SAMSKRITA BHARATI TRUST (DAKSHNINA TAMILNADU),COIMBATORE vs. CIT, EXEMPTIONS,, CHENNAI

The brief facts of the case emanating from the records are that the assessee is a Trust registered by a Trust deed dated 16.04.2014, engaged in the activities of teaching Sanskrit, teacher training, conducting correspondanc e courses, residential camps, school based curriculum support and cultural education across Tamilnadu. The Trust is registered u/s.12AA since 01.04.2015 and was granted provisional registration under the new regime u/s.12A(1)(ac)(i) on 28.05.2021, which is valid for assessment years 2022-23 to 2026-27. Further, the Trust was also granted approval u/s.80G of the Act w.e.f. 07.03.2016 vide order dated 15.06.2016. Later the approval u/s.80G(5)(i) of the Act was granted on 31.08.2021 under the new regime.

As per the statutory requirement, the Trust filed an application in Form 10AB for permanent registration u/s.12A(1)(ac)(ii) of the Act on 30.06.2025. Similarly, the assessee also filed an application in Form 10AB for approval u/s.80G(5)(ii) of the Act vide application dated 30.06.2025.

The ld.CIT(E) has issued a show cause notice for which the assessee has filed details called for by the ld.CIT(E). On perusal of the details and documents furnished by the assessee, the ld.CIT(E) found that, though the assessee has stated its sole object is ‘education’, in the reply to questionnaire has declared that it is a non-formal teaching. Further, the ld.CIT(E) on analysis of the financials of the assessee, observed that the assessee is having collected the fees and selling books for conducting informal online classes on a high margin, is having huge surplus and hence treated the activity as commercial in nature. Therefore, the ld.CIT(E) rejected both the applications u/s.12AB and also 80G of the Act by passing a separate orders stating that (i) the Trust was indulged in

Aggrieved by the orders of the ld.CIT(E), the assessee preferred these appeals before us.

Before us the ld.AR assailing the action of the ld.CIT(E), submitted that the order of rejection of registration u/s.12AB and also recognition u/s.80G of the Act is arbitrary and against principles of law. The ld.AR submitted the impugned order has been passed in violation of principles of natural justice as the ld.CIT(E) had not granted the personal hearing to the assessee before concluding the order of rejection. Further, the ld.AR submitted that the ld.CIT(E) has concluded that the assessee is not carrying out the activity of education as a charitable purpose, without being raised that issue to the assessee in the show cause notice. Therefore the ld.CIT(E) has violated the principles of natural justice and hence prayed for one more opportunity of hearing before the ld.CIT(E) to submit the relevant evidence and documents in support of the claim of the assessee.

Per contra, the ld.DR supported the orders of the ld.CIT(E).

We have heard the rival parties and perused the material available on record and gone through the orders of the lower authorities. The issue that arises for our consideration is whether the ld.CIT(E) was justified in rejecting the applications filed by the assessee for (i) registration u/s.12AB and (ii) approval u/s.80G(5)(ii) of the Act.

However, on careful examination of the records, we find merit in the contention of the ld.AR that the rejection has been made in violation of the principles of natural justice. It is a settled position of law that any adverse inference must be preceded by a specific show cause and an effective opportunity of being heard. In the present case, the assessee has specifically contended that no personal hearing was granted before passing the impugned orders. Further, it is also brought to our notice that the issue relating to the characterization of the assessee’s activities as not constituting “education” within the meaning of section 2(15) was not explicitly put to the assessee in the show cause notice. Thus, the assessee was deprived of an opportunity to explain the nature of its activities, the methodology of imparting education, and to substantiate that its objects fall within the scope of charitable purpose.

In view of the above, we find that the impugned orders have been passed without affording adequate and effective opportunity of hearing to the assessee and without confronting it with all the grounds forming the basis of rejection. Therefore, the orders suffer from violation of principles of natural justice and cannot be sustained. Accordingly, in the interest of justice, we set aside the orders passed by the ld.CIT(E) u/s.12AB and 80G of the Act and remand the matter back to the file of the ld. CIT(E) for fresh adjudication. The ld. CIT(E) is directed to provide reasonable opportunity of hearing to the assessee, including a personal hearing, and to pass a speaking order after duly considering the submissions and evidences that may be filed by the assessee. The assessee is also directed to cooperate in the proceedings and furnish all necessary details and documents in support of its claim.

In the result, both the appeals of the assessee are allowed for statistical purposes and stay applications of the assessee are dismissed.