the order dated 01.03.2026 rejecting the application for renewal of registration under section 12AB is set aside and the matter is restored to the file of the CIT(E) for de novo adjudication. The CIT(E) shall communicate to the assessee the specific documents or information, if any, that remain to be furnished; grant a reasonable and effective opportunity to furnish the same; consider the material filed with the original application as well as any further material furnished by the assessee; and thereafter pass a speaking order in accordance with law. The assessee shall cooperate in the proceedings and furnish the requisitioned material within the time allowed. We make it clear that we have expressed no opinion on the merits of the assessee’s eligibility for registration under section 12AB.

16.

The order rejecting the application under section 80G rests upon the rejection of the application for renewal of registration under section 12AB. Since the order concerning section 12AB has been set aside and that application has been restored for fresh adjudication, the foundation of the consequential rejection under section 80G does not presently survive.

9 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) 17. We, therefore, set aside the order dated 01.03.2026 passed in respect of the application under section 80G and restore that application also to the file of the CIT(E). The CIT(E) shall decide it afresh, in accordance with law, after deciding the application under section 12AB and after affording the assessee a reasonable opportunity of being heard. We have expressed no opinion on the merits of the assessee’s eligibility for approval under section 80G.

18.

In view of the above, Ground Nos. 1 to 3 in both appeals are allowed for statistical purposes. Ground No. 4 in each appeal is general in nature and does not require separate adjudication.

19.

In the result, ITA No. 4774/Mum/2026 and ITA No. 4775/Mum/2026 filed by the assessee are allowed for statistical purpose.

Order pronounced on 31/07/2026 under Rule 34(4) of the Income Tax Appellate Tribunal Rules,1963.

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) VICE PRESIDENT ACCOUNTANT MEMBER Dated : 31 /07/ 2026. Pritesh Vaishnav PS

10 ITA No. 4774 and 4775/Mum/2026 (Assessment Year 2026-27) True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

BY ORDER,

ASSISTANT REGISTRAR ITAT, MUMBAI

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