ITAT Mumbai Sets Aside Cancellation of NPCI’s Section 12AB Registration; Remands for Fresh Decision on “Specified Violation”
Court / Authority
Income Tax Tribunal
Update / Judgement Date
24 Aug 2026
Source
WCP News Bulletin
Author
Manas Yadav — WCP Legal Desk
Reading Time
2 min read
View Count
Key Facts and Tribunal Findings
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, set aside the order of the Commissioner of Income Tax (Exemptions) cancelling registration of National Payments Corporation of India (NPCI) under Section 12AB and remanded the matter for fresh adjudication.
The assessee, a not-for-profit entity registered under Section 8 of the Companies Act, had been granted registration under Section 12A/12AB. The cancellation proceedings were initiated based on a reference made by the Faceless Assessing Officer during scrutiny, alleging “specified violations” under Section 12AB(4), including that the assessee’s activities were commercial in nature, benefitted specified persons (promoter banks), and involved application of income in violation of statutory provisions.
The CIT(E) cancelled the registration, holding that the assessee’s activities—such as providing payment infrastructure services including ATM networks, IMPS, RuPay, and other banking platforms—were not charitable and were carried out for the benefit of member banks generating commercial income.
Before the Tribunal, the assessee challenged the validity of the cancellation on procedural and jurisdictional grounds, contending that the exact “specified violation” under Section 12AB(4) was not identified, and that the reference made by the Assessing Officer was not furnished, thereby violating principles of natural justice.
The Tribunal accepted these contentions. It held that failure to provide the reference relied upon by the Assessing Officer and failure to specify the precise clause of “specified violation” deprived the assessee of a meaningful opportunity to respond.
Accordingly, the Tribunal set aside the cancellation order and remanded the matter to the CIT(E) for de novo adjudication, directing that the exact charge and relevant material be clearly communicated and adequate opportunity be provided. The appeal was allowed for statistical purposes.
Full Judgement / Attachment
Full Judgement
Frequently asked questions about Income Tax Tribunal
- What is the Income Tax Appellate Tribunal (ITAT)?
- The ITAT, set up in 1941, is the second appellate authority in direct tax matters and the final fact-finding body. It hears appeals against orders of the Commissioner (Appeals) and certain other authorities, through benches across India.
- What is the time limit to file an appeal before the ITAT?
- An appeal must be filed within two months from the end of the month in which the order is communicated. This rule has applied since 1 October 2024 and continues under the Income-tax Act, 2025. The Tribunal can condone delay for sufficient cause.
- Can the ITAT stay a tax demand?
- Yes. The Tribunal can stay recovery of a disputed demand while an appeal is pending, usually on deposit of a part of the demand or furnishing security. Stays are granted for a limited period, and the appeal is expected to be decided within it.
- Where does an appeal go after the ITAT?
- An appeal against an ITAT order lies to the High Court, but only on a substantial question of law. A further appeal lies to the Supreme Court.
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- Post your requirement on White Collar Professional to receive proposals from verified Chartered Accountants and tax Advocates, compare them, and pay securely through the platform. This page also tracks the latest ITAT ITAT orders as they are reported.
