Millenium Education Society vs Income Tax Officer (Exemption), Rohtak

PER SUDHIR KUMAR, JM :

This appeal by the assessee is directed against the order dated 18.2.2026 of the Ld. CIT(Exemption), Rohtak passed u/s. 12AB(1)(b)(ii)(B) of the Income Tax Act, 1961.

The brief facts of the case are that assessee is a society running Millenium Public School in a rural area since the year 2000, and enjoyed valid registration u/s. 12AA upto AY 2026-27. The applicant applied on 27.9.2025 for renewal of registration under section 12AB for ten years from AY 2027-28, alongwith audit reports of the last three years. In response to a query letter dated 6.1.2026, the appellant disclosed that temporary interest-bearing advances had been made to certain members / office bears, fully recoverable and expected to be repaid within FY 2026-27. The CIT(E) rejected the application solely on the ground of these advances, without doubting the actual existence, recognition, or continuous functioning of the school, and without any adverse finding on the audited accounts. Against the aforesaid action, the assessee is in appeal before us.

We have heard both the sides and perused the records. It is an admitted fact that appellant applied on 27.9.2025 for renewal of registration under section 12AB for ten years from AY 2027-28, alongwith audit reports of the last three years. In response to a query letter dated 6.1.2026, the appellant disclosed that temporary interest-bearing advances had been made to certain members / office bears, fully recoverable and expected to be repaid within FY 2026-27. The CIT(E) rejected the application solely on the ground of these advances, without doubting the actual existence, recognition, or continuous functioning of the school, and without any adverse finding on the audited accounts. However, the advances made to members are subject matter of verification by the CIT(E) at the time of denial of registration which has not been done in the instant case. We further find that CIT(E) should examine the objects of the trust, and if the objects are charitable, then registration cannot be denied. We further note that as no adverse findings has been given by the ld. CIT(E) regarding the objects of the trust. In view of the aforesaid factual matrix and in the interest of justice, we deem it fit and proper to remit back the issues to the file of the Ld. CIT(E) to adjudicate the same afresh, after verifying the facts that interest-bearing advances had been made to certain members / office bears, are fully recoverable and expected to be repaid within FY 2026-27 and also examine whether the aims of the trust are charitable in nature by affording adequate opportunity of being heard to the appellant. However, Assessee is directed through the Ld. AR to furnish the complete details/ evidences before the Ld. CIT(E) in accordance with law and fully cooperate with him during the proceedings in order to substantiate its case. We hold and direct accordingly.

In the result, the appeal filed by the assessee stand allowed for statistical purposes in the aforesaid manner.