GOYAL EDUCATIONAL AND WELFARE SOCIETY,FARIDABAD vs. CIT EXEMPTION, CHANDIGARH

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ITA 2814/DEL/2026Status: DisposedITAT Delhi17 July 20264 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(E) rejected the application without issuing a show cause notice or providing an opportunity to the assessee to explain the discrepancies. Therefore, the matter was remitted back for fresh adjudication.

What were the facts?

The assessee society sought registration under Section 12AB of the Income Tax Act. The CIT(E) rejected the application due to doubts about unsecured loans, salary payable, and claimed expenses.

What were the issues?

Whether the denial of registration under Section 12AB without providing an opportunity to the assessee to explain financial discrepancies violates principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 12AB

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’: NEW DELHI

For Appellant: Dr. Rakesh Gupta, Sr. Adv, Shri Somil Agarwal, Adv, Shri Saksham Agarwal, CA and Shri Deepesh Jain, Adv
For Respondent: Shri Lal Ram Sanga Sailio
Hearing: 13/07/2026

PER MANISH AGARWAL, AM: This appeal is filed by the assessee against the order of the ld. Commissioner of Income Tax (Exemption), Chandigarh [CIT(E), in short] dated 13.03.2026 rejecting the approval/registration sought u/s 12AB of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’).

2.

Before us, the Ld. AR of the assessee submits that the registration u.s 12AB was rejected for the reason that the assessee has shown huge unsecured loans and

2 ITA No.2814/Del/2026 heavy salary payable was shown. Further the ld. CIT(E) alleged that the assessee has claimed College running expenses in addition to the expenses already claimed int eh Income & Expenditure account. As per ld. AR, no show cause notice was issued to the assessee before concluding that the assessee has failed to satisfied about the genuineness of the activities and authenticity of the financial statements. It is therefore, requested that matter be remitted back to the file of ld. CIT(E) for making necessary explanation about the genuineness of the activities and to satisfactorily justify on the discrepancies alleged by ld. CIT(E) about the unsecured loans, abnormal salary payment and doubtful financial transactions.

3.

Per contra, the Ld. CIT-DR supported the orders of Ld. CIT(E) and requested for the confirmation of the same.

4.

We have heard the rival submissions and from the perusal of the order of Ld. CIT(E), it is observed that while rejecting the application for registration u/s 12Ab of the Act, ld. CIT(E) has raised serious doubts about the financial statements filed by the assessee however, they were never confronted to the assessee nor any opportunity was provided before the denial of registration u/s 12AB of the Act.

5.

Under these facts and circumstances of the case and in the interest of natural justice, all the grounds of appeal are remitted back to the file of Ld. CIT(E) for fresh adjudication on merits in accordance with law after providing reasonable opportunities to the assessee. The Assesse is also directed to file all the necessary replies before the Ld. CIT(E) in order to establish the genuineness of its activity. With these directions, the appeal of the assessee is allowed for statistical purposes.

3 ITA No.2814/Del/2026 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 13.07.2026.

Sd/- Sd/- /- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 17.07.2026. *PK, Sr. PS* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI

4 ITA No.2814/Del/2026

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