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Facts
The assessee, a public charitable trust, applied for renewal of registration under section 12A(1)(ac)(ii) of the Income-tax Act. The CIT(Exemptions) rejected the application because the assessee failed to respond to notices and furnish required details, thus not satisfying statutory conditions.
Held
The tribunal found that the rejection was based solely on non-furnishing of details, for which the assessee provided a plausible reason. Citing principles of natural justice and Supreme Court judgments, the tribunal held that a reasonable opportunity of being heard was denied. Therefore, the tribunal set aside the CIT(Exemptions)'s order and restored the matter for fresh adjudication, subject to the assessee paying a nominal cost.
Key Issues
Whether the CIT(Exemptions) erred in rejecting the application for renewal of registration under Section 12A(1)(ac)(ii) due to non-compliance with notices, without affording proper opportunity of being heard and considering available material.
Sections Cited
Section 12A(1)(ac)(ii), Section 12A(1)(ac)(i), Section 12AB(1)(b), Rule 17A, Rule 17A(2)
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Income Tax Appellate Tribunal, “A” 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 passed for A.Y. 2025-26.
The assessee has raised the following grounds of appeal:
“1.1 The order passed u/s. 12A(1)(ac)(ii) on 30.10.2025 by CIT(Exem) Ahmedabad rejecting the application for renewal of registration u/s 12A(1)(ac)(ii) is wholly illegal, unlawful and against the principles of natural justice. 1.2 The ld. CIT(Exem), has grievously erred in law and or on facts in not appreciating that there was a sufficient cause for failure to respond to the notices of hearing issued on 26.06.2025. and 27.08.2025. Therefore, the appellant ought to have been allowed further opportunity in the interest of justice. 1.3 On the facts and circumstances of the case Ld. CIT(E ) has erred on facts and in law in rejecting the application for registration under section 12A(1)(ac)(ii) of the Act, despite the objects of the appellant being charitable in nature and the activities of the assesse being genuine and discernable from the record available on I.T. Portal.
Pahchamrut Education And Charitable Trust vs. CIT(E) Asst.Year –2025-26 - 2– 1.4 That the in the facts and circumstances of the ld. CIT(Exem), ought not to have rejected the application for registration by ignoring the actual activities carried on by the trust. 1.5 The appellant craves leave to add, amend or alter of the grounds of appeal
”
3. The brief facts of the case are that the assessee is a public charitable trust constituted by a trust deed dated 19th February, 2016 and duly registered under the Bombay Public Trust Act. The trust was earlier granted registration under section 12A(1)(ac)(i) of the Income- tax Act, 1961 (“Act”) for a specified period and, in terms of the amended statutory scheme, the assessee trust filed an application for renewal of registration in Form No. 10AB under section 12A(1)(ac)(ii) of the Act. The procedure for disposal of such application is governed by section 12AB(1)(b) of the Act read with Rule 17A of the Income- tax Rules, 1962, which requires the applicant to submit prescribed documents so as to enable the Commissioner to satisfy himself regarding the genuineness of activities of the trust, the conformity of such activities with its stated objects and compliance with other applicable laws.
The CIT (Exemptions) issued notices from time to time calling upon the assessee to furnish various details and documents as contemplated under Rule 17A(2). According to the order, these notices were duly served, but the assessee neither filed any submissions nor sought adjournment. It was observed that no documentary evidence was placed on record to enable the authority to verify the genuineness of the activities of the trust, whether such activities were in accordance with its objects and whether other relevant laws were complied with. On account of such non-compliance and absence of material, the CIT Pahchamrut Education And Charitable Trust vs. CIT(E) Asst.Year –2025-26 - 3– (Exemptions) held that the statutory conditions laid down under section 12AB were not satisfied and, accordingly, rejected the application for renewal of registration filed in Form No. 10AB.
The assessee is in appeal before us against the order passed by the CIT (Exemptions) dismissing the application filed by the assessee.
Before us, the ld. counsel for the assessee contended that the impugned order passed under section 12A(1)(ac)(ii) of the Act is illegal, arbitrary and in violation of the principles of natural justice. It was submitted that there existed sufficient cause for failure to respond to the notices dated 26.06.2025 and 27.08.2025 as the notices were issued at the email ID of the tax consultant, who was preoccupied with statutory income-tax and GST compliances during the relevant period, resulting in the notices escaping attention. It was further submitted that the assessee trust is a genuine public charitable trust established for educational, medical and social welfare purposes and does not carry on any commercial or profit-oriented activities. According to the ld. counsel, the trust maintains regular books of account which are duly audited and that substantial information, including financial statements, audit reports and past returns, was already available on the Income-tax Portal. It was submitted that before us that the CIT (Exemptions) ought to have examined such material and granted one more effective opportunity before rejecting the application for renewal. On these facts, it was pleaded that the matter be restored to the file of the CIT (Exemptions) for fresh adjudication in accordance with law.
Pahchamrut Education And Charitable Trust vs. CIT(E) Asst.Year –2025-26 - 4– 7. We have considered the rival submissions and perused the material available on record. It is evident that the application for renewal of registration has been rejected solely on the ground of non- furnishing of details and absence of response to notices. At the same time, the assessee has demonstrated that there was a plausible and bona fide reason for such non-compliance and has asserted that relevant material regarding its objects and activities was already available on record through statutory filings. It is well settled that the authority must adhere to the principles of natural justice and afford a reasonable opportunity of being heard. The Hon’ble Supreme Court in Andaman Timber Industries v. Commissioner of Central Excise (281 CTR 241) has held that denial of an effective opportunity amounts to violation of natural justice and vitiates the proceedings. Similarly, in Tin Box Company v. CIT (249 ITR 216), the Hon’ble Supreme Court has held that where proper opportunity has not been granted, the matter should be restored to the file of the authority for fresh consideration.
In view of the above and considering the totality of facts, we deem it appropriate, in the interest of justice, to set aside the impugned order passed by the CIT (Exemptions) and restore the matter to his file for de novo consideration. However, since the assessee was also not vigilant in responding to the statutory notices at the relevant time, we consider it just and proper to impose a nominal cost of Rs. 1,000/-, which shall be paid by the assessee to the credit of the Prime Minister Relief Fund before the commencement of fresh proceedings. The CIT (Exemptions) shall thereafter examine the application afresh in Pahchamrut Education And Charitable Trust vs. CIT(E) Asst.Year –2025-26 - 5– accordance with law, after affording adequate opportunity of being heard to the assessee and after considering all documents and explanations that may be furnished in support of the claim for renewal of registration. The assessee is directed to cooperate fully and comply with all requirements during the de novo proceedings.
In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 19/02/2026