Purshottam Memorial and Charitable Trust Vs ITO (ITAT Jaipur)
Seven-Day Notice Inadequate in Trust Registration Case: Jaipur ITAT Orders Fresh Hearing
The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has set aside orders rejecting a charitable trust’s applications for registration and approval under Sections 12A/12AB and 80G, finding that an adequate opportunity of hearing had not been provided.
In Shree Purshottam Memorial and Charitable Trust v. ITO, Ward-6(2), Jaipur, ITA Nos. 1036 and 1037/JPR/2025, pronounced on 4 November 2026, the Tribunal directed the Commissioner of Income Tax (Exemption), Jaipur, to pass fresh orders after hearing the trust.
The Commissioner had rejected the applications after the trust failed to respond to a show-cause notice allowing seven days. The Tribunal’s relief was confined to restoring the matters for reconsideration; it did not itself grant registration or approval.
Background: Trust Sought Regular Registration and Approval
The appellant filed applications in Form 10AB, seeking registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii) of the Income-tax Act, 1961.
The trust had earlier received provisional registration and provisional approval. Through the applications under consideration, it sought regular registration and approval.
The CIT(E) rejected the applications through two orders dated 11 June 2025. The rejection concerned the genuineness of the trust’s activities.
The trust challenged both orders before the Tribunal, raising objections to the conclusions reached and the opportunity provided during the proceedings.
Trust Disputed Finding of Non-Genuine Activities
In the registration appeal, the trust argued that its activities were genuine and explainable. It maintained that rejection of the final registration application on the ground of non-genuineness was unjustified.
The trust also challenged cancellation of the provisional registration previously granted under Section 12A, describing the action as arbitrary.
In the connected Section 80G appeal, it disputed rejection of approval on the ground of absence of registration under Section 12AB.
It further challenged the adverse treatment of its earlier provisional approval.
These grounds placed both registration and approval issues before the Tribunal. However, the Tribunal ultimately resolved the appeals on the question of adequate hearing, rather than deciding the genuineness of the activities.
Two Opportunities Were Given, but First Reply Was Filed
The Tribunal examined the sequence recorded in the Commissioner’s orders.
It noted that two opportunities had been given to the trust. Importantly, the trust had responded to the first opportunity.
The Commissioner examined that reply and then issued a further show-cause notice dated 21 May 2025.
The notice required a response by 28 May 2025, leaving a gap of seven days.
The trust did not comply with that notice, following which its applications were rejected.
The record therefore did not present a case of complete non-participation throughout the proceedings. A reply had been submitted, examined and followed by a further request for information.
Tribunal Found Opportunity Inadequate on the Facts
The ITAT held that the opportunity afforded was insufficient for furnishing the necessary details referred to in the impugned orders.
It concluded that adequate opportunity of being heard had not been provided.
The Tribunal’s reasoning focused on the actual procedural sequence: an initial response, its examination by the Commissioner, and a subsequent show-cause notice requiring compliance within seven days.
To advance the cause of justice, the trust needed an adequate opportunity to place the required information before the authority.
Accordingly, the Tribunal declined to sustain the rejection orders in their existing form.
Fresh Orders Directed After Hearing the Trust
The Tribunal set aside the impugned orders and directed the CIT(E) to pass fresh orders after providing an adequate opportunity of hearing.
Both appeals were therefore allowed for statistical purposes.
This outcome restores the applications for adjudication. It does not amount to a finding that the trust has conclusively established genuine activities or fulfilled every condition for registration and approval.
Those questions remain for examination by the Commissioner after considering the material furnished in the renewed proceedings.
The trust must consequently use the restored opportunity to address the information requirements and substantiate its applications.
Seven Days Was Not Declared Universally Invalid
The decision should be understood in its factual setting.
The Tribunal did not prescribe a universal minimum response period for every registration proceeding. Nor did it hold that every notice providing seven days must necessarily be invalid.
Its conclusion was that the opportunity was inadequate in this case, considering the proceedings and the details required.
The operative direction therefore requires a meaningful hearing before fresh conclusions are drawn, rather than automatic acceptance of the trust’s claims.
Significance of the Ruling
The order highlights that the number of notices alone does not determine whether an adequate hearing has occurred. The sequence of responses and the opportunity to supply the required details also matter.
Here, the trust had participated initially, but the Tribunal found the subsequent opportunity insufficient before rejection.
The Commissioner must now reconsider both applications after hearing the trust. The substantive entitlement to registration and Section 80G approval remains open, while the earlier rejection orders have been set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, JAIPUR
The Appellant, Shree Purshottam Memorial and Charitable Trust by filing aforesaid interconnected appeals, sought to set aside the impugned orders both dated 11.06.2025 passed by the Commissioner of Income Tax (Exemption), Jaipur [hereinafter referred to as the ‘CIT(E)’] on the grounds inter-alia that:-
ITA No. 1036/JPR/2025
“1. On the facts and circumstances of the case and in law, the Id. CIT (Exemption) has grossly erred in rejecting the final registration application filed u/s 12AB of the Income Tax Act, 1961. Such denial of registration is incorrect and invalid in law hence deserves to be quashed.
2. On the facts and circumstances of the case and in law, the Id. CIT (Exemption) has further erred in rejecting the registration application on the ground of Non-Genuineness of Activities. However, the activities of the trust are completely genuine and explainable. Therefore, the denial of registration on this basis is completely irrational, illogical and against the principle of natural justice, hence deserves to be rolled back.
3. On the facts and circumstances of the case and in law, the Id. CIT (Exemption) has further erred in cancelling the provisional registration earlier granted under section 12A of the Income Tax Act, 1961. Such cancellation being arbitrary in nature as well as unjustified hence deserves to be deleted.
4. That the appellant reserves the right to add/ alter/ modify/ deleted any or all grounds at any time before the hearing.
ITA No. 1037/JPR/2025
“1. On the facts and circumstances of the case and in law, Id. CIT (Exemption) has grossly erred in rejecting the application for approval u/s 80G of the Income Tax Act, 1961. Such denial of approval is invalid in law as well as facts, hence deserves to be quashed.
2. On the facts and circumstances of the case and in law, the Id. CIT(Exemption) has further erred in rejection the application for approval u/s 80G of the Income Tax Act, 1961 on the ground of non-registration u/s 12AB. Such reason for denial of approval is incorrect, unlawful and against the principal of natural justice hence deserves to be deleted.
3. On the facts and circumstances of the case and in law, the ld. CIT (Exemption) has also erred in cancelling the application for provisional approval earlier granted under section 80G of the Income Tax Act, 1961. Such cancellation of provision approval is arbitrary in nature as well as unjustified hence deserves to be annulled.
4. That the appellant reserves the right to add/ alter/ modify/ deleted any or all grounds at any time before the hearing.”
2. Briefly stated, facts necessary for consideration and adjudication of the issues at hand are : Applications moved by the appellant in Form No. 10AB, seeking registration approval u/s 12A(1)(ac)(iii) and u/s 80G(5)(iii) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) were rejected on ground of non genuineness of activities.
3. Being aggrieved with the impugned orders passed by the Ld. CIT(E), appellant has come up before the Tribunal by way of filing the present appeals.
4. We have heard Ld. ARs for the appellant Ld. DR for the Revenue and perused the record available on file.
5. Bare perusal of the impugned orders passed by the Ld. CIT(E) go to show that two opportunities were given to the appellant. On first opportunity, the appellant filed reply, which was examined and show cause notice was issued on 21.05.2025, to be replied by 28.05.2025 with a gap of 7 days. On failure of the appellant to comply with the show cause notice applications were rejected.
6. From the facts explained above, it is proved on record that adequate opportunity of being heard has not been provided to the appellant to furnish the necessary details as mentioned in para 2 of the impugned order. To substantiate the cause of justice, adequate opportunity of being heard was required to be given to the appellant, hence the impugned order passed by the Ld. CIT(E) is set aside to pass afresh order by providing adequate opportunity of being heard to the appellant.
7. Resultantly, both the appeals filed by the appellant are allowed for statistical purposes.
