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Facts
The assessee, Life Care Foundation, sought registration under Section 12AB of the Income-tax Act, 1961. The CIT(E) rejected the application citing substantial donations from Khalsa Aid India Chapter, which was under NIA investigation, and a foreign remittance allegedly in contravention of FCRA provisions.
Held
The Tribunal held that the assessee was not given adequate opportunity to clarify the issues before the adverse inferences were drawn by the CIT(E). The matter was remitted back to the CIT(E) for fresh adjudication.
Key Issues
Whether the CIT(E) erred in rejecting the registration application without affording proper opportunity to the assessee to explain the nature and source of foreign remittances and the genuineness of its activities?
Sections Cited
12AB, 5, 12A(1)(ac)(iii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, CHANDIGARH BENCH “A”, CHANDIGARH
Before: SHRI. RAJPAL YADAV, VP & SHRI. KRINWANT SAHAY, AM
िनधा�रती की ओर से/Assessee by : Shri Rajat Nayyar, C.A राज� की ओर से/ Revenue by : Shri Manav Bansal, CIT, DR सुनवाई की तारीख/Date of Hearing : 02/09/2025 उदघोषणा की तारीख/Date of Pronouncement : 11/09/2025 आदेश/Order PER KRINWANT SAHAY, AM:
This is an appeal filed by the Assessee against the order of the Ld. CIT Exemptions, Chandigarh dt. 23/03/2024. 2. At the outset the Registry has pointed out that the present appeal is barred by limitation by 292 days for which the Ld. Counsel filed an affidavit dt. 07/04/2025, contents of which read as under:
I. Avtar Singh President/Director Life Care Foundation with registered office address at Banipal tower, Opp ram Leela Ground, Near Bus Stand, Sector 17,Derabassi Mohali do hereby take oath and state on slemn affirmation as under-
1. 1. That application for final approval for registration u/s 12A(1)(ac)(iii) has been rejected by CIT Exemptions. Permanent Account Number ("PAN") – AAECL3772H 2. For which we sought legal opinion on the same and have accordingly preferred the present appeal before the Hon'ble ITAT.
3. Later on our application Hon'ble ITAT raised defective notice
2 mentioning reason that appeal is time barred.
4. That we are operating test laboratories primarily blood tests in Punjab at zero cost to the needy patients since Oct 2020 and have opened more than 100 Blood test centers in all cities and villages of Punjab. During the year 2024-2025 we were highly focused on promoting early detection of cancer through blood tests and we had arranged a lot of blood tests camps for the same continuously throughout the year and have been awarded & honored by renounced Politian's and respected personalities. Our efforts were truly engaged in these blood test camps to promote cancer awareness in small towns, villages and backward areas of Punjab due to which we were not able to submit our appeal to Hon'ble ITAT on time. We have also submitted proofs of camps as mentioned in various newspapers and journals.
That we have filed appeal to Hon'ble ITAT on 21 march 2025.
That in this way there is a delay of only 292 days for which an application ·under Section 5 of the Limitation Act has been filed along-with memorandum of appeal. Applicant VERIFICATION I, Avtar Singh, the above named deponent do hereby verify'1:hat the contents of this memorandum of appeal from paras 1 to 6 are true to the best of my knowledge and belief. Dated 07.04.2025 Place Derabassi 3. Ld. DR strongly opposed the condonation of delay.
After considering the contents of the affidavit for condonation of delay, we are of the view that the delay of 292 days deserves to be condoned in the interest of substantial justice. The assessee has demonstrated reasonable cause and, therefore, the delay is hereby condoned and the appeal is admitted for adjudication.
3 5. In the present appeal Assessee has raised following grounds:
Opportunity of being heard not given.
Linking life care with terrorism which is not the case.
Khalsa aid made a payment which is one time in nature against which we have delivered our services to help families of martyres. We are not dealing with khalsa aid on regular basis moreover we are not taking any donations in our foundation. 6. Briefly the facts of the case are that the assessee, Life Care Foundation, a Section 8 Company incorporated on 13.10.2020, filed an application in Form No. 10AB on 30.09.2023 seeking registration under Section 12AB of the Income-tax Act, 1961. The stated objects of the appellant included relief of the poor, education, medical relief, and advancement of any other object of general public utility. The application was examined by the Ld. CIT(E). During the course of proceedings, notices were issued seeking various clarifications and documents, including financial statements, bank statements, activity details, proof of charitable work, and compliance with other statutory laws. The assessee responded by submitting its objectives, financial records, and details of activities carried out such as health checkups, medical relief, and social welfare campaigns.
The Ld. CIT(E), after examining the submissions, observed that a substantial portion (about 62%) of the assessee’s donations during F.Y. 2020-21 had been received from Khalsa Aid India Chapter. It was further noted that Khalsa Aid India was under investigation by the National Investigation Agency (NIA) on allegations of receiving foreign funds from banned organizations.
4 This created doubts regarding the genuineness of activities of the assessee.
7.1 Ld. CIT(E) also noticed that the assessee had received Rs. 75,000/- from Dr. Gurpreet, New York on 09.03.2021, while the assessee was not registered under the FCRA Act, 2010. This receipt was viewed as a contravention of law. On these grounds, the Ld. CIT(E) concluded that the activities of the assessee did not inspire confidence about their genuineness. Accordingly, the application for registration under Section 12AB was rejected vide order dated 23.03.2024.
Against the order of the Ld. CIT(E) the assessee preferred an appeal before the Tribunal.
During the course of hearing the Ld. AR submitted that the assessee had received various notices from the Department on different issues and, in response thereto, had duly furnished all the necessary documents and information as required. However, while passing the impugned order, the Ld. CIT(E) proceeded solely on the basis that the assessee had received certain payments from Khalsa Aid, without ever raising a specific query on this aspect or calling for any clarification. It was argued that the final conclusion was drawn without affording the assessee an opportunity to explain or place further documents, which amounts to denial of natural justice.
9.1 The AR further contended that the finding of the Ld. CIT(E) linking the assessee with terrorism is wholly unwarranted and beyond the record, as there is no material to suggest any such 5 connection. The receipt from Khalsa Aid was explained to be a one-time payment, against which the assessee had provided services for the welfare of families of martyrs. It was emphasized that the assessee is not engaged in regular dealings with Khalsa Aid and, in fact, does not receive donations in the normal course. Hence, the adverse inference drawn by the Ld. CIT(E) is baseless and not supported by facts.
Per contra, the Ld. DR relied on the order of the Ld. CIT(E).
We have heard the rival contention of both the parties and perused the material available on the record. In the present case we find that the rejection of registration by the Ld. CIT(E) is primarily based on the following two considerations:
(i) Substantial donations from Khalsa Aid India Chapter, which is under investigation by enforcement agencies; and (ii) Receipt of a foreign remittance allegedly in contravention of the FCRA provisions.
11.1 It is, however, evident from the records and submissions that no specific opportunity was provided to the assessee to clarify or substantiate these issues before drawing adverse inferences. The assessee’s contention that the payment from Khalsa Aid was one- time in nature and linked to relief services has not been examined in detail. Similarly, the nature, purpose, and legality of the foreign remittance has not been verified with necessary evidence.
6 11.2 The principles of natural justice require that before arriving at conclusions affecting the rights of the assessee, due and proper opportunity be given to meet the allegations. In the present case, such opportunity appears inadequate. In view of the above, we deem it appropriate to remit the matter back to the file of the Ld. CIT(E) for fresh adjudication. The Ld. CIT(E) shall re-examine the application of the assessee in the light of the documents and explanations to be furnished, particularly with respect to the nature and genuineness of receipts from Khalsa Aid India Chapter; the issue relating to receipt of funds from abroad and compliance with FCRA, 2010; and the actual conduct of charitable activities vis-à-vis the stated objectives.
11.3 The assessee shall be given due opportunity of being heard and to place all relevant evidences on record.
In the result, the appeal of the assessee is allowed for statistical purposes.