Facts of the Case

The assessee, Neem Ka Thana Education Society, filed an application under Section 12A(1)(ac)(iv)(B) in Form No. 10AB seeking registration as a charitable institution. The application was rejected by the CIT (Exemption), Jaipur vide order dated 16.06.2025 on three grounds, namely that the society had allegedly taken benefit of Sections 10, 11 and 12 in earlier years, that it was not registered under the Rajasthan Public Trust Act, 1959, and that the genuineness of its activities could not be verified. During the proceedings, notices were issued calling for information and affidavits, including clarification regarding availing of Section 11 benefits and documents to establish genuineness of activities. Although replies were partially filed, the applicant did not respond to the final show cause notice dated 06.06.2025 and earlier verification notice dated 03.02.2025. Aggrieved by the rejection, the society preferred an appeal before the Tribunal.

Issues Involved

Whether the application for registration under Section 12A could be rejected solely on account of non-compliance to notices without granting a final effective opportunity, whether alleged availing of benefits under Section 11 required fresh verification on merits, whether non-registration under the Rajasthan Public Trust Act at the time of passing the order was fatal when registration was subsequently obtained, and whether the matter deserved restoration for fresh adjudication.

Petitioner’s Arguments

The applicant society admitted that replies to certain notices and the show cause dated 06.06.2025 were not furnished. It was submitted that one more opportunity may be granted to demonstrate that no benefit of Sections 10, 11 or 12 was availed during the relevant assessment years and to establish the genuineness of its educational and charitable activities. It was further submitted that subsequent to passing of the impugned order, the society had been duly registered under the Rajasthan Public Trust Act, 1959 on 28.07.2025, and an application for admission of additional evidence along with the registration certificate was filed, which was essential for proper adjudication.

Respondent’s Arguments

The Department did not oppose the request for restoration of the matter. The CIT-DR fairly submitted that if the Tribunal deemed it appropriate in the interest of justice, the application could be restored to the file of the CIT (Exemption) for fresh consideration after granting another opportunity to the applicant society.

Court Order / Findings

The ITAT Jaipur observed that rejection of the application was primarily based on non-compliance to notices and lack of verification rather than a conclusive finding on merits. The Tribunal noted that the applicant admitted non-filing of replies to the critical notices but sought one final opportunity to place all relevant material on record. The Tribunal further noted that registration under the Rajasthan Public Trust Act, 1959 had since been obtained and the certificate dated 28.07.2025 constituted relevant additional evidence which ought to be considered. In view of the candid stand of the assessee and absence of objection from the Revenue, the Tribunal held that the ends of justice would be met by restoring the application to the file of the CIT (Exemption) for fresh decision after granting adequate opportunity of hearing and considering all replies, documents and additional evidence.

Important Clarification

The Tribunal clarified that applications for charitable registration should be examined on merits after affording effective opportunity to the applicant to establish compliance with statutory requirements and genuineness of activities. Rejection on technical grounds of non-compliance, particularly where subsequent compliance and relevant evidence are available, warrants restoration for fresh adjudication in the interest of natural justice.

Final Outcome

The appeal filed by the assessee was allowed for statistical purposes. The rejection order passed by the CIT (Exemption), Jaipur was set aside, and the application for registration under Section 12A(1)(ac)(iv)(B) was restored to the file of the CIT (Exemption) for decision afresh after providing another opportunity of being heard to the applicant society and considering all material including additional evidence on record.

Source Link- https://itat.gov.in/public/files/upload/1767614155-U4wqrq-1-TO.pdf

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