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Facts
A public charitable trust applied for registration under section 12A via Form 10AB. The CIT(Exemptions) rejected the application, citing the assessee's alleged non-compliance with notices requesting details under Rule 17A and failure to furnish mandatory documents, thus being unable to satisfy the genuineness of the trust's activities.
Held
The Tribunal noted that only two notices were issued and held that the assessee was not afforded a sufficient opportunity to present its case. It restored the matter to the CIT(Exemptions) for de-novo consideration, instructing to provide a reasonable opportunity of hearing and examine all relevant material.
Key Issues
Whether the rejection of the application for 12A registration by the CIT(Exemptions) for alleged non-compliance was justified without providing adequate opportunity to the assessee.
Sections Cited
12A, 12AB, 2(15), 35, 36, Rule 17A, Rule 17A(2)
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide order dated 30.10.2025.
The assessee has raised the following grounds of appeal:
“A. That the ld. CIT(Exemption) erred in rejecting the application u/s 12A(l)(ac)(iii) for alleged non-compliance with 10/07/2025 questionnaire., ignoring trustees' Sack of technical tax knowledge—which rendered them unable to respond to intricate demands like detailed activity notes—despite attached trust deed, FY 2021-24 audits evidencing genuine activities (e.g., Rs.67.76 lakhs receipts in FY 2022-23 applied to employment-generating salaries 557.90 lakhs via govt. contracts). This mechanical order violates natural justice, warranting remand. Reliance: Ananya Education and Charitable Trust v. CIT(Exemption) [ITAT Ahmedabad, 31/07/2025], holding procedural/technical lapses non-fatal where substance (charitable objects/spends) prevails; remanded for fresh review. Tax effect; Nil. B. That the Ld. CIT failed to consider the Trust's role in poverty relief by securing government contracts, providing employment to beneficiaries (e.g., via training/programs reflected in audited expenditures like Rs.4.18 lakhs purchases/Rs.80k catering for camps), with computations showing nil gross Navsarjab Foundation Daisar vs. CIT(E) Asst.Year –NA - 2– income and full object-aligned application (no TDS discrepancies; gross fees indicate compliant withholding if applicable). Rejection on unverified non- submission disregards Section 12AB(3) inquiry mandate. Reliance: Sainath Education Charitable Trust v. CIT(Exemptions) [177 taxmann.com 582, 1TAT Ahmedabad, 19/08/2025], emphasizing verification of actual activities over form; set aside for ignoring evidence of genuineness. Tax effect: Nil. C. That trustees' rural, non-expert background excuses non-response, as no mala fide intent shown. CIT erred in not affording equitable opportunity/personal hearing (per notices), deciding ex-parte while overlooking Form 10AB attachments (audits confirming no misuse, compliant investments u/s 35/36). Contravenes CBDT Circulars 1/7/2024 for liberal treatment of small trusts. Reliance: Delhi IT AT in Shri Sai Charitable Trust v. CIT(E) (2025), quashing arbitrary rejection for non-consideration of submissions/ignorance mitigation: Tower must be exercised reasonably, not rigidly." Tax effect: Nil. D. That financial (FY 2021-22 auditor's report: proper accounts, nil violations; AY 2023-24: 93%+ application rate) affirm charitable nature u/s 2(15), with employment via govt ties as core activity; rejection overlooks this, meriting de novo inquiry. Reliance: Ananya Education (supra), directing remand under correct clause with hearing. Tax effect: Nil.”
The brief facts of the case are that the assessee, a public charitable trust, filed an application in Form No. 10AB seeking registration under section 12A of the Income-tax Act, 1961 (“the Act”). The learned Commissioner of Income-tax (Exemptions) initiated proceedings under section 12AB of the Act and issued notices calling upon the assessee to furnish various details and documents as prescribed under Rule 17A of the Income-tax Rules, 1962, including activity notes, supporting evidence and other relevant information to enable him to satisfy himself about the genuineness of the activities of the trust and their conformity with the objects of the trust. According to the learned CIT(Exemptions), though notices were duly issued and served upon the assessee, the assessee neither filed the required details and documents nor sought any adjournment. The CIT(Exemptions) observed that the mandatory documents as required under Rule 17A(2) were not furnished by the assessee, and therefore the learned CIT(Exemptions) was unable to satisfy himself about the genuineness of the activities of the trust, whether the activities were in Navsarjab Foundation Daisar vs. CIT(E) Asst.Year –NA - 3– consonance with the objects of the trust, and whether other applicable laws were complied with. The CIT(Exemptions), relying upon the principles laid down by the Hon’ble Supreme Court in the cases of Commissioner of Income-tax, Ujjain vs. Dawoodi Bohara Jamat and M/s New Noble Educational Society, the learned CIT(Exemptions) held that it was incumbent upon the assessee to furnish the necessary information and documents to enable proper examination of its claim. In the absence of such compliance, the learned CIT(Exemptions) held that the assessee had failed to discharge its onus and, accordingly, rejected the application filed in Form No. 10AB under section 12A(1)(ac) of the Act.
The assessee is in appeal before us against the order passed by the CIT(Exemptions) dismissing the application of the assessee.
We have heard the rival contentions and perused the material available on record. We note that the impugned order has been passed mainly on the ground of non-compliance with the notices issued by the learned CIT(Exemptions) and non-furnishing of details and documents as called for. At the same time, it is an admitted position that only two notices of hearing were issued to the assessee before rejecting the application. Considering the facts of the instant case, we are of the considered view that the assessee ought to have been afforded a more effective and reasonable opportunity of being heard to place on record the relevant material in support of its claim.
We further find force in the submission of the learned counsel for the assessee that the trust is engaged in charitable activities supported largely by Government grants and government-linked projects, and that the rejection has been made without examining the substantive material Navsarjab Foundation Daisar vs. CIT(E) Asst.Year –NA - 4– already available on record, such as the trust deed and audited financial statements. In our view, the ends of justice would be met if the matter is restored to the file of the learned CIT(Exemptions) for fresh consideration after giving the assessee one more proper opportunity to substantiate its claim.
Accordingly, in the interest of justice, we restore the matter to the file of CIT(Exemptions) for de-novo consideration in accordance with law. The learned CIT(Exemptions) shall afford reasonable opportunity of being heard to the assessee and examine the application afresh on merits. The assessee shall cooperate in the proceedings and shall file all requisite details and documents, including evidence to demonstrate the genuineness of its activities, the manner of application of its income, and compliance with the provisions of the Act and the Rules. The learned CIT(Exemptions) shall thereafter pass a speaking order in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 19/02/2026