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Facts
The assessee applied for registration under Section 12AB of the Income Tax Act, 1961. The CIT(A) rejected the application, citing that the assessee was not engaged in charitable activities as defined in Section 2(15) and had not provided sufficient documents. The assessee argued that the rejection was based on insufficient opportunity and commercial receipts were within limits.
Held
The Tribunal held that the assessee should be given one more opportunity to provide the necessary documents and clarifications. The impugned order of the CIT(A) was set aside, and the case was remanded back to the CIT(E) for a fresh adjudication on a de novo basis.
Key Issues
Whether the CIT(A) erred in rejecting the application for registration without providing sufficient opportunity and proper appreciation of facts, and whether the assessee's activities qualify as charitable.
Sections Cited
253, 12AB, 2(15)
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI BHAGIRATH MAL BIYANI & SHRI PARESH M JOSHI
आदेश/ O R D E R
Per Paresh M Joshi, J.M.:
This is an appeal filed by the Assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the Act for sake of brevity) before this Tribunal. The assessee is aggrieved by the order bearing Number: ITBA/EXM/F/EXM45/2024- 25/1075202074(1) dated 28.03.2025 passed by the Ld. CIT(A), Bhopal by virtue of which assessee’s application in the form 10AB for the registration u/s 12AB under the new provision of Page 1 of 9
Aatma Prakash Mental Health Foundation A.Y. NA the Act was rejected. The aforesaid order is hereinafter referred to as the “impugned order”.
2. FACTUAL MATRIX 2.1 The assessee Atma Prakash Mental Health Foundation was incorporated on 09.10.2023 under the Provisions of the CO’s Act 2013 as section 8 Company having CIT:-
U85310MP2016NPL 041753 as a not for profit charitable foundation working in the area of mental Health awareness & so also for well being among children & Youth in the school & non school environment.
2.2 That the Ld. CIT(E) in the “Impugned Order” has recorded as follows:-
“Annexure (mentioned in row-9 above)
The assessee has applied in Form 10AB for registration u/s 12A.B under the new provision of Income Tax Act, 1961. Consequently, opportunity letters were issued to the assessee and various documents/details were called for; to process the said application and to verify the objects and activities of the assessee. The details of opportunity letters and response received in compliance thereof are as under; Page 2 of 9 Aatma Prakash Mental Health Foundation A.Y. NA S.N. Details of notices issued in respect of registration u/s 12AB 1 02.01.2025 10.01.2025 No reply 2 22.01.2025 27.01.2025 Adjournment request received 3 03.02.2025 10.02.2025 Reply received 4 24.03.2025 28.03.2025 No reply
2-Vide above referred letters various documents/information were called to ascertain the genuineness of the activities of the assessee society and its suitability to obtain registration u/s 12AB of the Act. The assessee has submitted requisite documents/information in response to reminder letter dated: 03.02.2025. However, some clarifications/additional documents were sought vide this office letter dated: 24.03.2025 as under: "1-It is found that the company is mostly generating revenue by offering Therapy sessions and fee of the same is collected as 'Contribution for the Workshop" at commercial rates. During F.Y. 2023-24, such commercial receipt is more than 20% of the total receipt during the year. Hence, currently the company is not engaged in charitable activities as defined in section 2(15) of the Income Tax Act. You are hereby given an opportunity to show-cause why the application in Form 10AB for registration/approval u/s 12AB of the Act should not be rejected. 2-It is also found that the foundation is registered at various platforms like Practo, Justdial etc. as counselling psychology clinic where Ms. Prarthana Sharma who is Director in the Page 3 of 9
Aatma Prakash Mental Health Foundation A.Y. NA Company is mentioned as counselor. Please explain receipt from such platforms are shown in income of the company or of Ms. Prathana Sharma. 3-Please provide documents in support of education qualification of the counsellors providing services at the Foundation. 4-Please provide offline and online patient register for the FY 2023-24 of all the platforms where the foundation is registered." 3-However, in response to the query letter dated: 24.03.2025, the assessee has not submitted the required documents/details/clarification till date. Vide aforesaid letter it was also communicated to the assessee that the matter is already barred by limitation on 31.03.2025 and hence it was requested to submit the requisite details/clarification/documents within the time specified in the letter as under: "--As the matter is barred by limitation on 31.03.20025 this may kindly be treated as last and final opportunity to submit requisite documents/clarification/information. --In case of non-compliance, the decision may be made based on the documents available with this office. --This may also be noted that personal hearing is not required and the submission may be made through electronic modes like through portal/e-mail mentioned at the bottom of this letter." 4--Due to non-compliance of required documents/information filed by the assessee, the application of the assessee in Form 10AB for grant of registration u/s 12AB of the Act is hereby rejected.” 2.3 That the assessee being aggrieved by the “Impugned Order” has preferred the Instant Appeal before this Tribunal and has Page 4 of 9
Aatma Prakash Mental Health Foundation A.Y. NA raised following the grounds of appeal in the form no. 36 against the “Impugned Order” which are as under:-
“1. On the facts and in the circumstances of the case, the Lid. Commissioner of Income Tax (Exemption), Bhopal (hereinafter referred to as "the Ld. CIT (E) Bhopal"] has erred in rejecting the application for renewal of registration u's. 12AB of the Income Tax Act, 1961 (hereinafter refereed to as "the Act") without appreciating that the appellant is a Section 8 Company genuinely engaged in charitable activities and promotes mental health awareness. Thus, the Order of Rejection u/s. 12AB of the Act dated 28.03.2025 is liable to be set aside.
On the facts and in the circumstances of the case and in law and without prejudice to the above, the Ld. CTT(E), Bhopal has erred in rejecting the application for renewal of registration u/s. 12AB of the Act without appreciating that the assessee is not engaged in any kind of commercial activities and thus, denying registration to the appellant company without considering the facts of the case, is not in accordance with the provisions of the Act and thus, the Rejection Order u/s: 12AB of the Act dated 28.03.2025 is liable to be set aside.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(E), Bhopal has erred in rejecting the application for renewal of registration u/s. 12AB of the Act without appreciating that the appellant has duly substantiated the genuineness of charitable activities of providing mental health awareness and conducting workshops for mental health awareness. Thus, the Rejection Order u/s. 12AB of the Act dated 28.03.2025 is liable to be set aside.
On the facts and in the circumstances of the case and in law, the Ld. CIT(E), Bhopal has erred in rejecting the application for renewal of registration u/s. 12AB of the Act without providing proper and sufficient opportunity of being
Aatma Prakash Mental Health Foundation A.Y. NA heard and rejecting the application on 28.03.2025, t.c. the same day itself as on the due date of compliance of Notice, which is not in accordance with the provisions of the Act and is against the principles of natural justice. Thus, the Rejection Order u/s. 12AB of the Act dated 28.03.2025 is liable to be set aside. The appellant company craves leave to add, alter, amend or delete any of the grounds of appeal before or during the course of appellate hearing of the case.”
Record of Hearing 3.1 That the hearing in the matter took place before this Tribunal on 26.11.2025 when Ld. AR for and on behalf of the assessee appeared before us and placed on record of this Tribunal a paper book containing pages 1 to 28. It was submitted by the Ld. AR that notice dated 02.01.2025 whereby hearing was fixed for 10.01.2025 could not be replied by the assessee. The last hearing notice was dated 24.03.2025 for 28.03.2025 which too was not attended by assessee due to very short gap of only 3 days. It was submitted that the “Impugned Order” was issued on 28.03.2025 i.e. on last date of hearing itself. Basis P.B. page 9 to 14 it was submitted that a reply dated 09.02.2025 was placed on record. There is a mention of this reply in the “Impugned Order” against the letter of opportunity
Aatma Prakash Mental Health Foundation A.Y. NA dated 03.02.2025 with remark in status column as “Reply Received”. The Ld. AR finally prayed that “Impugned Order” should be set aside & the matter be remanded back to the file of CIT(E) on denovo basis as the same would meet ends of justice.
Ld. AR emphatically contended that one more opportunity be granted to them when they would comply with all the requisitions of the Department. Per contra Ld. DR appearing for & on behalf of the revenue contended that while it is true that only 3 days time was provided by the Ld. CIT(E) (supra) he however left the issue to the wisdom of bench to take appropriate call in accordance with law.
Observation Finding & conclusions 4.1 We now have to decide the legality validity & the proprietary of the “Impugned Order” basis records of the case & rival contentions canvassed before us.
4.2 We have carefully perused the records of the case as presented to this Tribunal by both the Ld. AR & the Ld. DR to determine the legality, validity of the “Impugned Order” basis law & by following the due process.
Aatma Prakash Mental Health Foundation A.Y. NA 4.3 We basis records of the case & after hearing & upon examining the contentions are of the considered view that in the peculiar facts & circumstances of the case one more opportunity should be provided to the assessee as & by was of a last chance so that all the necessary material particulars which were left to be filed/replied on account of query/letter dated 24.03.2025 could now be filed replied so that Ld. CIT(E) can adjudge & adjudicate the case a fresh by passing a speaking & reasoned order.
4.4 According in order to meet ends of justice we deem fit to set aside the Impugned Order & remand the proceedings back to the file of Ld. CIT(E) on denovo basis. Assessee is directed to fully cooperate with the department in denovo proceedings & not to seek any adjournments on flimsy grounds.
Order 5.1 In the premises drawn up by us the “Impugned Order” is set aside & case of the assessee is remanded to the Ld. CIT(E) on denovo basis.
Aatma Prakash Mental Health Foundation A.Y. NA 5.2 In result the appeal of the assessee is allowed for statistical purposes.
Order pronounced in open court on 04.12.2025.