Independent assessment and effective hearing govern charitable registration, with donor-tax approval following registration eligibility determination.

Registration under Section 12AB requires the Commissioner to disclose the substance of any Assessing Officer's report, allow the applicant to rebut it, and independently assess the application. Reliance substantially on an undisclosed report, without an effective hearing, is procedurally defective; the trust's stated objects of teaching the Vedas and Upanishads and promoting Sanatan Dharma do not alone justify rejection. Approval under Section 80G(5) depends on establishing eligibility for Section 12AB registration and must be reconsidered after that determination. Both applications therefore require fresh consideration under the prescribed procedure.

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Issues: (i) Whether rejection of registration under Section 12AB was sustainable when the Commissioner relied on the Assessing Officer's report without independently applying his mind and providing an effective hearing; (ii) whether the application for approval under Section 80G(5) could be decided before determination of eligibility for registration under Section 12AB.

Issue (i): Whether rejection of registration under Section 12AB was sustainable when the Commissioner relied on the Assessing Officer's report without independently applying his mind and providing an effective hearing.

Analysis: The Commissioner may obtain a report from the jurisdictional Assessing Officer, but must disclose its substance to the applicant, provide an opportunity to rebut it, and independently determine the application under Section 12AB. The Commissioner failed to follow this procedure and relied substantially on the Assessing Officer's report. The reasoning that the trust's objects included teaching the Vedas and Upanishads and promoting Sanatan Dharma was also not, by itself, a valid basis for rejecting registration under Section 12AB.

Conclusion: The rejection of registration under Section 12AB was unsustainable and was set aside for fresh adjudication after an effective hearing and independent consideration.

Issue (ii): Whether the application for approval under Section 80G(5) could be decided before determination of eligibility for registration under Section 12AB.

Analysis: Approval under Section 80G(5) was dependent on the applicant first establishing eligibility for registration under Section 12AB. Since the Section 12AB application was remanded for fresh consideration, the Section 80G(5) application also required reconsideration after the Section 12AB issue was determined and the necessary details were furnished.

Conclusion: The rejection of approval under Section 80G(5) was remanded for fresh consideration consequential to the determination of registration under Section 12AB.

Final Conclusion: Both matters require fresh consideration by the Commissioner in accordance with the statutory procedure, after hearing the applicant and considering the relevant material independently.

Ratio Decidendi: A registration application under Section 12AB cannot be rejected solely on an Assessing Officer's report without disclosure of the report, an effective opportunity of hearing, and independent application of mind by the competent authority; an application under Section 80G(5) must be considered in light of the determination under Section 12AB.

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