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Judgment
PER NAVEEN CHANDRA, ACCOUNTANT MEMBER :
These two captioned appeals have been filed by the assessee against the order of the learned Commissioner of Income Tax (Exemption), Delhi [‘CIT(E)’ in short] dated 30.09.2025 under Section 12AB/(1)(B)(ii)(B) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
Since the above captioned appeals were heard together and the facts in issues are identical, both the appeals are being disposed of by this common order for the sake of convenience and brevity.
The grounds raised by the assessee in ITA No. 7962/Del/2025 are as under :
“1.That on facts and circumstances of the case, the order made by Ld Commissioner of Income Tax (Exemptions), Delhi in Form 10AD dated 30.09.2025 is bad in law; That, on facts and circumstances of the case, Ld CIT(E) Delhi erred in rejecting the application of the appellant made in Form 10AB seeking registration u/s 80G of the Income Tax Act, 1961.
2.That on facts and circumstances of the case, the order made by Ld Commissioner of Income Tax (Exemptions), Delhi erred in cancelling registration u/s 80G of the Income Tax Act, 1961 without following the due process of law as envisaged u/s 80G of the Income Tax Act, 1961;
3.That on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Exemption) failed to provide any proper opportunity of heard to the appellant.
4.That on the facts and in the circumstances of the case, the Ld. CIT(E), Delhi erred in rejecting the application for renewal of registration under section 80G(1)(ac)(ii) of the Income-tax Act, 1961 by holding that the activities of the appellant-trust are commercial in nature, completely overlooking that the jurisdiction of the Ld. CIT(E) at the stage of renewal is confined only to examining (i) the charitable nature of the objects, and (ii) the genuineness of the activities, and not to undertake an assessment-like enquiry into the application of income or alleged commerciality of activities.
5.That the Ld. CIT(E) failed to appreciate that the appellant-trust has longstanding charitable objects and has been consistently carrying out genuine charitable activities duly supported by books and records, and the rejection of renewal on alleged 'commerciality' is beyond the limited and circumscribed mandate prescribed under section 80G and contrary to settled judicial principles.
6.That the impugned order is bad in law and liable to be quashed as it is contrary to the ratio laid down in judicial precedents wherein it has been held that at the stage of registration/renewal, the authority is required to confine itself to the objects of the trust and genuineness of the activities and cannot go into issues of commerciality, application of income, or violation of provisions that fall within the domain of assessment.
7.That the appellant craves leave to add, to alter or to amend grounds of appeal before the appeal is heard and disposed off.”
The grounds raised by the assessee in ITA No. 7963/Del/2025 are as under :
1.“That on facts and circumstances of the case, the order made by Ld Commissioner of Income Tax (Exemptions), Delhi in Form 10AD dated 30.09.2025 is bad in law; That, on facts and circumstances of the case, Ld CIT(E) Delhi erred in rejecting the application of the appellant made in Form 10AB seeking registration u/s 12AB of the Income Tax Act, 1961.
2.That on facts and circumstances of the case, the order made by Ld Commissioner of Income Tax (Exemptions), Delhi erred in cancelling registration u/s 12AB of the Income Tax Act, 1961 without following the due process of law as envisaged u/s 12AB of the Income Tax Act, 1961;
3.That on the facts and in the circumstances of the case and in law, the Commissioner of Income-tax (Exemption) failed to provide any proper opportunity of heard to the appellant.
4.That on the facts and in the circumstances of the case, the Ld. CIT(E), Delhi erred in rejecting the application for renewal of registration under section 12AB(1)(ac)(ii) of the Income-tax Act, 1961 by holding that the activities of the appellant-trust are commercial in nature, completely overlooking that the jurisdiction of the Ld. CIT(E) at the stage of renewal is confined only to examining (i) the charitable nature of the objects, and (ii) the genuineness of the activities, and not to undertake an assessment-like enquiry into the application of income or alleged commerciality of activities.
5.That the Ld. CIT(E) failed to appreciate that the appellant-trust has longstanding charitable objects and has been consistently carrying out genuine charitable activities duly supported by books and records, and the rejection of renewal on alleged 'commerciality' is beyond the limited and circumscribed mandate prescribed under section 12AB and contrary to settled judicial principles.
6.That the impugned order is bad in law and liable to be quashed as it is contrary to the ratio laid down in judicial precedents wherein it has been held that at the stage of registration/renewal, the authority is required to confine itself to the objects of the trust and genuineness of the activities and cannot go into issues of commerciality, application of income, or violation of provisions that fall within the domain of assessment.
7.That the appellant craves leave to add, to alter or to amend grounds of appeal before the appeal is heard and disposed off.”
Brief facts of the case are that the assessee has filed an application dated 27.03.2025 in Form 10AB for approval under 12AB(1)(b)(iii)(B) and section 80G(5)(ii) of the Act for regularization of its provisional approval under section 12AB and 80G of the Act which was rejected by the CIT(E). Aggrieved, assessee is in appeal before us.
At the outset, learned Counsel for the assessee vehemently argued that the CIT(E) has passed an order of rejection of registration under section 12A and 80G of the Act without providing show cause notice and prayed for remanding the matter back to the file of CIT(E).
Per contra, learned DR did not raise any serious objection.
We have heard the rival submissions and perused the material available on record. We find that the CIT(E) has held that the assessee is involved in commercial activities. We find however, that the CIT(E) has not afforded reasonable opportunity to the assessee to explain the various discrepancies in its explanation. We, therefore, are of the considered view that the issues raised in the orders with regard to registration u/s 12AB and 80G be set aside to the file of the CIT(E) for a fresh adjudication. We, therefore, direct the ld. CIT(E) to give three effective opportunities to the assessee and examine and adjudicate on the impugned issues afresh. The assessee is also directed to furnish all documents/evidence as and when required by the ld. CIT(E) for examination. Needless to add that in the event the assessee fails to avail the three effective opportunities provided, the CIT(E) would be free to take adverse view, if any. In view of the same, the appeal of the assessee is allowed for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes.