KOOLKING FOUNDATION,MALERKOTLA vs. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

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ITA 882/CHANDI/2025Status: DisposedITAT Chandigarh29 October 2025Bench: SHRI LALIET KUMAR (Judicial Member), SHRI KRINWANT SAHAY (Accountant Member)1 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee has a right to be heard before an order is passed by the CIT(E). Since this opportunity was not provided, the case was remanded back to the CIT(E) for a fresh decision after hearing the assessee.

What were the facts?

The assessee, Kookling Foundation, applied for registration under Section 12A of the Income Tax Act. The CIT (Exemptions) rejected the application without issuing a show cause notice or providing an adequate opportunity of being heard.

What were the issues?

Whether the CIT(E) erred in rejecting the registration application without providing a proper opportunity of hearing to the assessee.

Which sections of the Income-tax Act were involved?

Section 12A,Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH

Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY

For Appellant: CA (Virtual)
Hearing: 28.10.2025Pronounced: 29.10.2025

Order Per Krinwant Sahay, AM: Appeal in this case has been filed by the assessee against the order dated 26.05.2025 passed by the Ld. Commissioner of Income Tax, Exemptions, Chandigarh.

2.

Grounds of appeal are as under:

1.

1. 1. That the Ld. CIT (Exemptions), Chandigarh has grossly erred in law and on facts in rejecting the application filed by the 882-Chd-2025 Koolking Foundation, Malerkotla 2 appellant for registration under Section 12A of the Income Tax Act, 1961 without properly appreciating the facts and evidences on record 2. That the Ld. CIT (Exemptions), Chandigarh has grossly erred in law and on facts in rejecting the application filed by the appellant for registration under Section 12A of the Income Tax Act, 1961 without issuance of any show cause notice and without affording adequate and meaningful opportunity of being heard.

3. That the Ld. CIT (Exemptions) has erred in concluding that the activities of the trust are not genuine and not in accordance with the objects ignoring the fact that the trust is newly formed and had duly filed the required documents evidencing its charitable intent, including proof of land acquisition for future charitable use.

4. That the rejection of registration solely on the ground that the trust is in its initial start-up phase and has not commenced activities on a full scale is unjustified and contrary to settled legal principles.

5. That the Ld. CIT (Exemptions) has erred in holding that the trust objects are vague and omnibus in nature whereas the objects of the trust are well-defined, charitable in nature and aligned with the purposes enumerated under Section 2(15) of the Act.

882-Chd-2025 Koolking Foundation, Malerkotla 3

6. That the Ld. CIT (Exemptions) has wrongly interpreted the land purchase transaction as not being charitable, ignoring the fact that such acquisition was intended for infrastructure creation for future charitable activities and that no income-generating activity was carried out.

7. That the Ld. CIT (Exemptions) has erred in making adverse inference from the funding structure of the trust particularly merely because there are unsecured loans from trustees, which were disclosed and explained and cannot be the basis for denying registration under Section 1248.

8.

That the Ld. CIT (Exemptions) has erred in not considering that mere absence of charitable expenditure in the first year of existence of a trust cannot be the sole ground for rejection of registration under Section 12A. 9. That the Ld. CIT (Exemptions) has erred in concluding that the trust operates for the benefit of related parties without bringing any tangible evidence on record and without giving the assessee an opportunity to rebut such assumptions. 10. That the Ld. CIT (Exemptions) has acted beyond jurisdiction in examining the application of income or operational activities in detail at the stage of application under Section 12A, which is premature and beyond the scope of inquiry at initial stage

882-Chd-2025 Koolking Foundation, Malerkotla 4 limited to genuineness of activities and charitable objects. 11. That the appellant craves leave to add, amend, alter, or withdraw any of the above grounds at the time of hearing.

3.

At the very outset, ld. Counsel for the Assessee submitted that the Ld. CIT(E) rejected the application filed by the appellant for registration u/s 12AA of the Income Tax Act, 1961 (in short 'the Act') without issuance of any show cause notice and affording reasonable opportunity of hearing to the Assessee.

4.

The ld. counsel also brought it to the notice of the Bench that as per proviso to Section 12AA of the Income Tax Act, the Ld. CIT(E) is required to grant opportunity to the Assessee of being heard but that has not been done in this case.

5.

Per contra, ld. DR relied on the order of the Ld. CIT(E).

6.

We have considered the findings given by the ld. CIT(E) in the order passed by her and we have also 882-Chd-2025 Koolking Foundation, Malerkotla 5 considered the submissions made by the AR of the Assessee during proceedings before us. We are of this considered view that as per the I.T. Act, the Assessee has every right to be heard before passing an order by the CIT(E), which in the present case, has not been done. Accordingly, we remand this case back to the file of the Ld. CIT(E) and grant an opportunity of being heard to the Assessee as required under the law and then pass an order. Accordingly, Assessee, appeal is allowed.

7.

In the result, the appeal of the Assessee stands allowed for statistical purposes.

Order pronounced on 28.10.2025.

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