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Facts
The assessee trust filed an application for registration under Section 12A of the Income-tax Act. The CIT(E) rejected the application for non-compliance and failure to furnish documents despite issuing notices. The assessee contended that the delay was due to lack of awareness of e-filing procedures.
Held
The Tribunal held that the rejection of the application solely for non-submission of documents without properly verifying the nature of objects and activities, and without providing a reasonable opportunity of being heard, is contrary to natural justice. The delay in filing the appeal was condoned.
Key Issues
Whether the CIT(E) erred in rejecting the registration application without providing a reasonable opportunity for hearing, and if the delay in appeal filing can be condoned.
Sections Cited
12A, 12AB(1)(b)(ii)(B)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: AND MAKARAND V.MAHADEOKARShri Mohanlal Savalchand Shri H.V. Doshi, AR Shri Rignesh Das, CIT-DR
आदेश आदेश/O R D E R आदेश आदेश
PER MAKARAND V.MAHADEOKAR, AM:
This appeal by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”] dated 24.05.2025, rejecting the assessee’s application for registration under section 12A of the Income-tax Act, 1961 [hereinafter referred to as “The Act”].
Condonation of Delay 2.1 The registry has noted that the appeal is filed with a delay of 44 days. The assessee has filed an application supported by an affidavit, seeking condonation of delay in filing the present appeal.
2.2 In the application and the accompanying affidavit, the assessee-trust has explained that the delay occurred due to lack of awareness of the rejection order under section 12AB of the Act, as the trustees were not conversant with the e-filing portal and were unaware of the communication through e-mail. Upon inquiry in August 2025, the trustees came to know of the rejection, following which immediate steps were taken to engage a new Chartered Accountant and to prepare and file the appeal. It has been further submitted that the delay was unintentional and not with any mala fide intention or with a view to gain any undue advantage. The explanation offered is duly supported by an affidavit of the trustee.
2.3 The learned Departmental Representative has not raised any objection to the condonation of delay.
2.4 Considering the submissions made and relying on the settled principle that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred, we find the explanation furnished by the assessee to be bona fide and reasonable. The assessee does not stand to gain by filing the appeal belatedly, and the delay is satisfactorily explained. Accordingly, in the interest of justice, the delay in filing the appeal is condoned, and the appeal is admitted for adjudication on merits.
Facts of the Case 3.1 The assessee filed an application in Form No. 10AB seeking registration under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. In the application, the trust declared its nature of activity as religious-cum-charitable. The CIT(E) issued notices from time to time calling for necessary documents and details in order to verify the genuineness of the trust’s activities and the charitable nature of its objects. However, the assessee did not respond to any of the notices issued, nor did it seek any adjournment. The CIT(E) recorded that the assessee had failed to furnish requisite details or supporting documents such as trust deed, accounts, activity report, or other evidences required under Rule 17A(2) of the Rules. Relying on settled position by judicial precedents, the CIT(E) held that the assessee failed to comply with the notices and did not furnish documents necessary to satisfy the statutory conditions. Accordingly, the application for registration was rejected.
3.2 Aggrieved by the order of CIT(E), the assessee is in appeal before us raising following grounds:
1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Exemption) has erred in rejecting application for registration u/s 12A of the Act.
2. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Exemption) has not provided reasonable opportunity of being heard as provided under Second Proviso to Section 12AB(1)(b)(ii)(B) of the Act.
3. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax (Exemption) has hurriedly rejected the claim of assessee without pointing out specific deficiency in show cause notice.
4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.
The learned Authorised Representative (AR) reiterated the facts and explained the reasons for delay and non-compliance as stated in earlier paras dealing with condonation of delay. It was submitted that there was no intention to withhold information, and that all necessary details are available and can be furnished before CIT(E).
4.1 The AR argued that the rejection of application merely for non- response to notices, without considering the merits or objects of the trust. It was further contended that section 12A registration proceedings are non- adversarial in nature and intended to verify charitable purpose, not to penalize procedural lapses. The AR thus urged that the assessee be given one more opportunity to present its case before the CIT(E).
4.2 The learned Departmental Representative (DR) supported the order of the CIT(E). However, the DR fairly admitted that if the Bench is satisfied that non-compliance was due to reasonable cause, the matter may be remanded for fresh consideration in accordance with law.
We have carefully considered the rival submissions and perused the material available on record. The undisputed facts reveal that the assessee filed its application in Form No. 10AB seeking registration under section 12A of the Act. The CIT(E) issued notices seeking supporting documents, but the assessee did not file any response. The CIT(E), therefore, rejected the application for want of compliance, holding that genuineness of activities could not be verified.
5.1 On perusal of the order, we find that the rejection is solely based on non-submission of documents and absence of compliance. There is no finding by the CIT(E) on the nature of objects or activities of the trust. Section 12AB(1)(b)(ii)(B) of the Act read with its second proviso explicitly mandates that before rejecting an application, the Commissioner shall provide reasonable opportunity of being heard to the applicant. In the present case, the CIT(E) has recorded that notices were issued; however, there is nothing on record to establish that such notices were effectively served or brought to the knowledge of the trustees. The assessee has explained that the trustees were not conversant with the e-filing system and were unaware of the electronic communications. The explanation is supported by an affidavit, and we find it to be bona fide.
5.2 In our considered opinion, the CIT(E) must be satisfied about genuineness of activities before granting registration. However, such satisfaction can only be reached upon examination of materials and after due inquiry. The absence of such inquiry due to procedural default should not result in outright rejection where the applicant expresses readiness to comply. Rejection of registration under section 12AA without affording sufficient opportunity to furnish documents is contrary to natural justice, and the matter deserves to be remanded.
5.3 Accordingly, the impugned order passed by the CIT(E), Ahmedabad, is set aside. The CIT(E) is directed to re-examine the application of the assessee-trust for registration under section 12A of the Act afresh in accordance with law, after affording proper opportunity of hearing to the assessee. The assessee is also directed to cooperate and furnish all requisite details promptly.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Court on 17th October, 2025 at Ahmedabad.