Facts of the Case

The assessee, Grameen Vikas Sansthan, filed an application for registration under section 12AB of the Income Tax Act, 1961 on 29.03.2024 in Form No.10AB as prescribed under Rule 17A of the Income Tax Rules, 1962. The learned Commissioner of Income Tax (Exemptions), Lucknow issued letters seeking clarifications and documents to verify the genuineness of the trust’s activities, its charitable nature, and commencement of activities.As no response was received from the assessee, the learned CIT (Exemptions) rejected the application for registration on the ground that the assessee failed to furnish documentary evidence to establish the genuineness and commencement of its charitable activities.

 Issues Involved

  1. Whether rejection of registration under section 12AB without granting reasonable opportunity is sustainable in law.
  2. Whether the application for trust registration requires fresh examination after providing adequate opportunity to the assessee.
  3. Whether the order of the CIT (Exemptions) complied with principles of natural justice.

 Petitioner’s Arguments

The assessee submitted that the application for registration under section 12AB was rejected without providing reasonable opportunity to submit the details and documents sought by the learned CIT (Exemptions). It was contended that the matter deserved restoration for fresh consideration so that the assessee could properly demonstrate the genuineness and charitable nature of its activities.

 Respondent’s Arguments

The learned Departmental Representative did not raise any objection to the request of the assessee for restoration of the matter and left the issue to the discretion of the Tribunal.

 Court Order / Findings

The Tribunal observed that the application for registration was rejected without affording reasonable opportunity to the assessee. Considering the specific facts and circumstances of the case and noting the absence of objection from the Revenue, the Tribunal held that the impugned order could not be sustained.

Accordingly, the order passed by the learned CIT (Exemptions) was set aside, and the matter relating to the assessee’s application under sections 12A/12AA/12AB was restored to his file with a direction to consider the application afresh and to pass a de novo order in accordance with law after providing reasonable opportunity to the assessee.

Important Clarification

The Tribunal reiterated that at the stage of registration under section 12AB, the authority is required to examine the genuineness of activities and charitable objects after granting adequate opportunity of hearing. Rejection of registration without following principles of natural justice renders the order unsustainable and necessitates restoration for fresh adjudication.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1770628536_GRAMEENVIKASSANSTHANMAHARAJGANJVS.CITEXEMPTIONLUCKNOW.pdf

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