SHRI KHANDAL VIPRA SEWA SANTHAN TRUST ,JAIPUR vs. CIT(E), JAIPUR, JAIPUR

This appeal by the Assessee is directed against the order of the learned Commissioner of Income Tax (Exemptions), Jaipur [hereinafter referred to as “the learned CIT(E)”] dated 05.02.2026 passed under section 12AB(1)(b)(ii) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), rejecting the application of the Assessee in Form No. 10AB for registration under section 12AB of the Act.

The grounds of appeal raised by the Assessee before us in the memorandum of appeal in Form No. 36 read as under:

Briefly stated, the facts of the case are that the Assessee, a trust at Jaipur which, as recorded in the impugned order, runs a hostel for students, filed Form No. 10AB on 30.09.2025 under section code 4A. The learned CIT(E) treated it as an application under section 12A(1)(ac)(vi)(B) of the Act. A questionnaire dated 14.11.2025 and a show cause notice dated 20.01.2026 were issued. The application was rejected on the three grounds summarised below:

The learned Departmental Representative (hereinafter referred to as “the learned DR”) supported the order of the learned CIT(E) and submitted that the Assessee did not furnish the details called for despite several opportunities.

We have heard both parties and perused the material on record. Two features of the impugned order call for notice at the outset. First, the finding in para 2.2 that “the applicant itself stated” that it had taken the benefit of sections 11 and 12 of the Act rests on a verification reproduced in para 2.1. Surprisingly, that verification is not the Assessee’s. It is made by a different person on behalf of a different entity located at Jodhpur, bearing a different PAN, and it refers to an application made on 09.03.2024, whereas the Assessee filed its application on 30.09.2025. Second, the table at the beginning of the annexure records against the show cause notice dated 20.01.2026 that a “Point wise reply has been furnished”, while the body of the order states more than once that no reply to that notice was furnished. The reply so recorded is not discussed anywhere in the order. Natural justice, often described as fair play in action, requires that what a party places on record is at least considered. A conclusion drawn from another entity’s declaration, with a reply on record left unexamined, cannot be sustained.

On the section code, the question is not merely which code the Assessee selected but which clause of section 12A(1)(ac) of the Act its case actually falls under. That depends on facts such as whether the Assessee held any earlier registration and whether, and on what basis, exemption under sections 11 and 12 of the Act was claimed in the returns for the earlier years. These facts have to be verified from the record. Once the appropriate clause is identified, the learned CIT(E) will also

On the RPT Act, we refrain from expressing any view on whether registration under that Act is a requirement material for achieving the objects of the Assessee within the meaning of section 12AB(1)(b)(i)(B) of the Act. This is left open for the learned CIT(E) to decide after considering the reply of the Assessee. However, we are constrained to observe that the remark in para 3.5 of the impugned order, that an appeal before this Tribunal filed by an unregistered trust is not admissible under section 29 of the RPT Act, was beyond the authority of the learned CIT(E). The right of appeal against an order under section 12AB(1)(b) of the Act is conferred by section 253(1)(c) of the Act, and the admissibility of such an appeal is for this Tribunal to decide. Section 29 of the RPT Act speaks of suits to enforce a right on behalf of a public trust in a court. An authority whose order is under appeal cannot pronounce on the maintainability of the appeal against its own order. The remark is, therefore, of no consequence.

On genuineness, the learned CIT(E) has raised detailed queries which deserve full answers. At the same time, whether running a hostel for students is a charitable activity within section 2(15) of the Act turns on the objects in the trust deed, the nature. The impugned order holds the activity to be against the objects of the trust without examining the objects clause. This issue also needs a fresh look on proper material.

In these circumstances, the impugned order is set aside and the application of the Assessee in Form No. 10AB is restored to the file of the learned CIT(E) for a fresh decision on all the issues in accordance with law, after giving the Assessee a reasonable opportunity of being heard. The learned CIT(E) shall be free to call for any information and make such enquiries as considered necessary. The Assessee shall file complete replies with supporting evidence to all the queries and shall