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Judgment
PER AMITABH SHUKLA, AM
This appeal filed by the Assessee is directed against the order of Ld. Commissioner of Income Tax (Exemption), Chandigarh, dated 13.03.2026 passed under section 12AB(1)(b)(ii) of the Act. The word ‘Act’ herein this order would mean Income Tax Act, 1961.
The assessee was called absent.
The ld. DR while relying upon the order of the lower authorities, took us through the factual matrix of the case. It was submitted that the ld. CIT(E) has denied the registration to the appellant as she had noted that appellant was not carrying any substantial charitable activity by itself and was rather engaged in commercial exploitation of its property. Attention was invited to the following extract of the order of the ld. CIT(E):
“…5. The submission of the assessee has been carefully considered. However, the explanation is not acceptable. It is observed that the applicant itself is not carrying out any educational activity. Instead, it has merely let out the school building to another entity which is running the school and the applicant society is earning rental income from the property.
6.The mere act of letting out property and earning rental income, without the applicant itself carrying out educational or other charitable activities, cannot be regarded as carrying out genuine charitable activities. The role of the applicant society appears limited to receiving rental income from the property while the actual educational activities are being conducted by another entity. Thus, the applicant has failed to demonstrate that it is itself engaged in genuine charitable activities as required under section 12AB of the Act.
7.In view of the above facts and circumstances, it is established that the applicant is not carrying out any substantial charitable activity by itself but merely letting out property to another entity which amounts to commercial exploitation of property. Therefore, satisfaction regarding the genuineness of the activities of the applicant society and the conditions prescribed under section 12AB are not fulfilled.
Accordingly, the present application filed in Form u/s 12A(1)(ac)(ii) of the Act is rejected for the reasons discussed above. This rejection shall also supersede any registration granted u/s 12AB of the Act by any authority at any earlier time.”
We have noted that the rights of natural justice of the assessee have been violated in as much as the impugned order u/s 12AB(1)(b)(ii) dated 13.03.2026 has been passed without giving adequate opportunity of being heard. The appellant has also in its grounds of appeal extracted hereinabove alluded towards violation of its principals of natural justice. The fact of ex-parte order of CIT(E) is evident from the conclusion drawn by her in her order to reject assessee’s application. We have also noted that the ld. CIT(E) has drawn unilateral conclusions and has not afforded the appellant opportunity of being heard before drawing adverse conclusions. Right of adequate opportunity of being heard is basic right of every litigant and is in violable in all judicial/quasi-judicial proceedings. We are conscious that no litigant gains by non-prosecution of its case. In the interest of justice, we remit the matter back to the file of Ld. CIT(E) for re-adjudication de novo, in accordance with law and by passing a speaking order. The assessee shall be bounden to comply with all the statutory notices and any non-compliance would be adversely viewed. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.