KUSUM GARG W/O SHRI VIJAY KUMAR GARG (S/O SHRI MOTI RAM GARG) MEMORIAL TRUST,GURGAON vs. EXEMPTIONS WARD FARIDABAD, FARIDABAD

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ITA 2896/DEL/2026Status: DisposedITAT Delhi16 October 2026AY 2026-278 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that while the assessee had failed to furnish the requisite details despite an opportunity, the CIT(E) had not recorded any specific adverse finding that the trust's objects were not charitable or that its activities were not genuine. The rejection was based on the inability to verify the conditions due to a lack of supporting material. The Tribunal acknowledged the assessee's onus to substantiate its eligibility but, in the interest of substantial justice, decided to grant the assessee one more opportunity. The impugned order was set aside, and the matter was restored to the CIT(E) for fresh adjudication. The assessee was directed to cooperate and furnish all required documents. The Tribunal explicitly stated that it was not expressing any opinion on the merits of the assessee's eligibility for registration. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Kusum Garg W/o Shri Vijay Kumar Garg (S/o Shri Moti Ram Garg) Memorial Trust, filed an application for registration under Section 12AB read with Section 12A(1)(ac)(iii) of the Income Tax Act, 1961, before the Commissioner of Income Tax (Exemptions) [CIT(E)], Chandigarh. The CIT(E) issued a questionnaire-cum-show-cause notice on 21.01.2026, seeking information to ascertain the genuineness of the trust's activities and their conformity with its objects. The notice was delivered electronically and read by the assessee on 22.01.2026. The assessee neither replied nor sought an adjournment by the stipulated date of 03.02.2026. Consequently, the CIT(E), by an order dated 13.02.2026, rejected the application, citing insufficient factual evidence and the inability to verify the genuineness of the trust's activities due to non-compliance. The assessee appealed this order.

What were the issues?

1. Whether the order passed by the Learned CIT (Exemptions) rejecting the application for registration under Section 12AB of the Income Tax Act, 1961, is bad in law and on facts, solely on account of non-compliance with the questionnaire issued during the proceedings. Assessee's Contention: The Learned AR argued that the CIT(E) erred in rejecting the application merely for non-compliance, without recording any specific adverse findings regarding the trust's objects or the genuineness of its activities. The rejection without substantive examination was unjustified, and the matter should be restored for fresh consideration. The assessee also highlighted that a request for extension was made and the reply was filed before the impugned order was received, raising concerns about natural justice. Revenue's Contention: The Learned DR supported the impugned order, submitting that the CIT(E) provided sufficient opportunity, and the assessee's failure to furnish information or seek adjournment prevented verification of the trust's activities' genuineness. Therefore, the rejection was justified.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 12A(1)(ac)(iii)

AI-generated summary — verify with the full judgment below

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

Before: MS KAVITHA RAJAGOPAL & SMT. RENU JAUHRI

For Appellant: Shri Ajay Garg, Advocate &, Ms Surbhi Katyal, Advocate
For Respondent: Shri Ajay Kumar, CIT, DR
Hearing: 20.07.2026Pronounced: 16.10.2026

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘E’: NEW DELHI BEFORE MS KAVITHA RAJAGOPAL, JUDICIAL MEMBER AND SMT. RENU JAUHRI, ACCOUNTANT MEMBER ITAs No.2897 & 2896/Del/2026 Assessment Year: NA Kusum Garg, W/o Shri Vijay CIT (E), Exemptions Ward, Kumar Garg (S/o Shri Moti Ram Faridabad. Garg) Memorial Trust, Vs. H. No.101/15, Jacompura, Gurgaon. PAN: AAGTK0586R (Appellant) : (Respondent) Assessee by : Shri Ajay Garg, Advocate & Ms Surbhi Katyal, Advocate Respondent by : Shri Ajay Kumar, CIT, DR Date of Hearing : 20.07.2026 Date of Pronouncement : 16.10.2026 ORDER Per Kavitha Rajagopal, JM: The captioned appeals are filed by the assessee challenging the order of the Ld. Commissioner of Income Tax (Exemptions) [‘the Ld. CIT(E)’, for short] passed u/s 12AB(1)(b)(ii) and 80G of the Income Tax Act, 1961 (‘the Act’, for short).

2.

Since the facts are identical we take ITA No.2897/Del/2026 as a lead case.

3.

The assessee has raised the following grounds of appeal:- “1. On the facts and circumstances of the case, Order passed by Learned CIT Exemptions, Chandigarh, rejecting the application for registration filed

ITA Nos.2897 & 2896/Del/2026 Kusum Garg w/ Shri Vijay Kumar Garg, C/o Moti Ram Garg Memorial Trust vs. CIT(E) in Form 10AB under Section 12A(1 )(ac)(iii) for registration under Section 12AB of Income Tax Act, 1961 , is bad both in law and on facts. 2. On the facts and circumstances of the case, Learned CIT Exemptions, Chandigarh erred both in law and on facts by rejecting the claim of exemption of the Appellant without considering the detailed Reply alongwith relevant documents filed by the Appellant. 3. Learned CIT Exemptions, Chandigarh failed to take on record the facts and evidences placed before him/her by the Appellant through its reply dated 12.02.2026 filed on 13.02.2026 and therefore the cancellation/rejection order is totally unjustifiable. 4. Learned CIT Exemptions, Chandigarh failed to take note of request for extension of date for filing reply till 16.02.2026 filed by the Appellant on 02.02.2026, a day before the last date of submitting the reply. The Appellant subsequently filed its reply on 13.02.2026, well before the date for which the extension was sought and prior to the receipt of the impugned order dated 13.02.2026. Therefore, the cancellation order/rejection order passed on 13.02.2026 without considering the Appellant's reply is totally devoid of principles of natural justice. 5, On the facts and circumstances of the case, the observations made by the Learned CIT Exemptions, Chandigarh in paras 3.1 and 3.2 of cancellation order/rejection order are perverse, devoid of facts and without merit. 6, The reliance placed by the learned CIT, Exemption, Chandigarh on the decision of judicial precedents cited in paragraphs 4.2 to .5 of the rejection order is fully and wholly distinguishable on the facts in the instant case, 7, The Appellant craves leave to add, amend or alter any of the grounds of the appeal.” 4. The assessee, Kusum Garg W/o Shri Vijay Kumar Garg (S/o Shri Moti Ram Garg) Memorial Trust, Gurgaon, Haryana, is a religious-cum-charitable trust which filed an application in Form No. 10AB on 12.09.2025 before the learned Commissioner of Income Tax (Exemptions), Chandigarh, seeking registration under Section 12AB read with Section 12A(1)(ac)(iii) of the Income-tax Act, 1961.

ITA Nos.2897 & 2896/Del/2026 Kusum Garg w/ Shri Vijay Kumar Garg, C/o Moti Ram Garg Memorial Trust vs. CIT(E) 5. Upon examination of the application and the accompanying documents, the learned CIT(E) observed that the information furnished by the assessee was insufficient to ascertain the genuineness of the activities carried out by the trust and to verify whether such activities were in consonance with the objects specified in its trust deed.

6.

Consequently, the learned CIT(E) issued an electronic questionnaire-cum- show-cause notice dated 21.01.2026, calling upon the assessee to furnish the requisite information and supporting documentary evidence on or before 03.02.2026. The information sought included the trust deed, registration particulars, details of commencement and nature of charitable activities, annual accounts, income-tax returns, audit reports, bank statements, particulars of charitable expenditure and supporting evidence establishing the genuineness of its activities. The assessee was also required to clarify whether its activities were charitable or religious-cum- charitable and whether the relevant statutory requirements were being complied with.

7.

The learned CIT(E) recorded that the aforesaid notice was duly delivered to the registered email addresses of the assessee and made available on the income-tax portal. As per the electronic records referred to in the impugned order, the notice was

ITA Nos.2897 & 2896/Del/2026 Kusum Garg w/ Shri Vijay Kumar Garg, C/o Moti Ram Garg Memorial Trust vs. CIT(E) read on 22.01.2026. However, the assessee neither furnished any reply to the questionnaire nor sought an adjournment within the stipulated period.

8.

In the absence of any response or supporting documentary evidence, the learned CIT(E) observed that the assessee had failed to substantiate the genuineness of its activities or demonstrate that the activities were being carried out in accordance with the objects of the trust. The learned CIT(E) further inferred from the non-compliance that the assessee was not interested in pursuing its application for registration.

9.

In support of these findings, the learned CIT(E) referred to various judicial pronouncements concerning non-prosecution, failure to comply with statutory proceedings and the consequences of non-cooperation.

10.

Accordingly, the learned CIT(E), by the impugned order dated 13.02.2026 passed in Form No. 10AD, concluded that the application was deficient in factual evidence and that, in the absence of the requisite submissions, the genuineness of the activities of the trust could not be verified. The learned CIT(E), therefore, rejected the assessee's application for registration under Section 12AB and also recorded that the registration stood cancelled.

ITA Nos.2897 & 2896/Del/2026 Kusum Garg w/ Shri Vijay Kumar Garg, C/o Moti Ram Garg Memorial Trust vs. CIT(E) 11. The learned AR for the assessee submitted that the learned CIT(E) had erred in rejecting the application for registration under Section 12AB of the Act merely on account of non-compliance with the questionnaire issued during the proceedings. It was contended that the assessee is a religious-cum-charitable trust established for carrying out charitable activities in accordance with its objects and that the learned CIT(E) had not recorded any specific adverse finding regarding the objects of the trust or the genuineness of its activities. The learned AR submitted that the rejection of registration on account of non-furnishing of certain information, without examining the matter substantively, was not justified. It was accordingly prayed that the impugned order be set aside and the matter be restored to the file of the learned CIT(E) for fresh consideration after affording the assessee an opportunity to furnish the requisite documentary evidence.

12.

Per contra, the learned DR strongly supported the impugned order and submitted that the learned CIT(E) had afforded sufficient opportunity to the assessee to establish the genuineness of its activities and their conformity with the objects of the trust. It was submitted that despite the questionnaire-cum-show-cause notice dated 21.01.2026 having been duly served electronically, the assessee neither furnished the requisite information nor sought any adjournment. The learned DR contended that in the absence of the necessary documents and supporting evidence,

ITA Nos.2897 & 2896/Del/2026 Kusum Garg w/ Shri Vijay Kumar Garg, C/o Moti Ram Garg Memorial Trust vs. CIT(E) the learned CIT(E) was unable to verify the genuineness of the activities of the trust. It was therefore submitted that the rejection of the application was justified and that the impugned order deserved to be upheld.

13.

We have heard the rival submissions and perused the material available on record. It is observed that the assessee had filed an application seeking registration under Section 12AB of the Act, which came to be rejected by the learned CIT(E) primarily on account of non-compliance with the questionnaire issued calling for information and supporting documentary evidence to establish the genuineness of its activities. We find that although the assessee had failed to furnish the requisite details despite being afforded an opportunity, the learned CIT(E) has not recorded any specific adverse finding that the objects of the trust are not charitable or that its activities are not genuine. The application has essentially been rejected on account of the inability to verify the requisite conditions in the absence of supporting material.

14.

We are conscious of the fact that the primary onus lies upon the assessee to substantiate its eligibility for registration and that the learned CIT(E) is empowered to call for the necessary information and conduct inquiries in accordance with Section 12AB of the Act. Nevertheless, considering the facts and circumstances of the case and in the interest of substantial justice, we deem it appropriate to afford the assessee one more opportunity to substantiate its claim by furnishing the requisite

ITA Nos.2897 & 2896/Del/2026 Kusum Garg w/ Shri Vijay Kumar Garg, C/o Moti Ram Garg Memorial Trust vs. CIT(E) documentary evidence. Accordingly, without expressing any opinion on the merits of the assessee’s eligibility for registration, we set aside the impugned order and restore the matter to the file of the learned CIT(E) for fresh adjudication in accordance with law, after affording the assessee a reasonable opportunity of being heard. The assessee is directed to extend full cooperation and furnish all requisite information and supporting documents as may be called for by the learned CIT(E). The learned CIT(E) shall examine the same and pass a reasoned and speaking order in accordance with law.

15.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

ITA No.2896/Del/2026.

16.

Since the facts are identical, our finding in ITA No.2897/Del/2026 as above would apply mutatis mutandis to this appeal and this appeal of the assessee is also allowed for statistical purposes.

17.

To sum up, the appeals of the assessee are allowed for statistical purpose. Order pronounced in the open court on 16.10.2026.

Sd/- Sd/- (RENU JAUHRI) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated, 16.10.2026 7

SHASHI Digitally signed by SHASHI KANT KANT PANDEY Date: 2026.10.28 PANDEY 10:55:36 +05'30'

ITA Nos.2897 & 2896/Del/2026 Kusum Garg w/ Shri Vijay Kumar Garg, C/o Moti Ram Garg Memorial Trust vs. CIT(E)

dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT

ASSISTANT REGISTRAR ITAT, NEW DELHI

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