ARAVANAIPPU,VELLORE vs. CIT(E), CHENNAI

ITA 2104/CHNY/2026Status: DisposedITAT Chennai29 September 2026AY 2026-274 pages
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What did the Tribunal hold?

The Tribunal held that the Ld. CIT(E) ought to have called for an explanation from the assessee if any omission or deficiency was found, before drawing an adverse view. The Tribunal noted that the assessee had enjoyed 12A registration from 2019 onwards. The passing of a cryptic order without confronting the assessee and asking for explanations regarding the income and expenditure account for the year ending 31.03.2025 constituted a per-se violation of natural justice. Consequently, the impugned order rejecting the Section 12AB registration was set aside, and the application was restored to the file of the Ld. CIT(E) with a direction to comply with the principles of natural justice and grant a proper opportunity to the assessee. Regarding the denial of approval under Section 80G, since it was consequential to the denial of Section 12AB registration, that application was also restored to the file of the Ld. CIT(E) for fresh consideration after the decision on the Section 12AB application. No issue was expressly left undecided.

What were the facts?

The assessee, Aravanaippu, filed appeals against the rejection order dated 22.03.2026 by the Commissioner of Income Tax (Exemption), Chennai (CIT(E)). The rejection concerned the assessee's applications for registration under Section 12AB and approval under Section 80G of the Income Tax Act, 1961. The assessee had previously held registration under Section 12AA since 27.09.2019 and obtained provisional registration under the new regime on 06.10.2021 for AY 2022-23 to 2026-27. For regular registration under Section 12AB, the assessee filed an online application on 27.09.2025. The CIT(E) called for details and financials, which were furnished. However, the CIT(E) passed an adverse order without giving the assessee a proper opportunity to explain its activities, leading to allegations of a violation of natural justice.

What were the issues?

1. Whether the Ld. CIT(E) erred in rejecting the appellant's application for regular registration u/s 12AB of the Act by holding that the appellant derives service income, and whether receipt of service income is a bar for such registration? (Question of law and fact, concerning Section 12AB). 2. Whether the Ld. CIT(E) erred in rejecting the appellant's application u/s 12AB of the Act without putting the appellant on notice vis-à-vis the reason for rejection, thereby violating principles of natural justice? (Question of law, concerning principles of natural justice and Section 12AB). 3. Whether the denial of approval u/s.80G of the Act, being consequential to the denial of registration u/s.12AB, is valid? (Question of law, concerning Section 80G and Section 12AB). Assessee's contentions: The order of the Ld. CIT(E) is erroneous and bad in law, passed ignoring facts and merits. Receipt of service income is not a bar for registration under Section 12AB. The rejection was done without proper notice, violating natural justice, and the assessee sought one more opportunity. Non-commencement or lull in charitable activities cannot be held against the assessee for registration. Revenue's contentions: The Ld. DR did not want to give the assessee another opportunity but could not counter the fact that the assessee was not show-caused before the adverse view was taken.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G,Section 12AA,Section 12(1)(ac)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI ABY T. VARKEY & MS. PADMAVATHY. S

Hearing: 05.08.2026Pronounced: 29.09.2026

PER ABY T. VARKEY, JM: These are appeals preferred by the assessee against the rejection order passed by the Ld. Commissioner of Income Tax (Exemption), Chennai, dated 22.03.2026 for registration u/s.12AB and approval u/s.80G of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2.

Grounds of appeal raised by the assessee qua rejection of 12A is noted as under:- GROUNDS OF APPEAL

ITA 2104 & 2105 /Chny/2026 Aravanaippu A. For that the order of the Ld. Commissioner o

The order continues below.

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