Vivek Mission Charitable Trust Vs CIT (ITAT Amritsar)
Amritsar ITAT: 12AB Registration Cannot Be Rejected on Inspector’s Adverse Report Without Giving Trust Opportunity to Rebut-Running Medical Facility Is Itself Charitable Activity
The assessee-trust was engaged in running an eye hospital and applied for registration by filing Form 10AB. The CIT(E), Chandigarh rejected the application on the premise that the trust was allegedly charging fees from patients but had failed to furnish details of such fees, OPD register/list of patients and list of donors.
A significant basis for rejection was a physical enquiry report prepared by the Income-tax Inspector. According to the report, a medical shop named “Gopal Medical Store” was operating from the hospital premises and selling medicines and intra-ocular lenses at market rates. The report also suggested that consolidated charges were collected from patients towards medicines, hospital beds and professional charges, whereas the audited financial statements reflected only donations.
The trust strongly disputed these findings. It contended that the hospital provided treatment without collecting anything from patients, with the entire expenditure being met from donations. It further explained that Gopal Medical Store was an independent third-party entity having no connection with the trust. The trust produced photographs showing the hospital, beds and patients undergoing treatment, newspaper reports and financial records to establish its charitable activities.
More importantly, the CIT(E) had relied upon the Inspector’s adverse report without furnishing the report or the adverse material to the trust and without giving it an opportunity to rebut the findings.
The ITAT observed that the fact that the trust was actually carrying on a medical facility could not be denied, and running such medical facility was itself a charitable activity. At the same time, the allegation that charges were being collected from patients was specifically denied by the assessee.
The Tribunal held that the CIT(E)’s action in rejecting registration on the basis of information contained in the Inspector’s report without giving the assessee an opportunity to rebut that material violated the principles of natural justice.
Accordingly, the matter was remanded to the CIT(E) for fresh consideration of the 12AB registration application, keeping in view the charitable activities actually carried on by the trust. The assessee was also directed to furnish all documentary evidence supporting its case and cooperate with the fresh proceedings.
Key takeaway: CIT(E) cannot reject Section 12AB registration by relying upon an Income-tax Inspector’s adverse physical-verification report collected behind the trust’s back. If such material is proposed to be used against the applicant, the report must be confronted and a meaningful opportunity to rebut it must be provided. Further, the actual running of a medical facility is itself a recognised charitable activity.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
This appeal is filed by the assessee against the order of the Ld CIT (E), Chandigarh, dated 20/01/2026, rejecting the application for registration dated 28/08/2025, filed by the assessee in Form 10AB, u/s 12A of the Income Tax Act 1961( henceforth the Act ).
2. The grounds of appeal taken by the assessee in the memorandum of appeal in form 36 are as follows:
“1. Violation of Principles of Natural Justice That the 1.d. CIT E has erred in law in relying upon the adverse physical inspection report of the Income tax Inspector without furnishing a copy of 1 the said report to the appellant and without granting any opportunity to rebut OR explain the contents thereof, thereby violating the principles of natural justice and rendering the impugned order void ab initio.
2. Mechanical Reliance on Inspectors Report That the Ld. CIT E abdicated quasi judicial responsibility by mechanically relying on the Inspectors report, which contained assumptions and legal conclusions beyond the Inspectors competence.
3. Exceeding Jurisdiction under Section 12AB That the Ld. CIT E has grossly erred in law by travelling beyond the limited jurisdiction under section 12AB by conducting a roving. assessment like enquiry into alleged receipts, pricing, and operational details, which is impermissible at the stage of grant of registration.
4. Treating Third Party Commercial Activity as Trusts Income not disclosed in the Income and Expenditure Account That the Ld. CIT E has erred in law and on facts in imputing alleged sale of 4 spectacles, lenses and medicines by an independent third-party medical store to the appellant trust, without any finding that such activities were carried out by the trust OR that any income accrued to the trust therefrom.
5. Perverse Finding of False Accounts Without Evidence That the 1.d. CIT E has erred in branding the accounts of the appellant as false without identifying any specific defect, suppression, OR misstatement, and without rejecting the books of account by doubting the genuineness of activities, completeness and correctness of accounts
6. Ignoring Uncontroverted Evidence on Record That the Ld. CIT 1. has failed to consider and appreciate the overwhelming documentary evidence filed by the appellant, including audited accounts, affidavits, absence of purchase records, newspaper reports, and photographic evidence demonstrating free charitable medical services.
7. Misapplication of Section 2 sub section 15 That the Ld. CIT(E) has wrongly invoked the proviso to section 2 sub section 15 without recording any finding of trade, commerce, OR business carried on by the trust for profit, ignoring that medical relief is per se a charitable purpose under section 2 sub section 15.
8. That the order on the above grounds is bad in law and on facts.
9. That the appellant craves leave to add OR amend the ground of appeal before the appeal is heard and disposed off.
10. GROUNDS OF APPEAL COMPREHENSIVE Each ground is independent and without prejudice to one another.”
3. The facts of the case as emerging are that the assessee is a charitable trust engaged in running a medical facility ( eye hospital ) and has applied for registration u/s 12A(1) (ac) (ii) of the Act 61, in form 10AB, which has been rejected by Ld. CIT(E) on the presumption that fees are charged from patients and the assessee has failed to produce the details of fees charged for medical services, list of OPD patients/OPD register, list of donors, and further as per physical enquiry report submitted by departmental inspector, it was noticed that a medical store “ Gopal Medical Store ” was operating from the said premises where medicines were sold at regular market rates where intra ocular lenses including imported ones and consolidated charges are collected from patients for medicines, hospital beds and professional charges, and such receipts collected from patients are not reflected in the audited financials ( which only reflects donations ).
4. In course of hearing the Ld AR of the assessee explained that the registration of the applicant assessee has been rejected on the basis of an “ inspectors report ”, without allowing an opportunity to the assessee to rebut the materials gathered behind its back. Secondly, he submitted that the trust is engaged in running an eye hospital where the entire expenses is borne out of DONATIONS received and nothing is collected from patients and beneficiaries and also explained that the medical shop as pointed out by the inspector in his report is an independent entity not connected with the assessee and as far as the assessee is concerned the genuineness of the charitable activity cannot be doubted in support of which he produced voluminous photographs of the hospital and its hospital beds and patients undergoing treatment and news paper cuttings to support his contention, and submitted that all receipts by way of donation and expenses incurred are supported by documents and duly recorded in books and financial statements and there is absolutely no reason to refuse the application for registration.
5. The Ld. DR relied on the order of the Ld. CIT (E).
6. We have heard the rival submissions and considered the materials before us and we are of the opinion that carrying on of the medical facility cannot be denied which itself is a charitable activity and the matter collection of charges from patients are absolutely denied by the Ld. AR and the Ld CIT (E) has proceeded to reject the application on the basis of information contained in the inspectors report without providing any opportunity to the assessee to rebut such findings , which violates the principles of natural justice.
6.1 As such in the interest of justice, we remand the matter back to the file of the ld. CIT(E) to consider the application for registration afresh keeping in mind the charitable activities i.e. carried out by the trust and we also direct the assessee to furnish all documentary evidences and submissions in support of his contention and to fully cooperate in fresh registration proceedings.
7. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 10.08.2026 under Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963.
