AAREEV FOUNDATION,VADODARA V. CIT(E), AHEMDABAD

ITA 1502/AHD/2025

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The Aareev Foundation appealed against the decision of the Commissioner of Income Tax (Exemption), Ahmedabad, which had rejected their application for final registration under section 12AB of the Income Tax Act, 1961. The rejection was based on the non-filing of documentary evidence to establish the genuineness of the Trust's activities. The Tribunal found that the CIT(Exemptions) had not adequately considered the materials provided and had not granted a fair opportunity to the Trust to substantiate its activities. The Tribunal noted the importance of a holistic consideration of the Trust's objectives and activities, as mandated by various Supreme Court judgments.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787144 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2023-2024
• Appeal Filed On: 29-07-2025
• Other Referred Cases: Collector, Land Acquisition v. Mst. Katiji & Others, N. Balakrishnan v. M. Krishnamurthy, Improvement Trust, Ludhiana v. Ujagar Singh, CIT v. Dawoodi Bohra Jamat, New Noble Educational Society v. CIT, Ananda Social and Educational Trust v. CIT, CIT v. Red Rose School
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALPESH PARMAR
• Assessee Lawyers: PARTH PATHAK
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Reasonable cause; Corroborative evidences; Principle of natural justice
• Section: 12AA

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE DR. BRR KUMAR, VICE PRESIDENT & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I.T.A. No.1502/Ahd/2025 (Assessment Year: 2023-24) Aareev Foundation, B-202, Unaddeep, Susen Tarsali Road, Vadodara-390010 Vs. Commissioner of Income Tax (Exemption), Ahmedabad [PAN No.AAITA5961G] (Appellant) .. (Respondent) Appellant by : Shri Parth Pathak, CA Respondent by: Shri Alpesh Parmar, CIT-DR Date of Hearing 01.10.2025 Date of Pronouncement 17.11.2025 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide order dated 23.02.2024 passed for A.Y. 2023-24. 2. The assessee has raised the following grounds of appeal: “1. That the Learned Commissioner of Income Tax (Exemptions) [“Ld. CIT(E)”] erred in law and on facts in rejecting the application for final registration under section 12AB of the Income Tax Act, 1961, on the alleged ground that the genuineness of the activities of the Trust/Institution was not established due to non-filing of documentary evidence. 2. That the Ld. CIT(E) failed to appreciate that the Trust/Institution has been carrying out genuine charitable activities in accordance with its objectives and has been regularly engaged in activities for the benefit of the public at large. 3. That the Ld. CIT(E) ought to have considered the past financial statements, activity reports, and other relevant documents submitted by the Trust, which clearly demonstrated the genuineness of the Trust’s activities. Printed from counselvise.com ITA No. 1502/Ahd/2025 Aareev Foundation vs. CIT(E) Asst.Year –2023-24 - 2– 4. That the rejection of the application solely on the ground of non-filing of documentary evidence is arbitrary and contrary to the established legal principles that require a holistic consideration of the Trust’s objectives and activities. 5. That the Ld. CIT(E) failed to consider that the Trust has already been granted provisional registration under Section 12AB, which itself indicates that the initial scrutiny had found the Trust's objects to be charitable and genuine. 6. That the Trust undertakes to furnish any additional documentary evidence, including activity reports, bank statements, and other relevant records, to substantiate the genuineness of its activities if provided with an opportunity. 7. That in view of the foregoing, the rejection of the final registration under Section 12AB is unjustified and liable to be set aside. 8. That the Ld. CIT(E) erred in rejecting the application without granting the Trust an opportunity to furnish the required documentary evidence in support of its activities, thereby violating the principles of natural justice.” Application for condonation of delay in filing of the present appeal: 3. The assessee has filed an application seeking condonation of delay of 455 days in filing the present appeal against the order of the learned Commissioner of Income Tax (Exemptions), Ahmedabad, rejecting the assessee’s application for registration under section 12AB of the Income-tax Act, 1961. The explanation furnished by the assessee is that the impugned rejection order dated 23.02.2024 was never communicated to it in a timely or proper manner and the assessee became aware of the adverse order only on 16.12.2024 upon online verification, whereafter the appeal was filed without any further delay. It is contended that the delay is neither intentional nor deliberate and has occurred due to bona fide circumstances wholly beyond the control of the assessee. 4. On consideration of the explanation and the supporting material, we find that the cause shown by the assessee constitutes a sufficient cause within the meaning of section 253(5) of the Act. The Hon’ble Supreme Court in Printed from counselvise.com ITA No. 1502/Ahd/2025 Aareev Foundation vs. CIT(E) Asst.Year –2023-24 - 3– Collector, Land Acquisition v. Mst. Katiji & Others (1987) 167 ITR 471 (SC) has laid down that a liberal and justice-oriented approach must be adopted while considering applications for condonation of delay, and that substantial justice deserves to prevail over technical considerations. The Hon’ble Supreme Court in N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123 has held that length of delay is not material and that acceptability of the explanation is the only relevant criterion. Further, in Improvement Trust, Ludhiana v. Ujagar Singh (2010) 6 SCC 786, it was reiterated that when there is no allegation of mala fides or dilatory tactics, courts must adopt a pragmatic and liberal view toward condonation. 5. In the present case, we are of the considered view that the assessee has demonstrated that the failure to file the appeal in time occurred solely due to non-communication of the impugned order by the Department, and as soon as the assessee came to know of the rejection through online verification, immediate steps were taken to file the appeal. There is nothing on record to suggest that the delay was deliberate, intentional, or aimed at gaining any undue advantage. On the contrary, refusal to condone the delay would result in grave injustice and deprive the assessee of an opportunity to have its claim adjudicated on merits, which would be contrary to the ratio laid down by the Hon’ble Supreme Court in Collector, Land Acquisition v. Katiji (supra), where it has been observed that a litigant ordinarily does not stand to benefit by lodging an appeal late. 6. In view of the totality of circumstances, and respectfully following the judicial pronouncements of the Hon’ble Supreme Court cited above, we are satisfied that the assessee has shown sufficient and reasonable cause for the Printed from counselvise.com ITA No. 1502/Ahd/2025 Aareev Foundation vs. CIT(E) Asst.Year –2023-24 - 4– delay. Accordingly, in exercise of the powers vested in this Tribunal under section 253(5) of the Income-tax Act, 1961, the delay of 455 days in filing the present appeal is hereby condoned. The appeal is admitted for hearing on merits. On Merits: 7. The brief facts of the case are that the assessee, Aareev Foundation, filed an application in Form 10AB on 17.09.2023 seeking final registration under section 12AB of the Income-tax Act, 1961 (the “Act”) after having been granted provisional registration under section 12A(1)(ac)(vi) with effect from A.Y. 2023-24. The CIT(Exemptions) issued notices dated 08.11.2023 and 07.12.2023 calling for various documents from the applicant viz. audited accounts for the preceding three years, a note on activities, supporting evidence of charitable functions, and other documents necessary in order to verify the genuineness of activities under section 12AB of the Act. However, the CIT(E) noted that no reply was filed to any of the notices nor was any adjournment sought by the assessee. On examining the documents submitted with the original application, the CIT(E) observed that the assessee had provided only the audited accounts for F.Y. 2021-22 and had not furnished the note on activities or other documents required to form satisfaction regarding genuineness of the activities of the assessee trust. The CIT(E), by placing reliance on the statutory mandate given in section 12AB and the principles laid down by the Hon’ble Supreme Court in CIT v. Dawoodi Bohra Jamat (Civil Appeal No. 2492 of 2014) and New Noble Educational Society v. CIT (Civil Appeal No. 3795 of 2014), held that he was unable to satisfy himself regarding the genuineness of activities, their conformity with the Printed from counselvise.com ITA No. 1502/Ahd/2025 Aareev Foundation vs. CIT(E) Asst.Year –2023-24 - 5– objects of the trust, and compliance with applicable laws. He therefore rejected the application in Form 10AB and cancelled the provisional registration. 8. The assessee is in appeal before us against the order passed by the CIT(Exemptions) dismissing the application of the assessee. 9. We have heard the rival contentions and perused the record. The assessee has contended that it has been carrying out genuine charitable activities and that the failure to file complete documents before the CIT(E) occurred due to bona fide reasons. The assessee further submits that the rejection was made without granting a fair and effective opportunity of being heard and that it is now ready to furnish all required documents including detailed activity reports, bank statements, audited accounts, and other supporting evidence. We find that the CIT(E) rejected the application solely due to non-furnishing of documents and without examining the merits of the charitable activities already undertaken. The Hon’ble Supreme Court in Ananda Social and Educational Trust v. CIT (2020) 426 ITR 340 (SC) has held that registration under section 12AA (now 12AB) cannot be denied merely because activities have newly commenced or initial evidence is limited; what is required is prima facie satisfaction of charitable objects and genuineness. Similarly, in CIT v. Red Rose School (2007) 163 Taxman 19 (All), it has been held that the Commissioner must adopt a fair, reasonable, and objective approach while examining applications for registration. 10. In the light of these authoritative decisions and considering the assessee’s grounds of appeal and willingness to furnish complete Printed from counselvise.com ITA No. 1502/Ahd/2025 Aareev Foundation vs. CIT(E) Asst.Year –2023-24 - 6– documentation, we are of the view that the matter requires fresh examination. The satisfaction contemplated under section 12AB regarding genuineness of activities and compliance with objects requires proper scrutiny of the documents which the assessee now undertakes to produce. Accordingly, the matter is restored to the file of the CIT(Exemptions) for de-novo consideration. The CIT(Exemptions) shall grant adequate opportunity to the assessee to furnish all relevant documents, including audited accounts, activity reports, bank statements, details of charitable programmes, and any other evidence necessary for verifying the genuineness of its activities. The assessee is directed to cooperate fully and provide all requisite information. The CIT(Exemptions) shall thereafter pass a fresh order in accordance with law and judicial principles discussed above. 11. In the result, the appeal of the assessee is allowed for statistical purposes. This Order pronounced in Open Court on 17/11/2025 Sd/- Sd/- (DR. BRR KUMAR) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad; Dated 17/11/2025 TANMAY, Sr. PS TRUE COPY आदेश की Ůितिलिप अŤेिषत/Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A)- 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाडŊ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad Printed from counselvise.com "