VICTOR MEMORIAL TRUST,GANDHINAGAR vs. CIT(EXEMPTION), AHMEDABAD

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ITA 428/SRT/2026Status: DisposedITAT Surat15 July 2026AY 2026-275 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(E) erred in rejecting the application based on only one opportunity granted to the assessee. The principles of natural justice require a reasonable opportunity of being heard before an adverse decision is taken.

What were the facts?

The assessee trust applied for approval under Section 80G(5). The CIT(E) rejected the application, citing incorrect form and non-compliance with requests for details regarding the trust's genuineness and activities. The provisional registration was also cancelled.

What were the issues?

Whether the rejection of the 80G application without providing a reasonable opportunity of being heard and proper consideration of documents violates principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 80G(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “DB” BENCH, SURAT

Before: SHRI TR SENTHIL KUMAR & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Sujesh C. Suratwala, CA
For Respondent: Shri Mukesh Jain, CIT-DR
Hearing: 20.05.2026Pronounced: 15.07.2026

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

This appeal is filed by the assessee against the order of Commissioner of Income Tax (Exemption), Ahmedabad, [in short “CIT(E)”], dated 08.03.2026 in the proceeding u/s 80G(5) of the Income Tax Act [hereinafter referred as “the Act”].

2.

The brief facts of the case are that the assessee had filed an application for approval u/s. 80G(5) of the Act. The Ld. CIT(E) found that the application was not filed in correct form. Further, he had also called for certain details from the assessee in order to examine the genuineness of the activities of the trust and the fulfilment of conditions laid down in

ITA No. 428/Srt/2026 Victor Memorial Trust Vs.CIT(E) 2

clauses (i) to (v) of section 80G(5) of the Act, to satisfy himself that the activities were in consonance with the objects of the trust. As no compliance was made by the assessee, the Ld. CIT(E) had rejected the application of the assessee vide the impugned order and the provisional registration granted earlier was also cancelled.

3.

Aggrieved with the order of the Ld. CIT(E), the assessee is in appeal before us. The following grounds have been taken in this appeal:

1.

Denial of natural justice - The learned CIT(E) erred in law and on facts in rejecting the application under section 80G(5) and cancelling the provisional approval without giving a reasonable opportunity of being heard. The order merely recites that notices were issued, it does not prove valid service or that the appellant was aware of the requisitions. No personal hearing or show-cause notice was granted. Such action violates the principles of natural justice. The ITAT has repeatedly held that ex parte rejection of 80G applications is invalid and matters should be remanded for fresh adjudication. 2. Failure to examine the trust's objects and activities- The CIT(E) has failed to consider the trust deed, audited accounts and evidence of charitable activities filed with the application. There is no finding that the trust's objects are not charitable or that its activities are not genuine. The rejection is based solely on alleged non-filing of documents. The Commissioner was duty-bound to verify the material already available and to call for specific information if required. The non-speaking order contravenes the requirement that quasi-judicial orders must record reasons. 3. Erroneous assumption that documents were not furnished - order states that the applicant did not file any documents as per rule 11AA(2). In fact, the application was accompanied by the trust deed, financial statements and other documents as required. The Commissioner did not specify which documents were lacking and did not give an opportunity to rectify the alleged deficiencies. The assumption that no documents were filed is factually incorrect and arbitrary. 4. Misapplication of rule 11AA and section 80G(5) - The CIT(E) relied on rule 11AA(2) to reject the application without examining whether the trust met the substantive conditions of section 80G(5). The rule prescribes the documents to be filed, but failure to furnish certain papers does not automatically establish that the trust is not genuine. The Commissioner should have allowed time to furnish any additional documents and then

ITA No. 428/Srt/2026 Victor Memorial Trust Vs.CIT(E) 3

assessed the merits. Rejection on technical grounds defeats the beneficial object of section 80G 5. Cancellation of provisional approval without jurisdiction - CIT(E) erred in cancelling the provisional approval simultaneously with rejecting the application. The statute contemplates that provisional registration will remain valid until regular registration is granted or refused. Cancellation without finding any contravention of section 80G(5) is arbitrary and contrary to law. 6. Non-consideration of existing 12AB registration - The Commissioner(Exemption) has failed to consider that the trust is registered under section 12AB. Courts have held that once registration under section 12A/12AB is granted and not withdrawn, the Commissioner cannot question the genuineness of activities while considering an application under section 80G. The impugned order ignores this settled position of law. 7. General Ground - The appellant respectfully submits that the above grounds of appeal are without prejudice to one another and that the appellant craves leave to add, amend, alter, modify, substitute or withdraw any of the grounds of appeal, either wholly or in part, at or before the time of hearing of the appeal, as may be considered necessary or expedient in the interest of justice. The appellant further submits that any omission or inadvertent error in the present grounds may kindly be permitted to be rectified at the time of hearing, and the Hon'ble Tribunal may be pleased to consider such additional or modified grounds in accordance with law. Relief sought - In view of the above grounds, the appellant prays that the order dated 08-03-2026 passed by the CIT(E), Ahmedabad be quashed and the CIT(E) be directed to grant approval under section 80G(5). Alternatively, the matter may be remanded to the CIT (E) with directions to give a reasonable opportunity to the appellant to furnish documents and to pass a fresh, reasoned order after considering the trust's activities and 12AB registration.

4.

Shri Sujesh C. Suratwala, the AR of the assessee submitted that Ld. CIT(E) had allowed only one opportunity of hearing on 25.02.2026. The Ld. AR explained that the Ld. CIT(E) had passed the order without taking into account the substantial details and documents filed with the application and also without giving proper opportunity of being heard to the assessee. He, therefore, requested that the assessee may be allowed

ITA No. 428/Srt/2026 Victor Memorial Trust Vs.CIT(E) 4 another opportunity of being heard by setting aside the matter to the file of the Ld. CIT(E).

5.

Per contra, Shri Mukesh Jain, the Ld. CIT-DR, supported the orders of Ld. CIT(E). He, however, had no objection if the matter was set aside the file of the Ld. CIT(E) for allowing another opportunity to the assessee.

6.

We have carefully considered the facts of the case and the material available on record. It is observed that the application of the assessee- trust under section 80G(5) of the Income-tax Act, 1961 came to be rejected by the Ld. CIT(E) primarily on account of non-compliance with the notice issued seeking certain documents and clarifications. From the records, it is evident that only one opportunity was granted to the assessee. The interest of natural justice cannot be served by rejecting the application of the assessee by allowing only one opportunity. Considering that the assessee is a charitable trust seeking approval under the provisions of the Act and that the issue relates to the examination of its objects and activities, we are of the considered view that one more opportunity deserves to be afforded to the assessee to place the requisite material before the Ld. CIT(E). The principles of natural justice require that a reasonable and effective opportunity of being heard be granted before an adverse decision is taken. In the facts and circumstances of the present case, and without expressing any opinion on the merits of the application, we deem it appropriate, in the interest of justice, to set aside the impugned order and restore the matter to the file of the Ld. CIT(E) for fresh adjudication. The assessee shall furnish all the documents, explanations and evidences as may be called for by the Ld. CIT(E) and shall fully cooperate in the proceedings. The Ld. CIT(E) shall afford

ITA No. 428/Srt/2026 Victor Memorial Trust Vs.CIT(E) 5

adequate opportunity of being heard to the assessee and thereafter pass a speaking order in accordance with law. Accordingly, the impugned order is set aside and the matter is restored to the file of the Ld. CIT(E) for de novo consideration. The grounds raised by the assessee are allowed for statistical purposes.

7.

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

Order pronounced in the Court on 15/07/2026 at Ahmedabad.

Sd/- Sd/- (TR SETHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 15th July, 2026 Neelesh, Sr. P.S (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर आयकर अपीलीय आयकर आयकर अपीलीय अपीलीय अिधकरण अपीलीय अिधकरण अिधकरण, अहमदाबाद अिधकरण अहमदाबाद अहमदाबाद / ITAT, Ahmedabad अहमदाबाद

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