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Facts
The assessee trust/society applied for registration under section 12A(1)(ac)(iii) and approval under section 80G(5), which were rejected by the CIT(E). The rejection for 12A registration was primarily based on a technical interpretation that activities commenced prior to provisional registration, deeming the provisional registration as invalid, without a detailed examination of the genuineness of activities or the trust's objects. The rejection of 80G approval was consequential to the rejection of 12A registration.
Held
The Tribunal found that the CIT(E) failed to conduct a proper and holistic examination of the material on record and did not afford a reasonable opportunity of being heard to the assessee. Emphasizing the provisions of section 12AB, which require examination of the trust's objects and genuineness of activities after granting adequate opportunity, the Tribunal set aside both the orders rejecting 12A registration and 80G approval. The matters were remanded back to the CIT(E) for fresh consideration in accordance with law, ensuring due opportunity of being heard to the assessee.
Key Issues
Whether the CIT(E) erred in rejecting the application for registration under section 12A(1)(ac)(iii) on technical grounds without a thorough examination of the trust's activities and objects, and whether the consequential rejection of approval under section 80G(5) was justified.
Sections Cited
12A(1)(ac)(iii), 12AB, 80G(5)
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िनधा"रती की ओर से/Assessee by : Shri Parikshit Aggarwal, C.A राज" की ओर से/ Revenue by : Shri Manav Bansal, CIT, DR सुनवाई की तारीख/Date of Hearing : 22/01/2026 उदघोषणा की तारीख/Date of Pronouncement : 25/02/2026 आदेश/Order PER KRINWANT SAHAY, A.M: Both the above appeals have been filed by the Assessee against the separate orders of Ld. CIT(E) Chandigarh each dt. 16/06/2025 pertaining to Assessment Year 2024-25.
Since both the above appeals were heard together therefore they are being disposed off by this consolidated order for the sake of convenience and brevity.
We shall take up the appeal in as a lead case for discussion wherein the assessee has raised the following grounds:
1. That on the facts, circumstances and legal position of the case, the Worthy CIT(E) has erred in rejecting registration application moved u/s 12A(1)(ac)(iii) even when the appellant was eligible for the same.
2. That on law, facts and circumstances of the case, the order passed by Worthy CIT(E) deserves to be quashed since the same has been passed without affording reasonable opportunity of being heard to the appellant.
3. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same.
Brief facts of the case are that the assessee trust/society had filed an application for registration, which came was rejected by the Ld. CIT(E) mainly on the ground that the assessee had already commenced its activities much prior to the grant of provisional registration and, therefore, the provisional registration itself was treated as bad in law. On this reasoning alone, the Ld. CIT(E) rejected the application without entering into a detailed examination of the genuineness of activities or compliance with the objects of the trust.
Against the order of the Ld. CIT(E) the assessee preferred in appeal before the Tribunal.
During the course of hearing the Ld. AR argued that the Ld. CIT(E) neither looked into details already filed nor gave any opportunity to the assessee to argue its case.
Per contra, the Ld. DR relied on the order of the Ld. CIT(E)
We have heard the rival submissions and have perused the material available on record. It is noticed that the rejection of registration has been made primarily on a technical interpretation relating to the timing of commencement of activities vis-à-vis the provisional registration. However, the provisions of section 12AB envisage that while processing an application for registration, the authority is required to examine the objects of the trust and the genuineness of its activities after granting adequate opportunity to the assessee.
8.1 In the present case, although certain notices were issued, the impugned order does not reflect a proper and holistic examination of the material placed on record by the assessee, nor does it deal with the assessee’s explanations in a reasoned manner. The rejection appears to have been made without fully appreciating the legal position and without adjudicating the matter on merits in accordance with law.
8.2 In the interest of justice, we are of the considered view that the matter requires fresh examination at the level of the Ld. CIT(E). Accordingly, we set aside the impugned order and restore the matter back to the file of the Ld. CIT(E) with a direction to decide the issue afresh in accordance with law, after affording reasonable and adequate opportunity of being heard to the assessee.
Now, we shall take up the appeal of the assessee in which arises from the order passed by the Ld. CIT(E), Chandigarh dated 16.06.2025, whereby the assessee’s application filed in Form No. 10AB seeking approval under section 80G(5) of the Income-tax Act, 1961 was rejected.
The facts and issues involved in this appeal are closely connected with those involved in ITA No. 985/Chd/2025. The rejection under section 80G(5) has been made mainly by placing reliance on the findings recorded in the order rejecting registration under section 12AB, along with certain observations regarding the religious nature of activities.
Since we have already set aside the order of the Ld. CIT(E) in and restored the matter for fresh adjudication, we find it appropriate and logical that the impugned order passed under section 80G(5) should also be set aside. The eligibility of the assessee for approval under section 80G is consequential and cannot be conclusively decided without a proper and lawful determination of the assessee’s registration status and examination of its objects and activities.
11.1 Accordingly, the impugned order passed by the Ld. CIT(E) in is also set aside and the matter is restored to the file of the Ld. CIT(E) for fresh consideration in accordance with law, after providing due opportunity of being heard to the assessee.
In the result, both the above appeals of the Assessee are allowed for statistical purposes.