The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has set aside the rejection of a charitable organization’s applications for registration under Section 12AB and approval under Section 80G of the Income Tax Act, remanding the matter back to the Commissioner of Income Tax (Exemptions) for fresh adjudication after providing an adequate opportunity of hearing. 

The Bench of Madhumita Roy (Judicial Member) and Ramit Kochar (Accountant Member) observed that the principles of natural justice required that the charitable organization be given a reasonable opportunity to substantiate its claim.

The appeal was filed by a Delhi-based charitable organization registered under Section 8 of the Companies Act, 2013. The organization had earlier obtained provisional registration under Section 12AB and subsequently filed Form 10AB on March 7, 2025, seeking regular registration under the Income Tax Act. 

During the processing of the application, the Commissioner of Income Tax (Exemptions) issued a notice on April 22, 2025, calling for various documents, clarifications, and supporting evidence regarding the genuineness of activities, charitable objects, and commencement of operations. However, according to the department, no response was received from the applicant. Consequently, the application for registration under Section 12AB was rejected. The related application seeking approval under Section 80G was also rejected. 

Before the Tribunal, the organization contended that it could not respond to the notices due to the advanced age and health-related difficulties of the person responsible for handling the compliance matters. It argued that the non-compliance was not intentional and requested another opportunity to present the required documents and explanations before the tax authorities. 

The Revenue did not oppose the request for a fresh opportunity, and the departmental representative fairly left the matter to the Tribunal’s consideration. 

Considering the facts and circumstances of the case, the Tribunal held that a fresh hearing was necessary to prevent a miscarriage of justice. The Bench therefore remitted both matters to the Commissioner of Income Tax (Exemptions) for de novo adjudication. The Commissioner has been directed to reconsider the applications after granting adequate opportunities to the assessee and after examining all materials and evidence that may be produced during the proceedings. 

The ITAT allowed both appeals for statistical purposes and restored the proceedings to the file of the Commissioner of Income Tax (Exemptions). The charitable organization will now have another opportunity to establish the genuineness of its activities and satisfy the requirements for obtaining registration under Section 12AB and approval under Section 80G.

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