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Facts
The assessees, Al Aqsa Foundation and Al Hasan Foundation, applied for registration under Section 12AB of the Income Tax Act, which was rejected by the CIT(E). The rejection was based on alleged false information, lack of expenditure in FY 2023-24 financials for claimed activities, and issues with the audit report, without issuing a show-cause notice. The assessees contended that charitable activities commenced in FY 2024-25, and relevant documents for that period were submitted but not considered by the CIT(E).
Held
The Tribunal found that the CIT(E) erred by analyzing FY 2023-24 financials for activities stated to have started in FY 2024-25 and violated principles of natural justice by not issuing a show-cause notice. Consequently, the Tribunal set aside the CIT(E)'s order and remanded the matter for a fresh decision, directing the CIT(E) to provide the assessee with a reasonable opportunity to be heard.
Key Issues
1. Whether the rejection of Section 12AB registration without a show-cause notice violates principles of natural justice. 2. Whether the CIT(E) misappreciated facts by considering incorrect financial years for evaluating the commencement and expenses of charitable activities.
Sections Cited
Section 12AB of the Income Tax Act
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Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR
Before: SHRI PARTHA SARATHI CHAUDHURY, JM & SHRI ARUN KHODPIA, AM
आदेश / O R D E R Per Arun Khodpia, AM:
The captioned appeals filed by the assessees are directed against the separate orders of the Commissioner of Income Tax (Exemption), Bhopal, [in short “Ld. CIT(E)”], both dated 27.12.2024, rejecting the application of captioned assessee’s in form 10AB for registration U/s 12AB of the Income Tax Act, [in short “The Act”].
In both the foresaid matters, identical grounds of appeal are raised by the assessee under similar facts and circumstances against commonly worded orders by Ld.CIT(E), therefore, these matters are heard together and disposed of by this common order.
ITA 60/RPR/2025 has been taken up as the lead matter and our decision therein shall apply mutatis mutandis to the other matter i.e., ITA 76/RPR/2025.
The grounds of appeal assailed by the assessee in ITA 60/RPR/2025, reads as under:
The brief facts of the case as described by the Ld. CIT(E) in his order dated 27.12.2024 along with his decision are extracted herein below for the sake of completeness of facts:
At the outset Ld. Authorized Representative (in short “Ld. AR) on behalf of the assessee submitted that the application of assessee in form 10AB for grant of registration u/s 12AB was not deposed off by the Ld CIT(E) in accordance with the facts on records and mandate of law, that he referred the activities of assessee for FY 2024-25 and verified the audited financials for of FY 2023-24. It was the submission that charitable activities were started by the assessee in FY 2024-25 only for which all the ledger copies and bills for expenses pertaining to FY 2024-25 were submitted before the Ld. CIT(E) but he did not even refer to those documents. Ld AR raised the grievance that the assessee was not even show caused before arriving at a conclusion against it, by the Ld. CIT(E) to rebut in its defense, the action of the authority was therefore, grossly in contravention to the principle of natural justice. Regarding mentioning UDIN in the Audited balance sheet, Ld AR shown us the issuance of UDIN No. 24429183BKAOCS4580 dated 28-09-2024 (page 351 of APB) for furnishing of Tax Audit Report of Form 10BB, however it is noticed that the same was left to be mentioned on the audited balance sheet, but the same could have been brought to the notice of Ld. CIT(E), if the assessee would have been called for such clarification. Under such circumstances, it was prayer that the order passed by Ld. CIT(E) shall be set aside and be directed to grant the registration u/s 12AB of the Act.
Per contra, Ld. CITDR representing the revenue vehemently placed his reliance on the order of Ld. CIT(E).
Having given a thoughtful consideration to the facts of present case, after hearing both the parties, we find substance in the submission of the assessee that before deciding fate of the application of assessee for grant of registration u/s 12AB, if the Ld. CIT(E) was not convinced with the submissions made, the assessee should have been show caused, so as to make its submission in rebuttal in order to follow the principle of natural justice. Further, the expenditure not incurred by the assessee in FY 2023-24 was a fact not disputed by the assessee, as Ld AR stated that the activities are started in April 2024, therefore examining the activities started in FY 2024-25 with financials of FY 2023-24 shows misappreciation of facts on the part of Ld. CIT(E) in his order (extracted supra). In view of such facts and circumstances, we are of the considered view that the applications of the assessee are dismissed under misconceived analysis of the facts by the Ld. CIT(E), much less without giving the opportunity to the assessee to rebut towards such adverse findings, this goes against the principle of natural justice. Consequently, the matter needs revisit by the Ld. CIT(E) with reasonable opportunity to the assessee.
Resultantly, the order of Ld. CIT(E) dated 27.12.2024 is set aside, with the direction to decide denovo, the impugned application of assessee in form 10AB for grant of registration u/s 12AB.
In result the appeal of the assessee in ITA 60/RPR/2025 is allowed for statistical purposes, in terms of our aforesaid observations.
Following our aforesaid decision in ITA 60/RPR/2025 in the case of Al Aqsa Foundation, having similar facts, circumstances, impugned order and grievance in ITA 79/RPR/2025 by the assessee namely Al Hasan Foundation, the matter stands on same parity, therefore has been decided with identical decision, consequently, rendered as allowed for statistical purposes.
In combined result both the captioned appeals of the respective assessee’s are allowed for statistical purposes, in terms of our aforesaid observations.
Order pronounced in the open court on 31/07/2025.