Facts of the Case

The assessee, Unique Boond Foundation, is a charitable trust which was granted provisional registration under Section 12A(1)(ac)(vi) of the Income Tax Act on 28.06.2023. Thereafter, the assessee filed applications for regular registration under Section 12AB and approval under Section 80G(5) of the Act on 28.06.2024.

Since the assessee was granted provisional registration, it was required to file Form 10AB within the prescribed time to enable verification of the genuineness and commencement of its charitable activities. The Commissioner of Income Tax (Exemptions) issued notices calling for clarifications and supporting documents. As no response was received from the assessee, the CIT (Exemptions) rejected the application for registration under Section 12A and, consequently, rejected the application under Section 80G(5) and cancelled the provisional registration.

Aggrieved by the rejection orders dated 19.12.2024, the assessee preferred appeals before the Income Tax Appellate Tribunal.

 Issues Involved

  1. Whether rejection of registration under Section 12AB without granting adequate opportunity of hearing is sustainable in law.
  2. Whether cancellation of provisional registration and rejection of Section 80G approval was justified without fresh adjudication.
  3. Whether principles of natural justice were violated by the CIT (Exemptions).

 Petitioner’s (Assessee’s) Arguments

The assessee contended that the CIT (Exemptions) rejected the applications under Sections 12AB and 80G without providing reasonable opportunity to submit the details and documents called for. It was submitted that the matter deserved to be restored for fresh consideration with a direction to provide adequate opportunity of hearing.

 Respondent’s (Revenue’s) Arguments

The learned Departmental Representative did not object to the prayer of the assessee and agreed that the matter may be restored to the file of the CIT (Exemptions) for fresh adjudication in accordance with law.

 Court Order / Findings

The ITAT observed that the applications for registration under Sections 12AB and 80G were rejected without granting reasonable opportunity to the assessee. The Tribunal held that such rejection was not sustainable. Accordingly, the ITAT set aside the impugned orders and restored the matters to the file of the CIT (Exemptions) with a direction to reconsider the applications afresh and pass de novo orders after providing reasonable opportunity of being heard to the assessee.

 Important Clarification / Legal Principle

Applications for charitable registration under Sections 12AB and 80G must be decided after granting reasonable opportunity to the applicant to establish the genuineness and commencement of charitable activities. Rejection without such opportunity violates principles of natural justice and warrants remand for fresh adjudication.

Link to download the order -  https://www.mytaxexpert.co.in/uploads/1770871338_UNIQUEBOONDFOUNDATIONJAIPURVS.CITEXEMPTIONLUCKNOWLUCKNOW.pdf  

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