KOOLKING FOUNDATION,MALERKOTLA V. THE COMMISSIONER OF INCOME TAX (EXEMPTIONS), CHANDIGARH

ITA 882/CHANDI/2025

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The case involves the Kookling Foundation, which appealed against the decision of the CIT (Exemptions), Chandigarh, rejecting their application for registration under Section 12A of the Income Tax Act, 1961. The primary contention was that the CIT (Exemptions) had rejected the application without issuing a show cause notice or providing an adequate opportunity for the foundation to present its case. The Tribunal noted that the CIT (Exemptions) had not adhered to the procedural requirements of the Income Tax Act, specifically the proviso to Section 12AA, which mandates an opportunity for the assessee to be heard. Consequently, the Tribunal remanded the case back to the CIT (Exemptions) for a fresh decision after hearing the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 785926 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 07-07-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANAV BANSAL
• Assessee Lawyers: PANKAJ BHALLA; VIRTUAL
• Keywords: Opportunity of being heard
• Section: 12AA; 12A

Judgement Text

"आयकर अपीलȣय अͬधकरण, चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH, ‘A’, CHANDIGARH BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER & SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 882 /CHD/2025 U/s 12AA Kookling Foundation, C/o Kookling Udhyog Private Limited, Village Ratolan, Focal Point, Dhuri Road, Malerkotla 148023 बनाम Vs. The CIT (Exemptions), Chandigarh èथायी लेखा सं./ PAN NO: AAFTK7048D अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent ( HYBRID HEARING ) Ǔनधा[ǐरती कȧ ओर से/Assessee by : Sh. Pankaj Bhalla, CA (Virtual) राजèव कȧ ओर से/ Revenue by : Sh. Manav Bansal, CIT DR सुनवाई कȧ तारȣख/Date of Hearing : 28.10.2025 उदघोषणा कȧ तारȣख/Date of Pronouncement : 29.10.2025 आदेश/Order Per Krinwant Sahay, AM: Appeal in this case has been filed by the assessee against the order dated 26.05.2025 passed by the Ld. Commissioner of Income Tax, Exemptions, Chandigarh. 2. Grounds of appeal are as under: 1. That the Ld. CIT (Exemptions), Chandigarh has grossly erred in law and on facts in rejecting the application filed by the Printed from counselvise.com 882-Chd-2025 Koolking Foundation, Malerkotla 2 appellant for registration under Section 12A of the Income Tax Act, 1961 without properly appreciating the facts and evidences on record 2. That the Ld. CIT (Exemptions), Chandigarh has grossly erred in law and on facts in rejecting the application filed by the appellant for registration under Section 12A of the Income Tax Act, 1961 without issuance of any show cause notice and without affording adequate and meaningful opportunity of being heard. 3. That the Ld. CIT (Exemptions) has erred in concluding that the activities of the trust are not genuine and not in accordance with the objects ignoring the fact that the trust is newly formed and had duly filed the required documents evidencing its charitable intent, including proof of land acquisition for future charitable use. 4. That the rejection of registration solely on the ground that the trust is in its initial start-up phase and has not commenced activities on a full scale is unjustified and contrary to settled legal principles. 5. That the Ld. CIT (Exemptions) has erred in holding that the trust objects are vague and omnibus in nature whereas the objects of the trust are well-defined, charitable in nature and aligned with the purposes enumerated under Section 2(15) of the Act. Printed from counselvise.com 882-Chd-2025 Koolking Foundation, Malerkotla 3 6. That the Ld. CIT (Exemptions) has wrongly interpreted the land purchase transaction as not being charitable, ignoring the fact that such acquisition was intended for infrastructure creation for future charitable activities and that no income-generating activity was carried out. 7. That the Ld. CIT (Exemptions) has erred in making adverse inference from the funding structure of the trust particularly merely because there are unsecured loans from trustees, which were disclosed and explained and cannot be the basis for denying registration under Section 1248. 8. That the Ld. CIT (Exemptions) has erred in not considering that mere absence of charitable expenditure in the first year of existence of a trust cannot be the sole ground for rejection of registration under Section 12A. 9. That the Ld. CIT (Exemptions) has erred in concluding that the trust operates for the benefit of related parties without bringing any tangible evidence on record and without giving the assessee an opportunity to rebut such assumptions. 10. That the Ld. CIT (Exemptions) has acted beyond jurisdiction in examining the application of income or operational activities in detail at the stage of application under Section 12A, which is premature and beyond the scope of inquiry at initial stage Printed from counselvise.com 882-Chd-2025 Koolking Foundation, Malerkotla 4 limited to genuineness of activities and charitable objects. 11. That the appellant craves leave to add, amend, alter, or withdraw any of the above grounds at the time of hearing. 3. At the very outset, ld. Counsel for the Assessee submitted that the Ld. CIT(E) rejected the application filed by the appellant for registration u/s 12AA of the Income Tax Act, 1961 (in short 'the Act') without issuance of any show cause notice and affording reasonable opportunity of hearing to the Assessee. 4. The ld. counsel also brought it to the notice of the Bench that as per proviso to Section 12AA of the Income Tax Act, the Ld. CIT(E) is required to grant opportunity to the Assessee of being heard but that has not been done in this case. 5. Per contra, ld. DR relied on the order of the Ld. CIT(E). 6. We have considered the findings given by the ld. CIT(E) in the order passed by her and we have also Printed from counselvise.com 882-Chd-2025 Koolking Foundation, Malerkotla 5 considered the submissions made by the AR of the Assessee during proceedings before us. We are of this considered view that as per the I.T. Act, the Assessee has every right to be heard before passing an order by the CIT(E), which in the present case, has not been done. Accordingly, we remand this case back to the file of the Ld. CIT(E) and grant an opportunity of being heard to the Assessee as required under the law and then pass an order. Accordingly, Assessee, appeal is allowed. 7. In the result, the appeal of the Assessee stands allowed for statistical purposes. Order pronounced on 28.10.2025. Sd/- Sd/- ( LALIET KUMAR ) ( KRINWANT SAHAY) Judicial Member Accountant Member “आर.क े.” आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "