Income Tax Notice u/s 12AB(4)(a) Unsustainable During Pending Challenge to FCRA Certificate Cancellation: Delhi HC quashes Notice against CHRI [Read Order]
The Court observed that since the adjudication of FCRA cancellation is pending before a competent bench, the Income Tax Department’s action is premature
The Delhi High Court has quashed an Income Tax notice issued under Section 12AB(4)(a) of the Income Tax Act, 1961 against the Commonwealth Human Rights Initiative (CHRI), holding that such action was unsustainable while the cancellation of the organisation’s FCRA certificate is still under challenge before the court.
The Income Tax Department issued a notice dated 29 July 2025, proposing cancellation of CHRI’s registration under the Income Tax Act on the ground that its Foreign Contribution (Regulation) Act (FCRA) registration had already been cancelled by the Ministry of Home Affairs.
CHRI challenged this notice before the High Court, contending that since the cancellation of the FCRA certificate itself is under challenge in W.P.(C) 8666/2022 pending before a Single Judge of the Court, any parallel action under Section 12AB of the Income Tax Act would be premature.
Your Ultimate Guide to India’s Latest Income Tax Laws - Click here
Senior Advocate Arvind P. Datar, appearing for the petitioner, argued that while cancellation of Income Tax registration may follow from a violation of other laws, in the present case the very basis of such cancellation, i.e., the termination of the FCRA certificate is sub judice.
Therefore, until the outcome of the FCRA challenge is decided, the Income Tax authorities could not have proceeded to issue a notice under Section 12AB.
The Revenue, represented by Standing Counsel Shlok Chandra, did not dispute that the sole ground for the impugned notice was the cancellation of the FCRA certificate, which remains under judicial consideration.
A Bench of Justice V. Kameswar Rao and Justice Vinod Kumar accepted this contention and held that the notice under Section 12AB could not be sustained in law.
The Court observed that since the adjudication of FCRA cancellation is pending before a competent bench, the Income Tax Department’s action is premature.
Accordingly, the impugned notice was set aside. However, the Court clarified that the authorities would be at liberty to proceed afresh in accordance with law, depending on the final decision of the challenge to the FCRA cancellation.
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
