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Facts
The assessee, a trust, applied for registration under Section 12A (via 12AB) and approval under Section 80G. The CIT(E) rejected both applications, citing lack of sufficient documents to prove genuineness and compliance, and failure to file returns. The trust had commenced activities but no return was filed as the assessment year was ongoing.
Held
The Tribunal held that the CIT(E) had passed a cryptic order without granting a personal hearing, which is mandatory under Section 12AB(1)(b)(ii)(B) of the Act. The Tribunal set aside the orders and remitted the matters back to the CIT(E) for fresh consideration after affording a reasonable opportunity of being heard.
Key Issues
Whether the rejection of applications for registration under Section 12AB and approval under Section 80G was valid without granting a personal hearing and a speaking order. Whether the failure to file a return, when the assessment year was ongoing, constituted a defect sufficient for rejection.
Sections Cited
12A, 12AB, 80G, 12AB(1)(b)(ii)(B)
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Income Tax Appellate Tribunal, ‘B’ BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
These are the appeals filed by the assessee challenging the rejection orders of the Ld.CIT(E) rejecting the 12A registration and also the approval u/s. 80G of the Act both dated 25/06/2025 and raised the following grounds:
“1. The order passed by the learned Commissioner of Income Tax (Exemptions), Bengaluru, ("CIT(E)"), insofar as it is prejudicial to the Appellant, is contrary to taw, the weight of evidence, principles of natural justice and preponderance of probabilities on the facts and circumstances of the case. & 1511/Bang/2025
2. The learned CIT(E) erred in law by rejecting the application under section 80G of the Act without issuing a show cause notice proposing such rejection and consequently, the impugned order is in gross violation of principles of natural justice on the facts and circumstances of the case.
3. The learned CITE) erred in law and on facts in not passing a speaking order rejecting the application filed under section 12AB of the Act on the facts and circumstances of the case.
4. The learned CIT(E) failed to consider the documentary evidence and failed to appreciate that the Appellant fulfills all the necessary conditions for approval under section 12AB of the Act on the facts and circumstances of the case. The Appellant craves to add, alter, modify, substitute, change and delete any of the grounds before or at the time of hearing the appeal. In the view of the above, the Appellant prays that the appeal may be allowed in entirety in the interest of equity and justice.”
“1. The order passed by the learned Commissioner of Income Tax (Exemptions), Bengaluru, (“CIT(E)”), insofar as it is prejudicial to the Appellant, is contrary to law, the weight of evidence, principles of natural justice and preponderance of probabilities on the facts and circumstances of the case.
2. The learned CIT(E) erred in law by rejecting the application under section 80G of the Act without issuing a show cause notice proposing such rejection and consequently, the impugned order is in gross violation of principles of natural justice on the facts and circumstances of the case.
3. The learned C1T(E) erred in law and on facts in not passing a speaking order rejecting the application filed under section 80G of the Act on the facts and circumstances of the case.
4. The learned CIT(E) failed to consider the documentary evidence and failed to appreciate that the Appellant fulfills & 1511/Bang/2025 all the necessary conditions for approval under section 80G of the Act on the facts and circumstances of the case. The Appellant craves to add, alter, modify, substitute, change and delete any of the grounds before or at the time of hearing the appeal. In the view of the above, the Appellant prays that the appeal may be allowed in entirety in the interest of equity and justice.”
The brief facts of the case are that the assessee is a trust registered under the provisions of the Indian Trusts Act and sought for registration u/s. 12A of the Act for which an application u/s. 12AB was filed by the assessee. Similarly, another application was filed seeking an approval u/s. 80G of the Act. The Ld.CIT(E) on receipt of the said applications had directed the assessee to appear before the Ld.CIT(E) and the assessee also appeared and filed various details and documents. The Ld.CIT(E) had observed that the trust was registered on 08/12/2022 and started its activities during the F.Y. 2024-25. The Ld.CIT(E) observed that the assessee had not filed their return of income for which the assessee had no explanation to offer. Therefore the Ld.CIT(E) had come to the conclusion that the assessee had not submitted the necessary documents to prove the genuineness of the activities of the trust and also the compliance of such requirements of any other law as or materials for the purpose of achieving its objects. The Ld.CIT(E) therefore concluded that the assessee had not fully complied with the requirements and on that basis, he had rejected the registration sought for u/s. 12AB of the Act.
Similarly, the approval sought for u/s. 80G was also rejected.
As against the said orders, the assessee filed appeals before this Tribunal.
At the time of hearing, the Ld.AR submitted that the trust had started its activities for which the various documents were produced before the Ld.CIT(E) but unfortunately, the Ld.CIT(E) had concluded that no & 1511/Bang/2025 satisfactory evidences were produced to establish the genuineness of its activities. Further, the Ld.AR submitted that before rejecting the application, the Ld.CIT(E) had not granted any opportunity of being heard as contemplated u/s. 12AB(1)(b)(ii)(B) of the Act and therefore the order of the Ld.CIT(E) is against the principles of natural justice. The Ld.AR also submitted that the Ld.CIT(E) had not passed a speaking order but only on the ground that the assessee had not submitted the necessary documents had rejected the application which is not correct.
The Ld.DR relied on the orders of the Ld.CIT(E).
We have heard the arguments of both sides and perused the materials available on record.
We have perused the orders of the Ld.CIT(E). From the said order, we understand that the trust was registered during the F.Y. 2022-23 and they started their activities during the F.Y. 2024-25. Therefore there is no dispute about the trust started the activities during the F.Y. 2024-25. Further, the Ld.AR also produced some documents to show that the trust had commenced its activities. Only after the completion of the assessment year, the trust could have filed their return of income and therefore it could not be termed as a defect for rejecting the application u/s. 12AB as well as approval u/s. 80G of the Act. We have also considered the fact that the Ld.CIT(E) had passed a cryptic order and also without granting a reasonable opportunity of being heard before rejecting the said application. It is mandatory, as per section 12AB(1)(b)(ii)(B) of the Act, the Ld.CIT(E) ought to have granted a personal hearing before passing any adverse orders against the assessee. In the present case, no such opportunity was granted to the assessee before passing the rejection order.
In such circumstances, we deem it fit to remit these matters to the file of the Ld.CIT(E) by setting aside the orders made by him both dated 25/06/2025 for denovo consideration after affording reasonable opportunity & 1511/Bang/2025 of being heard to the assessee. We also made it clear that the assessee is also at liberty to establish their genuineness before the Ld.CIT(E) at the time of hearing.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 19th December, 2025.