AMAR BALIDAN SOCIETY/TRUST,JAMMU vs. CIT EXEMPTIONS, CHANDIGARH

Brief facts of the case are that the assessee is a charitable trust and it filed separate applications seeking renewal of its registration u/s 12AB of the Act and approval u/s 80G of the Income-tax Act, 1961 before the learned CIT (Exemptions). During the course of proceedings, the learned CIT(E) noticed certain discrepancies in the applications and accordingly issued a show cause notice requiring the assessee to furnish the eligibility of the Assessee for renewal of registration and to verify compliance with the conditions prescribed u/s 11 and 12 of the Act, the financial statement including the income and expenditure account, balance sheet and other applied record inter alia, a brief note on the charitable activities carried out during the preceding three years, and documentary evidence substantiating the charitable activities along with supporting books of account, vouchers and bank statements.

1 In response to the show cause notice issued by the Ld. CIT(E) to the Assessee, the Assessee filed reply on 8.12.2025 which was examined by the Ld. CIT(E) in accordance with the mandate of section 12AB of the Act, which requires (a) the genuineness of the 3 45 &* 46/Chd/2026 activities of the trust or institution; and (b) whether such activities are being carried out in accordance with the objects stated in its Memorandum of Association (MOA). Also, on examination of the financial statements furnished by the applicant for the last three years, it is observed that no substantive, meaningful, or programmatic activities have been carried out in furtherance of the objects stated in the MOA. It has been observed by the Ld. CIT(E) that the financial pattern, reveals that the expenses incurred by the applicant are merely for sustaining the administrative framework of the trust and not for carrying out any charitable activities as claimed.

2 It has also been observed by the Ld. CIT(E) that the very foundation for grant or continuation of registration under section 12AB of the Act is the actual carrying out of genuine charitable activities in consonance with the stated objects of the trust. Mere existence of charitable objects in the MOA, without their translation into real, demonstrable, and verifiable activities, does not satisfy the statutory requirements. The Ld. CIT(E) found that on account of the complete absence of activity-oriented expenditure over a continuous period of three years. leads to the inescapable conclusion that (a) the Assessee has not undertaken any genuine charitable activities; and (b) the activities of the Assessee, if any, are not being carried out in accordance with the objects stated in its MOA.

3 Therefore, the Ld. CIT(E) the activities of the trust were found to be non-genuine or not in accordance with its objects, and since both the statutory conditions stand violated in the present case, the application for renewal of registration and approval u/s 80G was rejected by the Ld. CIT(E)

The ld. Counsel for the Assessee submitted before us that the impugned orders have been passed without properly considering the reply of the Assessee. It has further been submitted that the Ld. CIT(E) has exceeded juri iction by examining the application of income and eligibility u/s 11 and 12. It has also been submitted that at the stage of registration / renewal u/s 12AB / approval u/s 80G, the scope of enquiry is limited to examination of objects and genuineness of activities and the issue relating to application of income are with the domain of Assessing Officer and cannot be examined at this stage of registration. It has further been submitted that the expense incurred were necessary for maintaining the organismal structure and incidental to carrying out charitable activities. The Ld. CIT(E) has also failed to identify any activity contrary to the objects of the trust. Furthermore, the impugned orders are ex facie illegal and violative of principles of natural justice as the Ld. CIT(E) failed to issue any proper and specific show cause

Per contra, the learned Departmental Representative relied upon the findings recorded in the impugned orders and submitted that sufficient opportunity had been afforded by the learned CIT(E) by issuing the show cause notice requiring the assessee to furnish the necessary information and the reply of the Assessee was duly considered by the Ld. CIT(E). Therefore, Ld. CIT(E) was justified in proceeding to decide the matter on the basis of material available on record.

1 However, the learned DR fairly submitted that if the Tribunal is inclined to restore the matter, appropriate directions may be issued

We have given our thoughtful consideration to the submissions of Ld. DR and material available on record as well have carefully examined the impugned order. It is observed that the applications of the Assessee have been rejected by the Ld. CIT(E) without appropriately examining the claim of the assessee on merits and even without adjudicating the claim of the assessee on the basis of records available. We find that the orders were passed by Ld. CIT(E) are ex- parte orders only after going through the reply filed by the Assessee and not on the basis of material available on record.

1 It is a settled proposition of law that while exercising powers under section 12AB of the Act, the learned CIT(E) is required to mainly examine the objects of the trust and the genuineness of its activities after affording an effective and reasonable opportunity of hearing to the applicant. Although a notice was issued by the learned CIT(E), but considering the facts and circumstances of the case and keeping in view the principles of natural justice, we are of the considered opinion that the assessee deserves one more effective opportunity to substantiate its claim.

2 Accordingly, we set aside the impugned orders passed by the learned CIT (Exemptions) and restore the matters to his file with a direction to examine the assessee's applications afresh in accordance with law after granting adequate and effective opportunity of hearing. The learned CIT(E) shall consider all the documentary evidences and submissions that may be furnished by the assessee and thereafter pass speaking and reasoned orders de novo on merits in accordance with law.

3 The assessee is also directed to extend full cooperation in the fresh proceedings and shall furnish all documents, explanations and evidences as may be called for by the learned CIT(E) without seeking unnecessary adjournments. It is made clear that we have not expressed any opinion on the merits of the claim, and all issues are left open for adjudication by the learned CIT(E).

In the result, both the appeal of the assessee are allowed for statistical purposes. Order pronounced in the open court on 22.07.2026 (MANOJ KUMAR AGGARWAL ) JUDICIAL MEMBER Rkk

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