Akashiganga Foundation vs PCIT (Central), Delhi-2

PER SHRI M BALAGANESH, ACCOUNTANT MEMBER:

The appeal in ITA Nos.5103 & 5103/Del/2026 for AYs 2022-23 to 2026-27, arises out of the order of the Id Pr. Commissioner of Income Tax-2, Delhi [hereinafter referred to as 'Id. PCIT', in short] dated 20.03.2026 against the seeking registration of trust u/s 12A(1)(ac)(i) of the of the Income-tax Act, 1961 (hereinafter referred to as 'the Act').

Both the appeals arise out of order of rejection passed by the Id CIT(E) against the application seeking registration of the assessee as a charitable trust and exemption u/s 80G of the Act.

We have heard the rival submissions and perused the material available on record. The assessee is a registered society and preferred an application in Form 10AB of the Act on 29.09.2025 seeking registration as a charitable society. Pursuant to the search and seizure action u/s 132 of the Act on 30.07.2025 at various charitable entities, the premises of the assessee society was also covered u/s 132 of the Act. Based on the materials found in the course of search, a show cause notice dated 11.03.2026 was issued to the assessee which was replied by the assessee on 18.03.2026.

The assessee is a society duly registered u/s 12A of the Act w.e.f. 01.04.2021. The assessee obtained registration u/s 12A(1(ac)(i) of the Act vide order dated 24.09.2021 for AYs 2022-23 to 2026-27. Later, the assessee preferred an application on 29.09.2025 seeking permanent registration u/s 12A(1)(ac)(ii) of the Act and submitted the requisite documents and clarification vide letter dated 06.01.2026 in response to the questionnaire issued. The jurisdiction of the case of the assessee was lying with Central Circle-18, Delhi under the administrative control of PCIT, Central-2, New Delhi, accordingly, the application of the assessee in Form 10AB vide 29.09.2025 along with 80G application was also transferred to PCIT, Central-2. Thereafter, the ld PCIT-Central 2, Delhi issued notice to the assessee seeking details, which was duly replied by the assessee. The ld PCIT, Central-2, Delhi based on the search finding proceeded to treat the activities of the assessee society as ingenuine forgetting the fact that assessee had been serving the community at large and also ignoring the contention of the assessee that it had not violated any provision of the law and have not been engaged in any unethical and unlawful activities. Accordingly, the ld PCIT, Central-2, rejected the application the application of the assessee seeking registration u/s 12AB of the Act and consequential exemption u/s 80G of the Act.

Considering the totality of facts and circumstances and considering the fact that assessee has sought only renewal of registration in the present application and consequential exemption u/s 80G of the Act, the ld PCIT ought not to have been influenced by the search findings. The issues raised by the ld PCIT had to be dealt with in the assessment and need not be subject matter of consideration in the registration proceedings. Hence, we deem it fit and appropriate to restore the appeal to the file of the ld PCIT, Central-2, Delhi for de novo adjudication in accordance with law.

The other ITA No. 5104/Del/2026 seeking exemption u/s 80G of the Act is consequential to registration u/s 12AB of the Act.

Needless to mention that the assessee be given reasonable opportunity of being heard in the aforesaid proceedings before the ld PCIT, Central-2, Delhi. The ld PCIT, Central-2, New Delhi is directed to dispose of the application on or before 31.03.2027.

With these observations, both the appeals of the assessee are allowed for statistical purposes.