KAMALAM FOUNDATION,ANKLESHWAR V. THE COMMISSIONER OF INCOME TAX (EXEMPTION), AHMEDABAD

ITA 1584/AHD/2025

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The case involves Kamalam Foundation, which appealed against the decision of the CIT(Exemption), Ahmedabad, rejecting their application for registration under section 12A of the Income Tax Act, 1961, and cancelling their provisional registration. The CIT(E) had rejected the application due to non-compliance with notices requiring documentation to establish the genuineness of the foundation's activities. The Tribunal found that while the CIT(E) was justified in noting non-compliance, the rejection without examining the merits of the trust's activities was not in line with the objectives of sections 12A/12AB. The Tribunal emphasized the importance of verifying the credentials of genuine charitable institutions and decided to set aside the CIT(E)'s order, restoring the matter for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 778790 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Appeal Filed On: 16-08-2025
• Other Referred Cases: CIT, Ujjain v. Dawoodi Bohra Jamat, New Noble Educational Society v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RIGNESH DAS
• Assessee Lawyers: HARDIK MEHTA
• Keywords: Set aside; Opportunity of being heard; Reasonable cause; Principle of natural justice; Charitable institution; Procedural lapse
• Section: 12A

Judgement Text

"आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण,अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ अहमदाबाद \bयायपीठ ‘C’ अहमदाबाद। अहमदाबाद। अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD ]BEFORE MS. SUCHITRA RAGHUNATH KAMBLE, JUDICIAL MEMBER AND MAKARAND V.MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1584/Ahd/2025 Asstt.Year : - Kamalam Foundation Plot No.6011 GIDC Ankleshwar Ankleshwar, Bharuch 393 002 PAN : AAJCK 1669 D Vs. The CIT(Exemption) Ahmedabad. (Applicant) (Responent) Assessee by : Shri Hardik Mehta, AR Revenue by : Shri Rignesh Das, CIT-DR सुनवाई क तारीख/Date of Hearing : 15/10/2025 घोषणा क तारीख /Date of Pronouncement: 16/10/2025 आदेश आदेश आदेश आदेश/O R D E R PER MAKARAND V.MAHADEOKAR, AM: This appeal filed by the assessee is directed against the order of the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”] dated 17.07.2025 passed under section 12AB(1)(b)(ii) of the Income Tax Act, 1961 [hereinafter referred to as “the Act”], rejecting the application for registration under section 12A and cancelling the provisional registration earlier granted under section 12AB. 2. The assessee has raised the following grounds of appeal: 1. The Hon’ble CIT(Exemption) has erred both in law and on facts by rejecting the application of the Appellant filed for grant of registration u/s 12A of the Income Tax Act, 1961 (‘the Act’). Printed from counselvise.com ITA No.1584/Ahd/2025 2 2. The Hon’ble CIT(Exemption) has erred in rejecting the application filed vide Form 10AB for grant of registration u/s 12A of the Act, as the Appellant was restricted by reasonable cause to submit the relevant details called for. 3. The Hon’ble CIT(Exemption) has erred in cancelling the provisional approval granted u/s 12A of the Act on the ground that the Appellant could not comply with the notices issued for furnishing certain details/documents. 4. The Hon’ble CIT(Exemption) has erred in treating the present application for registration as non-maintainable, which is against the principle of natural justice. 5. The Hon’ble CIT(Exemption) has erred in directing the Appellant to pay tax as per the provisions of section 115TD(5) of the Act. 6. The Appellant reserves the right to add, modify, amend or withdraw any ground(s) of appeal on or before hearing of the appeal. 2. Facts of the Case 2.1 The assessee filed an application in Form 10AB seeking regular registration under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. The said application was made following the expiry of its provisional registration granted earlier vide Form No. 10AC dated 03.01.2022. 2.2 The CIT(E) issued notices dated 28.03.2025 and 26.05.2025 calling upon the assessee to submit documents and to establish the genuineness of activities and compliance with other applicable laws. However, as recorded in paragraph 3 of the order, no submission or adjournment was received from the assessee in response to either notice. 2.3 In the absence of compliance, the CIT(E) observed that the pre- requisite conditions for registration under section 12AB(1)(b) remained unsatisfied. Reliance was placed on the decisions of the Hon’ble Supreme Court in CIT, Ujjain v. Dawoodi Bohra Jamat (Civil Appeal No. 2492 of 2014) and New Noble Educational Society v. CIT (Civil Appeal No. 3795 of 2014) to hold that the Commissioner must be satisfied about (i) genuineness of activities, (ii) conformity with objects, and (iii) compliance with laws material to achieving such objects. 2.4 As these conditions were not met, the CIT(E) rejected the application and cancelled the provisional registration. Printed from counselvise.com ITA No.1584/Ahd/2025 3 3. During the course of hearing before us, the Authorised Representative (AR) of the assessee, submitted that the non-compliance with notices dated 28.03.2025 and 26.05.2025 occurred because its tax consultant failed to appear before the CIT(E) due to unforeseen reasons, and the managing committee was unaware of such lapse. The omission was unintentional and not deliberate. The AR also submitted that all necessary documents such as the incorporation certificate, memorandum of association, audited accounts, and activity reports had been furnished with the initial applications in Forms 10A and 10AB, and that it has been genuinely carrying out charitable activities as per its objects. It was submitted that the order of the CIT(E) was passed without appreciating the facts and in violation of the principles of natural justice, and the matter deserved to be restored for fresh consideration. 4. The learned Departmental Representative (DR) supported the order of the CIT(E), contending that the assessee had been given adequate opportunities on two occasions to furnish documents, but remained non- compliant. 5. We have carefully considered the rival submissions, perused the record, and gone through the order of the CIT(E). The assessee admittedly failed to respond to those notices due to alleged negligence of its consultant. 5.1 While the CIT(E) was justified in observing non-compliance with statutory requirements, the rejection of the application without examining the merits of the trust’s activities would defeat the object of section 12A/12AB, which aims to facilitate registration of genuine charitable institutions after verifying their credentials. 5.2 We find merit in the assessee’s explanation that the lapse occurred due to communication failure between its consultant and managing committee. However, considering that the assessee remained totally non- Printed from counselvise.com ITA No.1584/Ahd/2025 4 responsive before the CIT(E), a deterrent is warranted to ensure due diligence in future. 5.3 In the interests of justice, therefore, and consistent with the principle laid down by various coordinate benches that technical or procedural lapses should not defeat substantive charitable entitlement, we deem it appropriate to set aside the impugned order and restore the matter to the file of the CIT(E), for deciding the application afresh on merits in accordance with law, after affording adequate opportunity of being heard to the assessee. 5.4 However, to ensure responsible compliance, a cost of Rs. 5,000/- is imposed on the assessee, payable to the Prime Minister’s Relief Fund, within 30 days of receipt of this order. Proof of such payment shall be furnished before the CIT(E) during the remand proceedings. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the Court on 16th October, 2025 at Ahmedabad. Sd/- Sd/- (SUCHITRA R. KAMBLE) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, dated 16/10/2025 vk* Printed from counselvise.com "