Section 351: specified violation

Introduction

Section 351 identifies serious compliance breaches treated as specified violations for a registered non-profit organisation. A finding under it can lead to action affecting registration.

The exact ground and statutory process should be matched to the notice; Finance Act 2026 changes must be read from the amended Act.

Key takeaways

What counts as a specified violation

Sub-section (1) lists the following as specified violations by a registered non-profit organisation:

• Any income of the organisation has been applied other than for its objects
• It carries out any commercial activity in contravention of Section 345
• It has applied any part of its total income for private religious purposes that does not benefit the public
• A registered non-profit organisation created or established after the commencement of this Act for a charitable purpose has applied part of its income for the benefit of a particular religious community or caste - other than the Scheduled Castes, Scheduled Tribes, backward classes, or women and children
• Any activity carried out by the organisation is not genuine, or is not carried out in accordance with all or any of the conditions of its registration
• The organisation has not complied with a requirement of another law referred to in Section 332(7)(a), and the order, direction or decree holding such non-compliance has either not been disputed, or has attained finality
• The registration application under Section 332(1) contains false or incorrect information

When the process is triggered

Sub-section (2): the process can start in any of three ways - the Principal Commissioner or Commissioner notices one or more specified violations during a tax year; a reference is received from the Assessing Officer under Section 270(13); or the organisation is selected under the Board's risk management strategy for that tax year.

Once triggered, the Principal Commissioner or Commissioner must call for documents or information, or make inquiries, to be satisfied about the occurrence of any specified violation, and must then pass an order in writing:

• Cancelling the registration for that tax year and all subsequent tax years, after giving the organisation a reasonable opportunity of being heard, if satisfied that one or more specified violations occurred, or
• Not cancelling the registration, if not satisfied about the occurrence of any specified violation

Timeline for the order

Sub-section (3): the order under sub-section (2)(ii) must be passed before the expiry of six months, calculated from the end of the quarter in which the first notice calling for documents, information or inquiry was issued. A copy of the order is forwarded to the Assessing Officer and to the registered non-profit organisation.

Step-by-step flow for cancellation under Section 351

1. 1

   Has a trigger under Section 351(2) occurred for a tax year?

   (a) the Principal Commissioner or Commissioner notices a specified violation; (b) he receives a reference from the Assessing Officer under Section 270(13); or (c) the organisation is selected under the Board's risk management strategy.

   • No: No proceedings under Section 351(2).
   • Yes: Go to the next step.
2. 2

   Calls for documents or information, or makes inquiry

   Under Section 351(2)(i), he does this to satisfy himself whether a specified violation listed in Section 351(1)(a) to (g) has occurred.

3. 3

   Is he satisfied that one or more specified violations have taken place?

   • No: He passes a written order not cancelling the registration (Section 351(2)(ii)(B)).
   • Yes: After a reasonable opportunity of being heard, he passes a written order cancelling the registration for that tax year and all subsequent tax years (Section 351(2)(ii)(A)).
4. 4

   Send the order

   A copy of the order goes to the Assessing Officer and the organisation (Section 351(2)(iii)).

5. 5

   Check the time limit

   Under Section 351(3), the order must be passed before six months expire, counted from the end of the quarter in which the first notice was issued under Section 351(2)(i).

Practical checklist

Glossary

Specified violation

One of the grounds listed in section 351(1), rather than every possible compliance failure.

First notice

The notice for documents, information or inquiry under subsection (2)(i) that starts the quarter-based time calculation in subsection (3).

Registration cancellation

The written decision under section 351(2)(ii)(A), following the required opportunity to be heard, affecting the identified tax year and subsequent tax years.

Frequently asked questions