The move comes after the Assistant Charity Commissioner's office apologised to Hazare in a letter, saying the notice was wrongly sent.
"It is a mystery to me why the notice was sent in the first place," Hazare told reporters at Ralegan Siddhi in Ahmednagar district.
"I enquired into the issue and was told that the Trust has been following all norms," the anti-corruption crusader said.
Hazare's advocate confirmed that defamation suit will be filed against concerned official.
The Charity Commissioner has asked the Trust to file its stand on why he may not file a case for non-compliance of submitting complete audited reports.
This was after the ''National Anti-corruption Public Power'' approached the Charity Commissioner and alleged that the Trust borrowed Rs 5 lakh in 2008-09 and kept Rs 50 lakh as fixed deposits and owned property worth Rs 23.49 lakh and that it did not mention this in the report to the Commissioner.