Kusum Garg vs CIT (E), Exemptions Ward, Faridabad

Per Kavitha Rajagopal, JM:

The captioned appeals are filed by the assessee challenging the order of the Ld. Commissioner of Income Tax (Exemptions) [‘the Ld. CIT(E)’, for short] passed u/s 12AB(1)(b)(ii) and 80G of the Income Tax Act, 1961 (‘the Act’, for short).

Since the facts are identical we take ITA No.2897/Del/2026 as a lead case.

The assessee has raised the following grounds of appeal:-

The assessee, Kusum Garg W/o Shri Vijay Kumar Garg (S/o Shri Moti Ram Garg) Memorial Trust, Gurgaon, Haryana, is a religious-cum-charitable trust which filed an application in Form No. 10AB on 12.09.2025 before the learned Commissioner of Income Tax (Exemptions), Chandigarh, seeking registration under Section 12AB read with Section 12A(1)(ac)(iii) of the Income-tax Act, 1961.

Upon examination of the application and the accompanying documents, the learned CIT(E) observed that the information furnished by the assessee was insufficient to ascertain the genuineness of the activities carried out by the trust and to verify whether such activities were in consonance with the objects specified in its trust deed.

Consequently, the learned CIT(E) issued an electronic questionnaire-cum-show-cause notice dated 21.01.2026, calling upon the assessee to furnish the requisite information and supporting documentary evidence on or before 03.02.2026. The information sought included the trust deed, registration particulars, details of commencement and nature of charitable activities, annual accounts, income-tax returns, audit reports, bank statements, particulars of charitable expenditure and supporting evidence establishing the genuineness of its activities. The assessee was also required to clarify whether its activities were charitable or religious-cum-charitable and whether the relevant statutory requirements were being complied with.

The learned CIT(E) recorded that the aforesaid notice was duly delivered to the registered email addresses of the assessee and made available on the income-tax portal. As per the electronic records referred to in the impugned order, the notice was read on 22.01.2026. However, the assessee neither furnished any reply to the questionnaire nor sought an adjournment within the stipulated period.

In the absence of any response or supporting documentary evidence, the learned CIT(E) observed that the assessee had failed to substantiate the genuineness of its activities or demonstrate that the activities were being carried out in accordance with the objects of the trust. The learned CIT(E) further inferred from the non-compliance that the assessee was not interested in pursuing its application for registration.

In support of these findings, the learned CIT(E) referred to various judicial pronouncements concerning non-prosecution, failure to comply with statutory proceedings and the consequences of non-cooperation.

Accordingly, the learned CIT(E), by the impugned order dated 13.02.2026 passed in Form No. 10AD, concluded that the application was deficient in factual evidence and that, in the absence of the requisite submissions, the genuineness of the activities of the trust could not be verified. The learned CIT(E), therefore, rejected the assessee's application for registration under Section 12AB and also recorded that the registration stood cancelled.

The learned AR for the assessee submitted that the learned CIT(E) had erred in rejecting the application for registration under Section 12AB of the Act merely on account of non-compliance with the questionnaire issued during the proceedings. It was contended that the assessee is a religious-cum-charitable trust established for carrying out charitable activities in accordance with its objects and that the learned CIT(E) had not recorded any specific adverse finding regarding the objects of the trust or the genuineness of its activities. The learned AR submitted that the rejection of registration on account of non-furnishing of certain information, without examining the matter substantively, was not justified. It was accordingly prayed that the impugned order be set aside and the matter be restored to the file of the learned CIT(E) for fresh consideration after affording the assessee an opportunity to furnish the requisite documentary evidence.

Per contra, the learned DR strongly supported the impugned order and submitted that the learned CIT(E) had afforded sufficient opportunity to the assessee to establish the genuineness of its activities and their conformity with the objects of the trust. It was submitted that despite the questionnaire-cum-show-cause notice dated 21.01.2026 having been duly served electronically, the assessee neither furnished the requisite information nor sought any adjournment. The learned DR contended that in the absence of the necessary documents and supporting evidence, the learned CIT(E) was unable to verify the genuineness of the activities of the trust. It was therefore submitted that the rejection of the application was justified and that the impugned order deserved to be upheld.

We have heard the rival submissions and perused the material available on record. It is observed that the assessee had filed an application seeking registration under Section 12AB of the Act, which came to be rejected by the learned CIT(E) primarily on account of non-compliance with the questionnaire issued calling for information and supporting documentary evidence to establish the genuineness of its activities. We find that although the assessee had failed to furnish the requisite details despite being afforded an opportunity, the learned CIT(E) has not recorded any specific adverse finding that the objects of the trust are not charitable or that its activities are not genuine. The application has essentially been rejected on account of the inability to verify the requisite conditions in the absence of supporting material.

We are conscious of the fact that the primary onus lies upon the assessee to substantiate its eligibility for registration and that the learned CIT(E) is empowered to call for the necessary information and conduct inquiries in accordance with Section 12AB of the Act. Nevertheless, considering the facts and circumstances of the case and in the interest of substantial justice, we deem it appropriate to afford the assessee one more opportunity to substantiate its claim by furnishing the requisite documentary evidence. Accordingly, without expressing any opinion on the merits of the assessee’s eligibility for registration, we set aside the impugned order and restore the matter to the file of the learned CIT(E) for fresh adjudication in accordance with law, after affording the assessee a reasonable opportunity of being heard. The assessee is directed to extend full cooperation and furnish all requisite information and supporting documents as may be called for by the learned CIT(E). The learned CIT(E) shall examine the same and pass a reasoned and speaking order in accordance with law.

In the result, the appeal filed by the assessee is allowed for statistical purposes.

Since the facts are identical, our finding in ITA No.2897/Del/2026 as above would apply mutatis mutandis to this appeal and this appeal of the assessee is also allowed for statistical purposes.

To sum up, the appeals of the assessee are allowed for statistical purpose.