HC Grants Final Opportunity for 12AB Registration, Citing Curable Defects and Natural Justice.

By | November 13, 2025
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HC Grants Final Opportunity for 12AB Registration, Citing Curable Defects and Natural Justice.

Issue

Whether a final order rejecting a trust’s application for registration under Section 12AB, which was passed ex parte due to the assessee’s repeated failure to comply with notices and attend hearings, should be set aside to provide one final opportunity of hearing in the interest of natural justice, especially when the stated grounds for rejection are potentially curable or factually contestable.

Facts

  • The assessee-trust filed an application in Form 10AB seeking final/regular registration under Section 12AB.
  • The Commissioner (Exemption) [CIT(E)] issued a letter/notice via email requiring the assessee to submit certain documents. The assessee did not comply.
  • A reminder was issued fixing a hearing date. The assessee again did not comply.
  • A final opportunity and hearing date were given. The assessee failed to provide any details or documents.
  • The CIT(E), deciding the case based on the available material, rejected the application on multiple grounds: the form was incomplete, the activities were non-genuine, and there was a failure to comply with notices.
  • The assessee filed a writ, arguing that they had submitted their registration under the Public Trust Act and that the other defects were “curable in nature” if one more opportunity was granted.

Decision

  • The High Court (implied) ruled in favour of the assessee and remanded the matter.
  • It held that the dispute requires a proper adjudication on its merits, which was not possible due to the ex parte order.
  • The court, in the interest of natural justice, decided to provide the assessee with one final opportunity to be heard.
  • The case was restored to the file of the CIT(E) for a fresh adjudication.
  • Significant Relief: The court also directed that the assessee’s provisional registration shall continue to remain valid until the CIT(E) passes a fresh order.

Key Takeaways

  • Natural Justice Over Procedural Default: The court prioritized the assessee’s right to a fair hearing on the merits over their repeated procedural defaults (non-compliance with notices).
  • “Curable Defects”: Grounds for rejection, such as an “incomplete form” or “non-genuineness of activities,” are often seen as curable defects that can be rectified if the assessee provides the necessary documents and explanations.
  • Final Opportunity: A High Court can use its writ jurisdiction to grant a final chance to an assessee who has failed to comply, especially when the consequence (rejection of charitable status) is severe.
  • Provisional Registration Protected: The court’s direction to keep the provisional registration valid during the remand is a crucial relief, protecting the trust from losing its tax-exempt status while the proceedings are ongoing.
IN THE ITAT JAIPUR BENCH ‘B’
Maharishi Markendeya Sushrut Sewa Sansthan
v.
Commissioner of Income-tax (Exemption)*
Dr. S. Seethalakshmi, Judicial Member
and RATHOD KAMLESH JAYANTBHAi, Accountant Member
IT Appeal No. 1234 (JP) OF 2024
[Assessment year 2023-24]
OCTOBER  30, 2025
Anoop Bhatia, CA for the Appellant. Mrs. Alka Gautam, CIT -DR for the Respondent.
ORDER
Rathod Kamlesh Jayantbhai, Accountant Member. – The assessee has filed an appeal against the order of the Id.CIT (Exemption), Jaipur dated 24-02-2024 passed under section 12AB of the Income Tax Act, 1961, raising therein following grounds of appeal;
”1. Under the facts and circumstances of the case and in law Ld CIT (E) has erred in denying the approval to the assessee under Section 12AB of the Income Tax Act 1961.
2. Under the facts and circumstances of the case and in law Ld. CIT(E) has erred in rejecting the application of approval under section 12AB of the income Tax Act 1961 on the Technical grounds, such action being absolutely unjustified, unlawful as well as against the concept of natural justice hence the order passed by lit CIT, Exemptions deserves to be quashed.
3. Under the facts and circumstances of the case and in law Ld. CIT(E) has erred in rejecting the application on the ground that appellant trust was not able to substantiate thegenuineness of activities which is absolutely incorrect. Appellant prays rejecting the application without considering or rebutting the documents and material filed before the Ld CIT (E) being bad in law and in violations to the principles of natural justice deserves to be rolled Back.”
2.1 During the course of hearing, the Bench noticed that there is delay of 163 days in filing the appeal for which Vice Chairman Shri Nitish Kumar Sharma filed a letter requesting therein to condone the delay for the reason thatthe assessee was under a bona fide belief that necessary compliance had been completed by the professional who are appointed. But it was not communicated to the assessee from their end that the procedural requirement for filling the appeal was not made within the prescribed time limit which resulted delay in timely filing the appeal. He further submitted that as soon as they became aware of the requirement, immediate steps were taken to file the appeal without any further delay. Thus, the assessee prayed to condone the delay in filing the appeal before ITAT. To this effect, assessee has filed an affidavit deposing therein that thedelay was caused solely due to a lack of proper understanding and guidance regarding the appeal procedure from the consultant.
2.2 On the other hand, the ld. DR objected to such inordinate delay but submitted that the Court may decide the issue as deemed fit and proper in the case in the interest of justice.
2.3 After hearing both the parties and perusing the materials available on record, the Bench feels that the reasons substantiated by the assessee has merit and thus the delay is condoned because assessee should not suffer at the cost of consultant.
3.1 Brief facts of the case are that the assessee filed an online application in Form No. 10AB seeking registration u/s 12AB of the Income Tax Act, 1961[for short Act] on 30.09.2023. A letter/notice dated 27.01.2024 was issued at the e-mail/address provided in the application requiring the assessee to submit certain documents/explanations by 09.02.2024, but no compliance was made by the assessee. Thereafter, a reminder letter was issued vide notice dated 10.02.2024 fixing the date of hearing on 15-02-2024 but no compliance had been made by the assessee. However, one more opportunity was given to the assessee vide letter dated 16-02-2024 fixing the date of hearing on 21-02-2024 but the assessee had not provided any details / documents on this date of hearing. Thus the case was decided by the ld. CIT(E) based on the materials available before him. The ld. CIT(E) noted that the assessee had failed to comply with the letters, despite given three opportunities. The ld. CIT(E) noted that since the assessee could not furnish the information / details as sought and thus, the ld. CIT(E) could not find out the genuineness of the charitable activities and objects of the assessee trust. Hence, the ld. CIT(E) rejected the assessee’s claim of registration u/s 12AB of the Act by observing as under:-.
”05. In view of above discussion assessee’s claim of registration section 12AB is liable to be rejected and thus being rejected on following grounds:-
•Incomplete Form 10AB
•Registration under Rajasthan Public Trust Act,, 1959.
•Non Genuineness of activities and non-compliance
06. Further 12AB (1)(b)(ii) (B) of the Income Tax Act, 1961 also state that if CIT is not satisfiedhas to pass order rejecting such application and also cancelling its earlier registration. Thus, it is clarified that applicant’s provisional registration under clause (vi) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961 dated 06.04.2022 is also being cancelled. Further assessee has failed to give proper justification for regularization of provisional registration, thus with this order provisional registration is also cancelled.”
3.2 While hearing, the ld. AR of the assessee mainly submitted that the assessee was not provided proper opportunity of personal hearing by the ld. CIT(E) and thustheorder should be quashed being ex-parte order and against the principles of natural justice. He submitted a Certificate dated 18-03-2024 issued by the office of Asstt. Commissioner (First), Devsthan Vibhag, Jaipur Khand, Jaipur under Rajasthan Public Trust Act, 1959 and further submitted once this being available with the assessee, the other reasons upon which rejections was made being curable in nature the assessee may be provided one more opportunity to adduce the required documents before the ld. CIT(E) as mentioned in his order.
3.3 On the other hand, the ld. DR relied upon the order of the ld. CIT(E).
3.4 After hearing both parties and perusing the materials available on record, we noticed that the ld. CIT(E) has rejected the assessee’s claim of registration u/s 12AB of the Act on following grounds:-
•Incomplete Form 10AB
•Registration under Rajasthan Public Trust Act,, 1959.
•Non Genuineness of activities and non-compliance
Before us, the ld. AR of the assessee prayed that he has already placed on record the certificate of registration under the RPT Act the other two reasons as mentioned by the ld. CIT(E) being curable in nature the assessee may be provided one more opportunity to adduce the required documents before the ld. CIT(A) as the assessee did not receive the communication from the Department physically to file the documents and thus the assessee could not adduce the documents before the ld CIT(E). He further submitted that the assessee trust has obtained the certificate from Devsthan Vibhagh, Jaipur under Rajasthan Public Trust Act, 1959 and the same is placed on record (supra). Based on this submission, we are of the considered view that lis between the parties has to be decided on merits so that nobody’s rights could be scuttled down without providing the proper opportunity of being heard and thereby the principles of natural justice to be followed. Looking to that aspect of the matter we direct the assessee trust to provide details / justification for registration before the ld. CIT(E)and also in all these circumstances of the facts and circumstances of the case, the Bench restores the matter back to the file of the ld. CIT(E) to decide the issue (supra) afresh in accordance with law. Since, we have restored the matter to the file of ld. CIT(E), the provisional registration which is otherwise valid will survive till the ld. CIT(E) decides the issue of registration.
3.5. Before parting, we may make it clear that our decision to restore the matter back (supra) to the file of the ld. CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. CIT(E) independently in accordance with law.
4. In the result, the appeal of the assessee is allowed for statistical purposes.