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Judgment
PER RAJ KUMAR CHAUHAN (J.M.):
The appeal is directed against the order dated 29.09.2025 passed by the Commissioner of Income Tax (Exemption), Delhi wherein the application of the appellant dated 10.02.2025 in Form 10AB for registration u/s 12A(1)(ac)(ii) of the Income Tax Act, 1961 (in short ‘the Act’) was dismissed, as the applicant has allegedly failed to file details/ information which were necessary for said registration.
Aggrieved by the impugned order, the assessee is in appeal raising following grounds:
“1.That on the facts and in the circumstances of the appellant's case, the learned Commissioner of Income tax (Exemption) Delhi, erred both in law and on facts in rejecting its application seeking renewal of registration under section 12A(1)(ac) (ii) of the Income tax Act, 1961 (as amended), without affording reasonable opportunity to the appellant and further completely ignoring the principles of consistency in this case.
3.That on the facts and in the circumstances of the appellant's case, the learned Commissioner of Income tax (Exemption) Delhi, erred both in law and on facts in framing the Order under section 12AB(1)(b)(ii) (B) of the Act, rejecting its application seeking renewal of registration based on pre conceived notions, surmises and conjectures and further violating the foundational principles of law and justice.”
We have heard Ld. AR on behalf of the assessee and Ld. DR for the Revenue. The Ld. AR at the very outset submitted that the Ld. CIT(E) has passed the impugned order without affording effective opportunity of hearing as the requisite documents which were required for consideration of the ld. CIT(E) and assessee would have been filed, had the necessary opportunity being given. It is further argued that the ld. CIT(E) has committed illegality in observing that since the applicant is charging fees from the children who are enrolled in play school, this activity cannot be considered as a charitable activity. It is submitted that the assessee is registered as a charitable entity since 2003 by issuing a certificate of registration dated 2nd April, 2003 issued under Societies Registration Act of 1860 placed at page 6 of the paper book along with copy of the order dated 20.11.2023 for granting registration of approval by the Income Tax Department placed at serial no. 19 of the paper book wherein the appellant has been duly registered and approval granted u/s 12AB(1)(b) of the Act. It is further submitted that the appellant is also duly registered u/s 12A r.w.s. 12AA(1)(b) of the Act vide order of registration dated 09.09.2003 placed at page 131 of the paper book.
In view of these facts and material, it is argued that the Ld. Commissioner of Income Tax (Exemption) did not have any jurisdiction to reject the application for grant of registration on the premise that play school run by it was not registered/ affiliated by any State or Central Government Authority. The Ld. AR has relied the case of Co-ordinate Bench ITA No. 5273 and 5276/Del/2024 for April 30, 2025 reported as (2025) 175 taxmann.com 264(Delhi) wherein para 5 to 8 are relevant extracted as under:
“5.The case of the assessee is this that whether the assessee is affiliated by any state or central authorities has no relevance to the matter of granting registration by the Id. CIT(E). Further that the genuineness of the activities of the trust and its compliance with any statutory requirements are required to be questioned to decide whether it is charitable or otherwise once the trust is registered under Section 12A of the Act. In this regard he has relied upon the judgment passed by the Coordinate Bench's decision in the case of ITO v. Chadha Education Society Maxfort Pre-Primary School [IT Appeal No. 91/Del/2016, dated 12-12-2018] wherein on the identical facts and circumstances of the matter the observations was made particularly relying upon the decision of Hon'ble Apex Court in the case of ACIT v. Surat City (2008) 170 Taxman 612/300 ITR 214 (SC) holding that the registration of trust once done under Section 12A is a fait accompli and the AO cannot thereafter make further probe into the object of the trust.
6.Thus, having regard to this particular aspect of the matter he thus, prayed for a direction upon the Id. CIT(E) to regularize its provisional registration granted under Section 12A of the Act as applied for in Form 10AB under Section 12A(1)(ac)(iii) of the Act.
7.The Id. DR on the other hand failed to submit any such judgment in support of the registration so rejected by the CIT(E). Hence, considering the judgment passed by the Hon'ble Delhi High Court, we held that the CIT(E) does not have any jurisdiction to reject the application for grant of registration on the premises that the play school is not registered/affiliated by any State or Central Government authority. Thus having regard to the entire aspect of the matter, we deem it fit and proper to remit the issue to the file of the CIT(E) for adjudication of the issue of granting registration under Section 12A of the Act taking into considerations all the relevant documents in support of the case made out by the assessee and to pass a reasoned order upon granting an opportunity of being heard to the assessee. The Ld. CIT(E) is also directed to pass an order in regard to the exemption claimed under Section 80G of the Act accordingly.
8.Both the appeals filed by the assessee are, thus, allowed for statistical purposes.”
While relying upon the Delhi Tribunal’s above order and the case law referred therein and in view of the submission made and the fact that effective opportunity of hearing is not given, a request is made to restore the matter to the file of Ld. CIT(E) with the direction to grant the necessary approval u/s 12A(1)(ac)(ii) of the Act to the applicant.
Ld. DR on the other hand relied upon the judgment of the Ld. CIT(E) and prayed for dismissal of the appeal.
We have considered the rival submissions and examined the record. The dismissal of the application and the reasoning therein as contained in para 1 and 5 of the impugned order extracted below as under:
“ORDER u/s 12AB(1)(b)(ii)(B) OF THE INCOME TAX ACT, 1961
1.The applicant is a society registered/incorporated on 02.04.2003. The applicant has filed an application dated 10.02.2025 in Form 10AB for registration us/ 12A(1)(ac)(ii) of the Income Tax Act, 1961. The applicant was issued a questionnaire dated 22.03.2025 with a request to furnish certain details/documents /clarifications in support of its claim of registration us/12A(1)(ac) (ii). The case was fixed for compliance on 07.04.2025.
2.The applicant responded on 15.07.2025 by way of providing details as sought vide notice dated 22.03.2025.
3.The applicant was issued notice dated 04.08.2025 to file the remaining details as sought earlier along with additional details. However, the applicant furnished a part reply.
4.Based on documents submitted following discrepancies are noted:
1.On perusal of the submission, it is noted that applicant is running two schools ie. Chetan Vidya Mandir School and Diya Playway, School located at Nihal Vihar, Nangloi, New Delhi-110041 However, the applicant has not provided any affiliation/recognition documents with any Educational Board/Government body/Directorate of Education. As per financial statements for FY 2022-23, 2023-24 & 2024-25, 24%, 38% & 33% respectively of the total receipts are derived from fees collected from students. Since the applicant is charging fees from the children enrolled in play school, this activity cannot be considered as a charitable activity but is commercial in nature. Therefore, the applicant is not providing education as per sec 2(15) of the Income Tax Act.
2.The applicant is receiving donations but the details of the donors are not provided.
5 In view of above discussion, the applicant failed to file details/information required by the notices referred above, to verify genuineness of charitable nature of its activities. In light of above, the application filed in Form 10AB for grant of registration us/12A(1)(ac) (ii) is rejected.”
We have noticed that the applicant is not a fresh registration but it stand registered since 09.09.2003 as a charitable entity by the Income Tax Department and order of registration u/s 12A r.w.s. 12AA(1)(b) of the Act has been placed. Moreover in view of the judgment of the Delhi Tribunal in ITA No. 5273 and 5276/Del/2024 (supra). The Ld. CIT(E) is not supposed to question the charitable activities carried out by the assessee. Hence, the Ld. CIT(E) was required to consider the registration of the assessee u/s 12A(1)(ac)(ii) of the Act. However, the applicant is required to file the necessary detail/ information required and necessary for consideration and grant of said approval by the Ld. CIT(E). For the above reasons the impugned order is not sustainable and set aside and the matter is restored for the file of Ld. CIT(E) for deciding the same afresh and grant necessary approval to the assessee, after considering the submissions made and the material produced before us.
The appeal of the assessee is allowed in above terms for statistical purposes.