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Facts
The assessee, Hatchlab Research Centre, applied for registration under Section 12AB of the Income Tax Act. The Ld. CIT(E) rejected the application, observing that the assessee's activities were not commensurate with its objectives as per its Deed/MOA/AOA and without specifying why the activities were not charitable.
Held
The ITAT found that the Ld. CIT(E)'s rejection order was non-speaking and did not provide a proper opportunity to the assessee. Therefore, the ITAT set aside the rejection order and remanded the matter back to the Ld. CIT(E) to provide another opportunity to the assessee to furnish details and pass a speaking order on merits.
Key Issues
Whether the rejection of the application for registration under Section 12AB by the CIT(E) without a speaking order or proper opportunity to the assessee was justified.
Sections Cited
12AB, 12A(1)(ac)(iii)
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Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
PER SHRI S BALAKRISHNAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against rejection order of Learned Commissioner of Income Tax (Exemption), Hyderabad [hereinafter in short
I.T.A.No.174/VIZ/2025 Hatchlab Research Centre “Ld.CIT(E)”] vide DIN & Notice No. ITBA/EXM/F/EXM45/2024- 25/1073244030(1) dated 13.02.2025 seeking registration under section 12AB of the Income Tax Act, 1961 (in short ‘Act’).
Briefly stated facts of the case are that the assessee has filed an e-application in Form No.10AB seeking registration under section 12AB of the Act. The Ld.CIT(E) issued notices to the assessee in respect of proceedings under section 12A(1)(ac)(iii) of the Act to produce the copy of Memorandum of Association/Trust Deed for verification and to furnish a detailed reply on the specific information called for in the said notice. In response, assessee has submitted some of the details as called for. Subsequently, another notice dated 24.12.2024 was issued to the assessee to submit the full information as per the notices issued. In response, assessee furnished its reply in compliance to the notice issued by the Ld.CIT(E). On a perusal of the submissions of the assessee, Ld.CIT(E) rejected the application filed in Form-10AB for registration under section 12AB of the Act.
Aggrieved by the rejection order, assessee filed an appeal before us and raised following grounds in its appeal: -.
“1. The order of the Commissioner of Income tax (Exemptions) dated 13/02/2025, purported to be under Sec. 12AB of Income tax Act, 1961, rejecting the appellant's application in Form No10AB u/s 12(1)(ac)(iii) seeking registration, is contrary to law, facts of the case and material on record.
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I.T.A.No.174/VIZ/2025 Hatchlab Research Centre
2. (i). The CIT(E) is not justified in not allowing reasonable opportunity of being heard to the appellant before rejecting the application for registration u/s 12 AB of the Act. The CIT(E) failed to appreciate that the appellant had categorically stated that any further information as may be required shall be submitted on request. (ii). The learned CIT(E) was not justified in rejecting the appellant's request for registration without appreciating the appellant's objectives in proper perspective. (iii). The CIT(E) blatantly erred in observing that the appellant failed to furnish details called for without appreciating that the appellant had submitted all the details along with necessary supporting evidence on 20/01/2025. (iv) The CIT(E) erred in not specifying how the activities of the appellant were against the objectives of the Appellant warranting rejection of request for registration.
3. For these ground and such other grounds as may be adduced either before or during the appellate proceedings, the appellant prays that the ITAT may be pleased to cancel the order of rejection of registration passed by CIT(E) with a direction to pass fresh order in accordance with law and render justice.”
The only issue contested by the assessee is with respect to rejection of the Registration under section 12AB of the Act by the Ld.CIT(E).
Inspite of issue of notice none appeared on behalf of assessee nor any adjournment was sought. Therefore, we proceed to dispose of this appeal on hearing the Ld. DR.
Ld. Departmental Representative [hereinafter in short “Ld. DR”] heavily relied on the order of the Ld. CIT(E) and prayed to sustain the order of the Ld.CIT(A).
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I.T.A.No.174/VIZ/2025 Hatchlab Research Centre
We have heard Ld. DR and perused the material available on record. We find that Ld. CIT(E) while rejecting the application in Form10AB for the purpose of Registration of the society under section 12AB of the Act has observed as follows: -
“3. On perusal of the submissions made by the assessee, it is observed that activities are not commensurate with the activities as per objectives of the registered Deed/MOA/AOA, which is not as per the provisions of the section 12AB of the IT Act, 1961. In view of the above, the present application in form 10AB for registration u/s. 12AB is herewith rejected.”
On a perusal of the Ld. CIT(E) order, we find that he has not discussed anything except stating that the activities are not commensurate with the activities as per objectives of the registered Deed/MOA/AOA. Ld. CIT(A) has not specified how the assessee’s activities cannot be deciphered as charitable in nature. Ld.CIT(E) has simply rejected the assessee’s application which, in our considered opinion is not correct. Therefore, in the interest of natural justice, we find it appropriate to grant another one more opportunity to the assessee to submit the relevant documents including the evidences as detailed in the notices. Accordingly, we grant one more opportunity to the assessee and thereby set-aside the impugned order and restore the matter back to the file of Ld.CIT(E) with a direction to provide one more opportunity to the assessee to furnish required details and to decide the case on merits by passing a speaking order. Assessee is Page. No 4
I.T.A.No.174/VIZ/2025 Hatchlab Research Centre also directed to fully cooperate and furnish necessary documents / information as required by the Ld.CIT(E).
In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 18th July, 2025.
Sd/- Sd/- (रिीश सूद) (एस बालाकृष्णन) (RAVISH SOOD) (S. BALAKRISHNAN) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER Dated: 18.07.2025 Giridhar, Sr.PS आदेशकी प्रतत तलतप अग्रेतषत/ Copy of the order forwarded to:- 1. तिर्ााररती/ The Assessee : Hatchlab Research Centre R.K. Galleria, 2nd, 3rd & 4th Floor Srinivasa Nagar, Bank Colony Service Road, Vijayawada Kirshna – 520001 Andhra Pradesh 2. राजस्व/ The Revenue : Commissioner of Income Tax (Exemption) Hyderabad 3. The Principal Commissioner of Income Tax 4. तिभागीयप्रतततितर्, आयकरअपीलीयअतर्करण, तिशाखापटणम /DR,ITAT, Visakhapatnam 5. The Commissioner of Income Tax 6. गार्ाफ़ाईल / Guard file आदेशािुसार / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam
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