Notices Issued Solely Through The ITBA Portal Do Not Constitute Valid Service Of Notice And Consequential Denial Of Section 80G Approval Is Unsustainable

By | June 13, 2026
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Notices Issued Solely Through The ITBA Portal Do Not Constitute Valid Service Of Notice And Consequential Denial Of Section 80G Approval Is Unsustainable

Issue

  1. Whether the service of statutory show-cause notices issued exclusively via the Income Tax Business Application (ITBA) portal satisfies the valid modes of service prescribed under Section 282(1) read with Rule 127(1), or if a dismissal of a registration application in limine based on such notice violates the principles of natural justice.

  2. Whether the rejection of a charitable trust’s approval under Section 80G(5) can be sustained if it is based solely on the rejection of its Section 12AB registration, where the registration issue itself has been remanded for fresh adjudication.

Facts

  • Issue I (Service of Notice via ITBA Portal): The assessee-society, which provides accommodation and care to chronically ill, permanently disabled, and leprosy-cured individuals, filed Form 10AB to seek fresh registration under Section 12A(1)(ac). The CIT(Exemption) issued notices requesting information exclusively through the ITBA portal. Due to non-compliance by the assessee, the CIT(Exemption) dismissed the registration application in limine (at the threshold) for non-prosecution.

  • Issue II (Rejection of Section 80G Approval): Consequent to the dismissal of the registration application, the assessee’s parallel application for approval under Section 80G(5) was also rejected by the CIT(Exemption). This denial was based entirely on the grounds that the prerequisite registration under Section 12AB had been denied.

Decision

  • Held, Matter Remanded (Issue I): The service of notice strictly through the ITBA portal, without leveraging other recognized channels, does not constitute a valid, sufficient, or legally complete method of service under Section 282(1) read with Rule 127(1). The summary dismissal of the registration application without ensuring proper communication violates natural justice. The issue is remitted back to the CIT(Exemption) for a de novo (fresh) disposal after providing a reasonable, real opportunity to be heard.

  • Held, Matter Remanded (Issue II): The rejection of the Section 80G(5) approval cannot be sustained because the foundational order denying the Section 12AB registration has itself been set aside and remanded for fresh adjudication. Since the bedrock reason for the rejection no longer stands, this issue is also remitted back to the file of the CIT(Exemption) for de novo consideration alongside the registration application.

Key Takeaways

  • ITBA Portal is Not an Absolute Substitute: Digital hosting on the ITBA portal alone does not absolve the tax authority from ensuring that a notice is actively served or communicated via the specific authorized channels (such as verified email or physical address) mandated by Section 282 and Rule 127.

  • Interdependence of Section 12AB and 80G: While registration under Section 12AB is an essential prerequisite for granting a Section 80G certification, any appellate or tribunal order that revives the registration proceedings automatically invalidates and reopens any consequential rejections under Section 80G.

  • Protection of Charitable Status: Applications from socio-charitable institutions cannot be disposed of cursorily on technical defaults of non-prosecution without the revenue verifying that the communication was actively received by the taxpayer

 

IN THE ITAT CHENNAI BENCH ‘C’
Cheshire Homes India KATP
v.
Commissioner of Income-tax , Exemptions*
ABY T. VARKEY, Judicial Member
and Inturi Rama Rao, Accountant Member
IT Appeal Nos. 950 & 951 (CHNY) of 2026
MAY  25, 2026
S. Krishnan and S. Nageswaran, FCAs for the Appellant. Bipin C.N., CIT for the Respondent.
ORDER
Inturi Rama Rao, Accountant Member. – These are two appeals filed by the assessee are directed against the separate orders of Learned Commissioner of Income Tax(Exemption), Chennai denying grant of approval u/s.12AB(4) and 80G of the Income Tax Act, 1961 both dated 01.12.2025.
2. Since identical facts and issues are involved in both these appeals, these appeals were heard together and disposed of by this common order. For the sake of clarity and convenience the facts relevant in the ITA No.950/CHNY/2026 are stated herein:
3. The Assessee in ITA No.950/CHNY/2026 raised the following grounds of appeal :
“1. On the facts and circumstances of the case, the order dated 01/12/2025 passed by the Learned Commissioner of Income Tax (Exemptions) rejecting the renewal of approval under section 80G (5) of the appellant CHESHIRE HOMES INDIA KATP without affording an opportunity by issuing a personal hearing notice and / or giving one more opportunity is contrary to law, facts of the case and weight of evidences when the registration form in FORM 12AB has been filed with all enclosures well within time ON 25/06/2025 WHEN THE LAST DATE OF FILING WAS 30/09/2025.
2. On the facts and circumstances of the case the Appellant thus be given one more opportunity to file all details called by the Commissioner of Income tax (Exemptions) Chennai 600034 vide his letter dated 10/09/2025 and to appear in person.
3. The Appellant CHESHIRE HOMES INDIA KATP craves leave to add, amend, alter, vary and or withdraw any or all of the above grounds of appeal.”
4. Briefly the facts of the case are that the appellant is a society duly registered under the Societies Act. It is formed with the object of providing accommodation on the lines of a home for the care, treatment, nourishment and general well-being of men, women and children of all communities and classes who are chronically ill and/or are permanently disabled or that of leprosy cured and who are without any means or resources or of limited means and resources. The Trust was duly registered u/s.12A of the Income Tax Act, 1961 on 18.03.2004 and the provisional registration was granted and the appellant had filed an application in Form-10AB seeking registration u/s.12A(1)(ac) of the Income Tax Act, 1961. On receipt of the application, the ld.CIT(Exemption) issued notices calling for certain information through ITBA Portal. However, the appellant could not comply with the said notices.
5. Being aggrieved, the appellant preferred an appeal before us in the present appeal. It is submitted that the appellant could not comply to the notices issued by the ld.CIT(Exemption), no notice was served on the appellant society.
6. On the other hand, ld.CIT-DR opposed the above submissions.
7. We heard the rival submissions and perused the material on record. At the outset, we find that the ld.CIT(Exemption) dismissed the appeal in limine for non-prosecution. We also find that ld.CIT(Exemption) issued notices through ITBA Portal which is not a proper service of notice.
8. In our considered opinion, it is not a valid method and manner of service of notice as specified under the provisions of section 282(1) of the Income-tax Act, 1961 Act and Rule 127(1) of the Income-tax Rules, 1962. Therefore, it is crystal clear that the notices were not served upon the appellant. To fortify our view, we would like to make reference to a decision rendered by the Hon’ble Punjab & Haryana High Court in the case of Munjal BCU Centre of Innovation and Entrepreneurship v. CIT (Exemptions ) 463 ITR 560 (Punjab & Haryana), wherein the Hon’ble High Court after making reference to provisions of 282(1) held that service of notice through ITBA portal is not valid service and remanded the matter to AO for de novo disposal of case. The relevant paragraphs of the judgment are reproduced below :
“7. We are afraid that we cannot subscribe to the submissions as advanced by the learned counsel for the Revenue-respondent. The provisions of section 282(1) of the Act of 1961 and rule 127(1) of the Income-tax Rules, 1962 provides for a method and manner of service of notice and orders which read as follows :
…………………………….
…………………………….
8. In view of the above, it is essential that before any action is taken, communication of the notice must be done in terms of the provisions as enumerated hereinabove. The provisions do not mention communication to be “presumed” by placing notice on the e-portal. A pragmatic view has to be adopted always in these circumstances. An individual or a company is not expected to keep the e-portal of the Department open all the time so as to have knowledge of what the Department is supposed to be doing with regard to the submissions of forms etc. The principles of natural justice are inherent in the income-tax provisions and the same are required to be necessarily followed.
9. Having noticed as above, this court is of the firm view that the petitioner has not been given sufficient opportunity to put up its please with regard to the proceedings under section 12A(1)(ac)(iii) of the Act of 1961 and as it was not served with any notice. Therefore, he would be entitled to file his reply and the Department would of course be entitled to examine the same and pass a fresh order thereafter.
10. In view of the above, the writ petition is allowed and the order dated January 16, 2023 (annexure P-5) is quashed and set-aside. The Department would provide an opportunity of hearing to the petitioner and they will also allow the petitioner to appear personally for the purpose and pass a speaking order independent of the order passed earlier by them on January 16,2023. The same shall be done expeditiously provided the petitioner file his reply within a period of three weeks.”
9. In view of the above legal position, we are of the considered opinion that proper notice(s) of hearing were not served upon the appellant. Therefore, we are of the considered opinion that in the interest of justice, the matter should be remitted back to the file of ld.CIT(Exemption) for denovo disposal of application after affording reasonable opportunity to the appellant, in accordance with law.
10. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes.
ITA No.951/CHNY/2026 – 80G
11. From the perusal of the ld.CIT(E) order, we observe that ld.CIT(E) denied the grant of approval u/s.80G(5) of the Act, merely for the reason that the appellant trust was denied registration u/s.12AB of the Act. In the appeal above in ITA No.950/CHNY/2026, we directed the matter back to the file of ld.CIT(E) for denovo adjudication, therefore, following the parity of the same reasoning, this appeal in ITA No.951/CHNY/2026 is also remitted back to the file of ld. CIT(Exemption) for denovo disposal of application after affording reasonable opportunity to the appellant, in accordance with law.
12. In the result, appeal filed by the assessee in ITA No.951/CHNY/2026 is partly allowed for statistical purposes.
13. To sum up, both appeals of the assessee are partly allowed for statistical purposes.