Facts of the Case

The assessee, Kiran Educational Trust, filed an application in Form No. 10AB seeking registration under Section 12A(1)(ac)(iii) of the Income-tax Act. The CIT (Exemption), Kolkata issued notice dated 01.04.2025 calling for certain information. As no reply was received, a reminder notice dated 21.05.2025 was issued, in response to which the assessee furnished various details along with supporting documents. The CIT (Exemption) thereafter sought further clarifications from the assessee, to which no response was submitted. On this basis, the CIT (Exemption) held that the genuineness of the activities of the trust was not established, treated the application as non-maintainable, rejected the application for registration under Section 12A(1)(ac)(iii) and cancelled the provisional registration granted earlier. Aggrieved by the rejection order dated 22.06.2025, the assessee preferred an appeal before the Tribunal.

Issues Involved

Whether rejection of registration under Section 12A(1)(ac)(iii) on the ground of non-furnishing of further details without granting adequate opportunity was justified, and whether the matter required restoration to the file of the CIT (Exemption) for fresh adjudication.

Petitioner’s Arguments

The assessee contended that the CIT (Exemption) erred in rejecting the application without properly considering the submissions and documents already furnished in response to the notices. It was argued that the rejection was based on presumptions and that the assessee should be afforded another opportunity to substantiate the genuineness of its activities and compliance with statutory requirements.

Respondent’s Arguments

The Revenue relied on the order passed by the CIT (Exemption) and submitted that the rejection was justified as the assessee failed to furnish the required clarifications sought during the proceedings.

Court Order / Findings

The ITAT Kolkata observed that the registration under Section 12A was denied merely on account of non-furnishing of certain supporting documents as called for by the CIT (Exemption). The Tribunal held that in the interest of justice, the assessee ought to be granted another opportunity to file its submissions and documents to establish the genuineness of its activities. Accordingly, the Tribunal set aside the order of the CIT (Exemption) and remanded the matter to his file with a direction to decide the application afresh after granting adequate opportunity of being heard and after allowing the assessee to furnish the details sought, and thereafter to pass an order in accordance with law.

Important Clarification

The Tribunal clarified that while examining applications for registration under Section 12A, the primary focus should be on the genuineness of objects and activities of the trust. Rejection of registration without granting sufficient opportunity to comply with requisitions is contrary to principles of natural justice.

Final Outcome

The appeal filed by the assessee was partly allowed for statistical purposes. The rejection order dated 22.06.2025 passed by the CIT (Exemption), Kolkata was set aside, and the matter was restored to his file for fresh adjudication in accordance with law after granting due opportunity to the assessee.

Source Link - https://itat.gov.in/public/files/upload/1767179217-wg22Ju-1-TO.pdf

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