Non-Speaking Order Rejecting 80G Approval Quashed; Remanded for De Novo Consideration

Issue

Whether the rejection of an application for approval under Section 80G of the Income-tax Act via a non-speaking order is legally sustainable, particularly when the same Commissioner (Exemptions) subsequently granted registration under Section 12AB to the assessee, thereby implicitly accepting the genuineness of its charitable activities.

Facts

The Application: The assessee-company, engaged in charitable activities, filed an application in Form No. 10AB seeking final registration/approval under Section 80G for the Assessment Year 2023-24.
The Proceedings: During the registration proceedings, the Commissioner (Exemptions) issued two notices. The assessee duly responded to these notices with detailed submissions and supporting documents.
The Rejection: The Commissioner (Exemptions) rejected the application.
The Flaw: The rejection order was found to be a “non-speaking order”. It was devoid of any discussion on the submissions made by the assessee and did not record any specific deficiency, contradiction, or violation of the conditions required for Section 80G approval.
The Contradiction: It was noted that the same Commissioner (Exemptions) had subsequently granted registration to the assessee under Section 12AB. Since Section 12AB registration also requires verification of the “nature and genuineness of activities,” this subsequent grant indicated that the Commissioner was satisfied with the assessee’s charitable nature, making the earlier 80G rejection inconsistent.

Decision

The Tribunal/Court ruled in favour of the assessee (by way of remand).
Violation of Natural Justice: The authority held that an adjudicating officer must pass a “speaking order” that addresses the objections and documents submitted by the applicant. Rejecting an application without dealing with the submissions is a violation of the principles of natural justice.
Inconsistency: The grant of Section 12AB registration by the same authority served as implicit proof that the activities were genuine, undermining the unreasoned rejection of the 80G application.
Outcome: The impugned order was set aside. The matter was restored (remanded) to the file of the Commissioner (Exemptions) for de novo consideration.
Direction: The Commissioner was directed to pass a fresh order on merits after duly examining the submissions and granting the assessee a further opportunity of being heard.

Key Takeaways

Speaking Orders are Mandatory: Quasi-judicial authorities cannot reject statutory applications with vague or template orders. They must specifically state why the submissions were not accepted.
Link Between 12AB and 80G: While Section 12AB and 80G have distinct conditions, the core requirement of “genuineness of activities” is common to both. If the department accepts genuineness for 12AB, it cannot arbitrarily reject it for 80G without specific, recorded reasons.
Remand for Fresh Adjudication: In cases of non-speaking orders or procedural lapses, the appellate tribunal typically restores the matter to the original authority to decide afresh in accordance with the law.

IN THE ITAT HYDERABAD BENCH ‘B’

Indishine Foundation

Commissioner of Income Tax (Exemption)

Ravish Sood, Judicial Member
and MADHUSUDAN SAWDIA, Accountant Member

IT Appeal No. 880 (Hyd) of 2025
[Assessment year 2023-24]

AUGUST 8, 2025

K.N. Nishanth Rao, Adv. for the Appellant. Dr. Narendra Kumar Naik, CIT-DR for the Respondent.

ORDER

Madhusudan Sawdia, Accountant Member.- This appeal is filed by M/s. Indishine Foundation (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Exemptions), Hyderabad (“Ld. CIT(E)”), dated 19.03.2025 for the A.Y. 2023-24.

2. The assessee has raised the following grounds of appeal :

3. The brief facts of the case are that, the assessee is a company registered under Section 8 of the Companies Act, 2013. The assessee filed an application in Form no.10AB on 16.09.2024 seeking registration under Section 80G of the Income Tax Act, 1961 (“the Act”). Upon perusal of the documents and submissions filed by the assessee, the Ld. CIT(E) rejected the application vide order in Form No. 10AD dated 19.03.2025, holding that the activities of the assessee were not commensurate with the stated objectives and not in conformity with the conditions prescribed under Section 80G of the Act.

4. Aggrieved by the order of Ld. CIT(E), the assessee is in appeal before this Tribunal. The Learned Authorised Representative (“Ld. AR”) submitted that during the proceedings before the Ld. CIT(E), the assessee was issued two notices dated 03.12.2024 and 17.02.2025 respectively. The assessee duly complied with both the notices by making submissions, copies of which are placed at page nos. 68 to 77 and 90 to 95 of the paper book. He further submitted that despite making full compliance and furnishing all required documents, the Ld. CIT(E) rejected the application through a nonspeaking order without pointing out any specific deficiency or noncompliance in the submissions made by the assessee. The Ld. AR also brought to our attention that the same Ld. CIT(E) subsequently granted registration to the assessee under Section 12AB of the Act vide order in Form no.10AD dated 22.03.2025 (copy placed at pages 99 to 102 of the paper book), just three days after the rejection of the Section 80G application. He contended that once the registration under Section 12AB of the Act has been granted by the same authority upon verifying the genuineness of activities, rejection of application under Section 80G of the Act, without detailed reasoning, is unjustified. He therefore prayed that, in the interest of justice, the matter may be restored to the file of the Ld. CIT(E) for fresh consideration on merits after granting adequate opportunity to the assessee.

5. Per contra, the Learned Departmental Representative (“Ld. DR”) relied on the order of the Ld. CIT(E) and submitted that the assessee failed to demonstrate that its activities were aligned with its stated objects and complied with the conditions of Section 80G. However, the Ld. DR fairly admitted that the order passed by the Ld. CIT(E) is cryptic and does not record any specific finding with regard to the deficiency in the activities or documents furnished by the assessee.

6. We have considered the rival contentions and perused the records placed before us. The assessee had filed an application for grant of approval under Section 80G of the Act in form no.10AB on 16.09.2024. During the course of proceedings, two notices were issued by the Ld. CIT(E) on 03.12.2024 and 17.02.2025 respectively, to which the assessee has duly responded. We have gone through the submissions made in response to the above notices and find that the assessee had furnished detailed replies along with supporting documents. Copies of such submissions are placed on record at page nos. 68 to 77 and 90 to 95 of the paper book. However, the order passed by the Ld. CIT(E) rejecting the application under Section 80G of the Act dated 19.03.2025 is devoid of any discussion on the submissions made by the assessee and does not record any specific deficiency, contradiction, or violation of Section 80G conditions. Such a non-speaking order, passed without dealing with the objections and documents submitted by the assessee, is not sustainable in law.

7. We also find merit in the submission of the Ld. AR that the same Ld. CIT(E) has subsequently granted registration under Section 12AB of the Act vide order in Form no.10AD dated 22.03.2025 (page nos.99 to 102 of the paper book). This indicates that the Ld. CIT(E), having verified the nature and genuineness of the activities for the purpose of Section 12AB, found no deficiency in the conduct of the assessee.

8. In view of the above, we are of the considered opinion that the matter deserves to be restored to the file of the Ld. CIT(E) for de novo consideration on merits, after duly examining the submissions already made by the assessee and granting further opportunity of being heard and furnishing any additional documents, if required. Accordingly, the Ld. CIT(E) is directed to pass a reasoned and speaking order in accordance with law, after affording adequate opportunity to the assessee.

9. In the result, the appeal of the assessee is allowed for statistical purposes.