NIRHAS FOUNDATION,VADODARA vs. THE CIT(EXEMPTION), AHMEDABAD

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ITA 1241/AHD/2026Status: DisposedITAT Ahmedabad18 May 20267 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the rejection of the 12AB registration was primarily due to non-compliance and lack of opportunity. For the 80G approval, its rejection was consequential to the 12AB registration issue. Therefore, both matters were restored to the CIT(E) for fresh adjudication.

What were the facts?

The assessee trust applied for registration under section 12AB and approval under section 80G. The CIT(E) rejected the 12AB application for non-furnishing of documents and the 80G approval because 12AB registration was a prerequisite. The assessee appealed both rejections.

What were the issues?

Whether the CIT(E) erred in rejecting the 12AB registration application without sufficient opportunity, and whether the 80G approval rejection was valid given the pending 12AB registration.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Mehul K. Patel, AR
For Respondent: Shri Prem Prakash Meena, CIT-DR
Hearing: 14.05.2026Pronounced: 18.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. Nos.1241&1242/Ahd/2026 (Assessment Year: N.A.) Nirhas Foundation, Vs. Commissioner of 11, Shri Nidhi Bunglows, Income Tax (Exemption), Nr. Manisha Cross Road, Vasna Ahmedabad Road, Vadodara-390015 [PAN No.AACTN4436H] (Appellant) .. (Respondent) Appellant by : Shri Mehul K. Patel, AR Respondent by: Shri Prem Prakash Meena, CIT-DR Date of Hearing 14.05.2026 Date of Pronouncement 18.05.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: Both appeals have been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide orders dated 08.03.2026. Since common facts and issues for consideration are involved for both the appeals before us, both the appeals are being disposed by way of a common order.

2.

The assessee has taken the following grounds of appeal:

ITA No. 1241/Ahd/2026 “1. That on facts, and in law, the learned CIT (Exemption) has grievously erred in not granting sufficient and reasonable opportunity of hearing and in rejecting the application for registration u/s 12A of the Act, vide ex-parte order. 2. That on facts and in law, the application made u/s 12A of the Act ought to have been granted by learned CIT (Exemption) as prayed for.

ITA Nos. 1241&1242/Ahd/2026 Nirhas Foundation vs. CIT(E) Asst. Year –N.A. - 2– 3. The appellant craves liberty to add, alter, amend any ground of appeal.” 3. The brief facts of the case are that the assessee trust filed an application in Form No.10AB seeking registration under section 12A of the Income-tax Act, 1961. The application was required to be examined in terms of section 12AB(1)(b) of the Act read with Rule 17A of the Income- tax Rules, 1962, which governs the procedure for fresh registration and prescribes the documents and evidences required to be furnished for the purpose of satisfying regarding the genuineness of activities of the trust and the conformity of such activities with the stated charitable objects.

4.

During the course of proceedings, the ld. CIT(Exemptions) called upon the assessee to furnish requisite details, documentary evidences and other supporting material as prescribed under Rule 17A(2) of the Rules. However, according to the ld. CIT(Exemptions), the assessee neither furnished the requisite submissions/documents nor sought adjournment. The ld. CIT(Exemptions) accordingly observed that in absence of supporting documentary evidences, he was unable to satisfy himself regarding (i) the genuineness of the activities of the trust or institution, (ii) whether the activities were being carried out in consonance with the stated objects of the trust, and (iii) whether other laws material for achieving the charitable objects had been complied with. Proceeding on the aforesaid basis, the ld. CIT(Exemptions) rejected the application filed in Form No.10AB under section 12AB of the Act and also cancelled the provisional registration, if any, already granted to the assessee. The ld. CIT(Exemptions) further directed the assessee to compute its tax liability

ITA Nos. 1241&1242/Ahd/2026 Nirhas Foundation vs. CIT(E) Asst. Year –N.A. - 3– under section 115TD of the Act read with Rule 17CB and comply with the consequential statutory requirements.

5.

The assessee is in appeal before us against the aforesaid order passed by the ld. CIT(Exemptions).

6.

We have heard the rival submissions and perused the material available on record. It is observed that the rejection of registration under section 12AB has primarily been made on account of non-compliance and failure on the part of the assessee to furnish the requisite documents and evidences before the ld. CIT(Exemptions). At the same time, it is also noticed that the matter has been decided without examination of the relevant evidences and supporting material which the assessee now claims to be in a position to furnish before the authorities. The proceedings relating to grant of registration under section 12AB carry significant tax consequences inasmuch as such registration forms the foundation for claiming exemption under sections 11 and 12 of the Act.

7.

We further note that the Coordinate Bench of the Tribunal in similar circumstances in Udhna Academy Education Trust in ITA No.970/Ahd/2026 vide order dated 07.05.2026 had restored the issue relating to rejection of registration under section 12AB to the file of the ld. CIT(Exemptions) for de novo adjudication after observing that the assessee should be granted one more effective opportunity to furnish the requisite documents and establish the genuineness of its activities and objects.

ITA Nos. 1241&1242/Ahd/2026 Nirhas Foundation vs. CIT(E) Asst. Year –N.A. - 4– 8. Having regard to the entirety of facts and in the interest of substantial justice, we are of the considered view that the assessee deserves one more effective opportunity to substantiate its claim for registration under section 12AB of the Act. Accordingly, we set aside the impugned order passed by the ld. CIT(Exemptions) and restore the matter to his file for fresh adjudication in accordance with law. The ld. CIT(Exemptions) shall examine the application afresh after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to furnish all requisite documents, evidences and details as prescribed under Rule 17A(2) of the Income-tax Rules, 1962 and fully cooperate in the proceedings without seeking unnecessary adjournments. Needless to clarify, the ld. CIT(Exemptions) shall adjudicate the issue independently on merits in accordance with law after examining the genuineness of activities and the objects of the trust.

9.

In the result, the appeal of the assessee relating to rejection of registration under section 12AB of the Act is allowed for statistical purposes.

We shall now take up the appeal relating to rejection of approval under section 80G(5) of the Act.

10.

The assessee has raised the following grounds of appeal:

ITA Nos. 1241&1242/Ahd/2026 Nirhas Foundation vs. CIT(E) Asst. Year –N.A. - 5– ITA No. 1242/Ahd/2026 “1. That on facts, and in law, the learned CIT (Exemption) has grievously erred in not granting sufficient and reasonable opportunity of hearing and in rejecting the application for registration u/s 80G(5) of the Act, vide ex-parte order. 2. That on facts and in law, the application made u/s 80G(5) of the Act ought to have been granted by learned CIT (Exemption) as prayed for. 3. The appellant craves liberty to add, alter, amend any ground of appeal.”

11.

The brief facts relating to this issue are that the assessee filed an application in Form No.10AB seeking approval under section 80G(5) of the Income-tax Act, 1961. During the course of proceedings, the ld. CIT(Exemptions) observed that the assessee did not possess a valid registration under section 12A/12AB of the Act either in the form of a regular registration order or a valid renewed registration. The ld. CIT(Exemptions) accordingly held that registration under section 12A/12AB is a mandatory pre-condition for grant of approval under section 80G(5) of the Act. Reliance was placed upon the judgment of the Hon’ble Gujarat High Court in CIT (Exemptions) v. Shree Tapeshwar Hanumanji Bajrang Charity Trust wherein it was held that in absence of valid registration under section 12A, approval under section 80G cannot be granted. Accordingly, the ld. CIT(Exemptions) rejected the application filed under section 80G(5) as non-maintainable.

The assessee is in appeal before us against the aforesaid order. 12.

13.

We have considered the facts of the case and the material available on record. We find that the rejection of approval under section 80G(5) has been made solely on the ground that the assessee did not possess valid

ITA Nos. 1241&1242/Ahd/2026 Nirhas Foundation vs. CIT(E) Asst. Year –N.A. - 6– registration under section 12A/12AB of the Act. However, while adjudicating the connected appeal relating to registration under section 12AB hereinabove, we have already restored the matter to the file of the ld. CIT(Exemptions) for fresh adjudication. Therefore, the very foundation on which the approval under section 80G has been rejected presently no longer survives and the issue relating to section 80G approval becomes consequential and intrinsically linked to the outcome of registration proceedings under section 12AB.

14.

We further note that in identical circumstances, the Coordinate Bench of the Tribunal in the case of Udhna Academy Education Trust in ITA No.971/Ahd/2026 vide order dated 07.05.2026 restored the issue relating to rejection of approval under section 80G of the Act to the file of the ld. CIT(Exemptions) for fresh adjudication after deciding the issue of registration under section 12A/12AB.

15.

Accordingly, following the same reasoning and in the interest of justice, we set aside the impugned order passed by the ld. CIT(Exemptions) rejecting the application under section 80G(5) of the Act and restore the matter to his file for de novo adjudication in accordance with law. The ld. CIT(Exemptions) shall reconsider the assessee’s application for approval under section 80G(5) afresh after adjudicating the issue relating to registration under section 12AB and after providing adequate opportunity of being heard to the assessee.

ITA Nos. 1241&1242/Ahd/2026 Nirhas Foundation vs. CIT(E) Asst. Year –N.A. - 7–

16.

In the result, the appeal of the assessee relating to rejection of approval under section 80G(5) of the Act is allowed for statistical purposes.

17.

In the combined result, both the appeals of the assessee are allowed for statistical purposes. This Order is pronounced in the Open Court on 18/05/2026

Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 18/05/2026 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

1.

Date of dictation 14.05.2026 (Dictated on dragon software) 2. Date on which the typed draft is placed before the Dictating Member 14.05.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 15.05.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 18.05.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 18.05.2026 7. Date on which the file goes to the Bench Clerk 18.05.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order……………………………………

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