B D BANSAL PUBLIC CHARITABLE TRUST,AMRITSAR vs. INCOME TAX OFFICER WARD-( EXEMPTION), AMRITSAR

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ITA 561/ASR/2026Status: DisposedITAT Amritsar30 July 2026AY 2026-275 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the rejection of the application was based on an incorrect satisfaction by the CIT(E) without considering the provided financials and without affording the assessee a proper opportunity to explain. The rejection without issuing a show cause notice was also found to be a violation of natural justice.

What were the facts?

The assessee trust applied for registration under Section 12A(1)(ac)(ii) of the Income Tax Act, which was rejected by the CIT(E) for failing to establish the genuineness of its activities. The CIT(E) noted that the trust's income was solely from bank interest, with no evidence of application for charitable purposes.

What were the issues?

Whether the rejection of the registration application for a charitable trust was justified without proper show cause notice and adequate opportunity to the assessee. Whether the CIT(E) correctly assessed the genuineness of the trust's activities based on the provided evidence.

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(ii),Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.

Before: SH. M. BALAGANESH & SH. UDAYAN DAS GUPTA

Hearing: 29.07.2026Pronounced: 30.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. M. BALAGANESH, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.560 and 561/Asr/2026 Assessment Year: 2026-27

B.D. Bansal, Public Charitable Vs. A.O. (Exemption), Trust, B-641, Ground Floor, Amritsar. Ranjit Avenue, Near A Block Gurudwara, Amritsar. [PAN:-AAATB6067C] (Respondent) (Appellant)

Appellant by Sh. Lakshay Bansal, CA Respondent by Sh. Farhat Khan, CIT. DR. Date of Hearing 29.07.2026 Date of Pronouncement 30.07.2026 ORDER Per: Udayan Dasgupta, JM: This appeal is filed by the assessee against the order of the Ld CIT (E), Chandigarh, dated 18/03/2026, rejecting the application for registration dated 27/02/2026 filed by the assessee in Form 10AB, u/s 12A(1)(ac)(ii) of the Income Tax Act 1961 (henceforth the Act). 2. The grounds of appeal taken by the assessee in the memorandum of appeal in form 36 are as follows: “1. That the impugned order passed by the Id. CIT(E) is bad in law and liable to be quashed, as no proper show cause notice specifying any proposed ground of rejection or adverse inference was issued, thereby violating the principles of natural justice.

I.T.A. No.560 and 561/Asr/2026 2 Assessment Year: 2026-27

2.

That the Id. CIT(E) has erred in law in rejecting the application by incorrectly equating absence of activities with lack of genuineness, thereby applying a test not contemplated under the Act and rendering the impugned order unsustainable.” 3. The facts emerging from records are that the application for renewal of registration u/s 12AB filed by the assessee, has been rejected on the allegation that the assessee has failed to establish the genuineness of activities. It has been observed that income of the trust is out of interest from banks on fixed deposits and the said interest income is being accumulated over the years, without any application of the same for charitable purpose and in absence of any evidence of application of income for the relief of poor, education, medical relief, or for advancement of any other objects of general public utility, the requisite conditions for availing exemptions are not satisfied.

3.1 Before the tribunal the Ld AR of the assessee submits that provisional registration of the trust was granted on 04/06/2023, (in form 10AC) for the period Asst year 2024-25 to Asst year 2026-27. In course of registration proceedings the assessee has replied to the questions raised by the Ld. CIT(E) dated 27/02/2026 calling for copy of trust deed and evidence of actual charitable activity carried out by way of supporting photographs, copies of bills, paper cutting etc. against which

I.T.A. No.560 and 561/Asr/2026 3 Assessment Year: 2026-27

the assessee filed copies of trust deed along with financials and copies of ITR for last three years.

4.

The Ld. AR further submitted that, no further cause notices has been issued by the Ld. CIT (E) and the application for registration has been rejected on the ground of absence of charitable activity being actually carried out. Drawing reference to the financials placed on record for the year ending 31st March 2018, March 2019, and March 2020 , the Ld AR of the assessee submitted that the observation of the Ld CIT ( E ) is factually incorrect , in as much , the income of the trust is from bank interest and charitable activity by way of donations made to poor, education expenses and medical expenses, relief to the poor, are all reflected in the financials and as such the observation of NIL charitable activity is not correct and the rejection is based on improper appreciation of factual evidence .

4.1 He further submitted that no show cause notice has been issued by the Ld. CIT (E), before rejection and cancellation of registration, which is against the principles of natural justice and he prayed for proper opportunity of hearing and explaining his case before the Ld. CIT (E).

4.2 Before concluding the Ld AR submitted that in the instant case the prima facie conditions of registration are fully satisfied, because the objects are charitable in nature, the genuineness of carrying out of charitable activities (though in small volume) cannot be denied and there is no specified violation in the case and there is

I.T.A. No.560 and 561/Asr/2026 4 Assessment Year: 2026-27

full compliance of Rule 17A, in the instant case and as such he prayed for adequate relief.

5.

The Ld. DR relied on the order of the Ld. CIT (E).

6.

We have heard the rival submission and the materials on record and we find that the Ld. CIT (E) has arrived at an incorrect satisfaction without taking into cognizance the financials on record and has not allowed an opportunity to the assessee to explain with documentary evidences and the rejection and cancellation of registration without an issue of SCN is violative of the principles of natural justice.

7.

As such in the interest of justice we remand the matter back to the Ld. CIT (E) to consider the application for registration afresh and allow an opportunity to the assessee to prove his case with evidences and photographs, to the satisfaction of the Ld. CIT (E), and to plead his case forthwith.

8.

In the result the appeal of the assessee is allowed for statistical purpose.

ITA 561 / ASR / 2026

9.

This appeal is filed by the assessee against the rejection of the application of approval u/s 80G, which is consequential to rejection of registration u/s 12AB of the Act 61.

10.

Our observation in ITA 560/ ASR/ 2026 applies mutatis mutandis

I.T.A. No.560 and 561/Asr/2026 5 Assessment Year: 2026-27

10.1 Since we have remanded the matter back relating to registration u/s 12A, we also remand this matter back to the Ld. CIT (E) for consideration with the application afresh in tandem with the application u/s 12A.

11.

In the result both the appeals are allowed for statistical purpose. Order pronounced on 30.07.2026 in the Open Court.

Sd/- Sd/- (M. BALAGANESH) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR I.T.A.T.

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