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Facts
Sree Srinivasa Trust, the assessee, applied for registration under Section 12AB of the Income Tax Act. The Ld. CIT(E) issued notices seeking details and documentation, which the assessee partially submitted. Subsequently, the Ld. CIT(E) rejected the application, observing that no substantial charitable activities were being carried out by the assessee.
Held
The Income Tax Appellate Tribunal found that the Ld. CIT(E)'s rejection order was not a speaking order, as it merely stated the absence of substantial charitable activities without specific elaboration. To uphold natural justice, the Tribunal set aside the impugned order and restored the matter back to the Ld. CIT(E), directing him to provide another opportunity to the assessee to furnish the required details and to pass a speaking order on merits.
Key Issues
Whether the Ld. CIT(E) was justified in rejecting the application for registration under Section 12AB without passing a speaking order and without providing adequate opportunity to the assessee.
Sections Cited
12AB, 12A(1)(ac)(vi)
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Income Tax Appellate Tribunal, VISAKHAPATNAM “DIVISION” BENCH, VISAKHAPATNAM
Before: SHRI RAVISH SOOD, HON’BLE & SHRI S BALAKRISHNAN, HON’BLE
आदेश /O R D E R
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 “Ld.CIT(E)”] vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-
I.T.A.No.107/VIZ/2025 Sree Srinivasa Trust 25/1070993860(1) dated 07.12.2024 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)(vi) 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 28.10.2024 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 learned Commissioner of Income Tax (Exemption), Hyderabad is contrary to the facts and also the law applicable to the facts of the case. 2. The learned Commissioner of Income Tax (Exemption), Hyderabad is not justified in rejecting the application filed by the appellant for registration u/s 12AB of the Act. 3. Any other ground that may be urged at the time of appeal hearing.”
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I.T.A.No.107/VIZ/2025 Sree Srinivasa Trust 4. 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).
At the outset, Ld. Authorized Representative (hereinafter in short “Ld.AR”] submitted that Ld. CIT(E) has not passed a speaking order for the denial of registration to the assessee. He further submitted that various documentary evidences have been provided before Ld. CIT(E) but he has casually observed the no substantial activities which are charitable in nature are being carried out by the assessee. He therefore pleaded that one more opportunity may be provided to the assessee to submit its reply with documentary evidences once again to the Ld.CIT(E).
On the other hand, Ld. Departmental Representative [hereinafter in short “Ld. DR”] heavily relied on the order of the Ld. CIT(E).
We have heard both the sides and perused the material available on record. The assessee responded to the notices issued by the Ld.CIT(E) but it is observed from the order of the Ld.CIT(E) that the assessee has partly responded. 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 no substantial activities which are charitable in nature are being carried out by the assessee, which is in violation of the provisions of the Page. No 3
I.T.A.No.107/VIZ/2025 Sree Srinivasa Trust 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 no substantial activities which are charitable in nature are being carried out by the assessee. 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 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 27th June, 2025.