SINDHU SARVODAYA SOCIETY,MUMBAI vs. CIT (EXEMPTIONS), MUMBAI

When the appeal was called for hearing, none appeared on behalf of the assessee despite service of notice. There was also no application seeking adjournment. We, therefore, proceed to dispose of the appeal ex parte qua the assessee after hearing the submissions of the Ld. DR and upon perusal of the material available on record.

The brief facts leading to the present appeal are that the assessee, a charitable trust engaged in the field of education, filed an application in Form No.10AB seeking grant of registration u/s 12AB of the Act. During the course of proceedings, the Ld. CIT(E) issued notices calling upon the assessee to furnish various details and documentary evidences in support of its application. Thereafter, the Ld. CIT(E), vide order dated 01/03/2026, rejected the application holding that the assessee had failed to furnish the requisite details and documents called for during the course of proceedings.

Aggrieved by the impugned order, the assessee has preferred the present appeal raising various grounds contending, inter alia, that all the requisite details and documents were duly furnished before the Ld. CIT(E); that the trust has been running an educational institution for more than four decades and has been carrying on genuine charitable activities in accordance with its objects; that the audited financial statements and other relevant documents were placed on record; and that the application came to be rejected without issuing any specific show cause notice proposing rejection and without pointing out the alleged deficiencies in the documents furnished, thereby violating the principles of natural justice.

The Ld. DR relied upon the findings recorded in the impugned order and submitted that the order passed by the Ld. CIT(E) does not call for any interference.

We have heard the submissions of the Ld. DR and carefully perused the material available on record. The short issue for our consideration is whether the rejection of the assessee's application u/s 12AB by the Ld. CIT(E) is sustainable in the facts and circumstances of the case.

We find that the impugned order proceeds on the footing that the assessee had failed to furnish the requisite details called for by the Ld. CIT(E). However, the specific case of the assessee, as borne out from the grounds of appeal, is that all the requisite details and documents sought during the course of proceedings were duly furnished before the Ld. CIT(E). It is further the grievance of the assessee that no show cause notice proposing rejection of the application was ever issued and no opportunity was granted to explain the alleged deficiencies, if any, in the material furnished.

It is well settled that while exercising jurisdiction u/s 12AB of the Act, the scope of enquiry is confined to examining the objects of the trust or institution and the genuineness of its activities. If the competent authority proposes to reject the application on the ground that the information furnished is inadequate or that certain documents have not been filed, the applicant is required to be specifically put to notice regarding such proposed action and afforded an effective opportunity of explaining the alleged deficiencies. Compliance with the principles of natural justice is an indispensable requirement before an adverse order affecting the rights of the applicant is passed.

In the present case, the impugned order does not indicate that any specific show cause notice was issued to the assessee proposing rejection of the application or pointing out the precise deficiencies which, according to the Ld. CIT(E), remained uncomplied with. If the Ld. CIT(E) was of the view that any information or document furnished by the assessee was incomplete or insufficient, the same ought to have been specifically brought to the notice of the assessee before proceeding to reject the application. Such an exercise having not been undertaken, the impugned order, in our considered opinion, suffers from violation of the principles of natural justice.

Having regard to the totality of the facts and circumstances of the case, we deem it appropriate to set aside the impugned order and restore the matter to the file of the Ld. CIT(E) for fresh adjudication. The Ld. CIT(E) shall examine all the details and documents already furnished by the assessee as well as such further material, if any, as may be placed on record, and thereafter decide the application afresh in accordance with law after issuing an appropriate show cause notice, wherever considered necessary, and after affording the assessee a reasonable and effective opportunity of being heard. We clarify that we have not expressed any opinion on the merits of the assessee's claim and all issues are left open to be adjudicated by the Ld. CIT(E) in accordance with law.

Since the rejection of the application seeking approval u/s 80G is consequential to the rejection of the application u/s 12AB, the issue relating to approval u/s 80G shall also be reconsidered by the Ld. CIT(E), if so required, while passing the fresh order pursuant to the directions contained herein.