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Judgment
PER S.RIFAUR RAHMAN,AM:
These appeals are filed by the assessee against the order passed by the ld. Commissioner of Income-tax (Exemptions), Delhi [for short ‘ld. CIT (E)] dated 23.03.2026under section 12AB(1)(b)(ii)(B) and 80G of the Income-tax Act, 1961 (for short ‘the Act’) in ITA Nos.5737/Del/2026 and 5738/Del/2026 respectively. The assessee also filed appeal being ITA No.6327/Del/2026 against the order passed by the ld. CIT (E) dated 23.03.2026 under section 12AB(1)(b) of the Act.
Since the issues are common and the appeals are connected, hence the same are heard together and being disposed off by this common order.
ITA No.5737/Del/2026 : Brief facts of the case of this appeal are the applicant filed an application dated 23.09.2025 in Form 10AB for registration u/s 12A(1)(ac)(ii) of the Act. The applicant was issued a questionnaire dated 22.01.2026 with a direction to furnish certain details/documents/clarifications in support of its request for registration u/s 12A(1)(ac)(ii) of the Act. In response, part reply was filed by the assessee. Ld. CIT (E) observed that as the applicant has failed to submit details/information required by the notice referred above, in support of genuineness of the activities and charitable objects, the application filed in Form 10AB for grant of registration u/s 12A(1)(ac)(ii) is hereby rejected. However, he gave liberty to the applicant that it is at liberty to file application again for approval u/s 12A of the Act with necessary justification.
ITA No.5738/Del/2026 : Ld. CIT (A), on the similar lines as discussed in the aforesaid appeal being ITA No.5737/Del/2026, rejected the application filed for grant of approval u/s 80G(5)(ii).
ITA No.6327/Del/2026 :In this appeal, the assessee was aggrieved with the approval granted with conditions. After considering the details filed by the assessee in second application for grant of registration, ld. CIT (E) held that after considering the application of the applicant and the material available on record, the applicant is hereby granted registration/approval for the assessment year(s), mentioned at serial no.8 above subject to the conditions mentioned in row number (12); the taxability, or otherwise, of the Income of the applicant would be separately considered as per the provisions of the Income Tax Act, 1961; this order is liable to be withdrawn by the prescribed authority if it is subsequently found that the activities of the applicant are not genuine or if they are not carried out in accordance with all or any of the conditions subject to which it is granted, if it is found that the applicant has obtained the approval by fraud or misrepresentation of facts or it is found that the assessee has violated an condition prescribed in the Income Tax Act, 1961. Further, ld. CIT (E) granted the approval subject to above conditions which are given at page 3 & 4 of the ld. CIT (E)’s order.
Aggrieved with the above orders, the assessee is in appeal before us raising following grounds, the main issues raised by the assessee are in appeal no: ITA No.5737,5738 and 6327/Del/2026 in which the assessee is aggrieved with the grant of registration with conditions u/s 12AB of the Act and denial of registration u/s 80G of the Act. The relevant grounds are reproduced below:
ITA No.5737/Del/2026
1 . That having regard to the facts and circumstances of the case, Ld. CIT(E) has erred in law and on facts in rejecting the registration u/s 12A(1)(ac)(ii) and that too without appreciating the facts and circumstances of the case and in violation of principles of natural justice and by recording the incorrect facts and findings and without appreciating/considering the submissions and evidences filed by the assessee.
2.That in any view of the matter and in any case, action of Ld. CIT(E) in rejecting the registration u/s 12A(1)( ac )(ii), is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice as the impugned order has been passed without granting adequate opportunity of hearing and by recording incorrect facts and findings.
ITA No.5738/Del/2026
1.That having regard to the facts and circumstances of the case, Ld. CIT(E) has erred in law and on facts in rejecting the approval u/s 80G(5)(ii) and that too without appreciating the facts and circumstances of the case and in violation of principles of natural justice and by recording the incorrect facts and findings and without appreciating/considering the submissions and evidences filed by the assessee.
2.That in any case and in any view of the matter, action of Ld. CIT(E) in rejecting the approval u/s 80G(5)(ii), is bad in law and against the facts and circumstances of the case and is contrary to the principles of natural justice, as the impugned order has been passed by recording incorrect facts and finding and the appellant ought to have been granted the benefit of approval under the said section.
ITA No.6327/Del/2026
1.That having regard to the facts and circumstances of the case, Ld. CIT(E) has erred in granting conditional registration under section l2AB(1 )(b) of the Income Tax Act, 1961, despite there being no provision under the Act for attaching such conditional registration and thus Ld. CIT(E) ought to have allowed the registration without any condition.
2.That having regard to the facts and circumstances of the case, Ld. CIT(E) has further erred in not appreciating that the assessee society had duly fulfilled all the requisite conditions prescribed under the law for grant of registration under section 12AB and there existed no adverse material warranting imposition of any condition while granting registration.
3.That having regard to the facts and circumstances of the case, impugned order has been passed by recording incorrect facts and findings, without proper appreciation of the material available on record, and is therefore arbitrary, unjustified and contrary to the facts of the case.
4.That having regard to the facts and circumstances of the case, impugned order has also been passed in violation of the principles of natural justice, as adequate and proper opportunity of being heard was not afforded to the assessee before imposing the alleged conditions while granting registration.
5.That in any view of the matter and in any case, action of Ld. CIT(E) in granting conditional registration U/S 12AB, is bad in law and against the facts and circumstances of the case.
6.That having regard to the facts and circumstances of the case, Ld. CIT(E) has erred in law and on facts in holding that the applicant being involved in advancement of GPU has commercial receipts exceeding 20% by way of sale of teaching learning material and further erred in giving direction in para 12 of the impugned order and that too without any basis and without appreciating the facts and circumstances of the case.
At the time of hearing, Ld AR of the Assessee submitted that when the assessee filed the application for seeking registration u/s 12AB and 80G, the Ld CIT(E) had rejected the same even though the assessee had submitted the relevant information, in case he needs further information, he could have given proper opportunity to the assessee before rejecting the applications. He was perturbed with the fact that the assessee would loose the exemption for the interim period for the reason that the Ld CIT(E ) had subsequently granted conditional registration when the assessee had filed fresh application. He further submitted that Ld CIT(E ) granted conditional registration u/s 12AB which is not proper, in this regard he brought to our notice various decisions of ITAT and Hon’ble HCs, wherein it was held that such conditional registration cannot be granted. He brought to our attention pages 177, 178 and 192 of the case law paper book the various decisions. He further brought to our notice the CBDT circular no. 21 of 2016, wherein it was clearly directed that when there is violation of the conditions for which the registration was granted, the tax exemption would be denied to the institution in that year and cancellation of registration would not be mandatory unless such cancellation becomes necessary on the grounds prescribed under the Act. In this regard he submitted that the issue of denial of exemption is the assessment matter but the same cannot be extended while granting registration. He submitted that the authorities do not have power to grant conditional registration. He prayed that suitable direction may be granted as per law.
On the other hand, Ld DR submitted that the assessee had not submitted the relevant information while seeking registration. He supported the findings of the Ld CIT(E ) while granting the registration, it is within his power to lay conditions particularly when the assessee may not confirm to the conditions for grant of registration earlier. He objected to the submissions made by the Ld AR.
Considered the rival submissions and material placed on record. We observed that the assessee society was established on 26th October 1982. This society was granted registration u/s 12A. The revenue, in the past, held that the assessee society was engaged in the sale of books which are in the general interest books, which the government was promoted this scheme to encourage the reading habit and none of them are in the nature of textbooks. Therefore, they treated the same as not falling under the definition of charity u/s 2(15) of the Act and also it was recommended to cancel the registration granted earlier. The same was contested before the appellate authorities by the assessee and the same was decided in favour of the assessee. In appeal the Hon’ble High Court also held in favour of the assessee and dismissed the appeal of the revenue. That being the case, this is not the first time the assessee was seeking the registration. Therefore, the authorities should have considered the application with due respect and given proper opportunities to the assessee to file the relevant information before rejecting the application. Since the initial application vide application dated 23.09.2025 was rejected due to non-submission of information as per the notice issued in this regard and at the same time, liberty was given to the assessee to file proper application in due course. In our view, the same is not proper. Therefore, the registration granted subsequently to the assessee vide order dated 22.05.2026 should be with effect from the date of initial application filed by the assessee vide application dated 23.09.3025 .
Since the registration was granted with conditions u/s 12AB on the basis of new application filed by the assessee, on which the assessee had filed the present appeal vide ITA No. 6327/Del/2026. We noticed that the annexure enclosed with the registration granted u/s 12AB consist of 12 clauses. Which contained various conditions, most of them are general but in clause no 12, the conditions mentioned with the caveat that it is engaged in advancement of GPU has commercial receipts exceeding the commercial receipt exceeding 20% by way of sale of teaching learning materials and accordingly registration is granted subject to the condition that the assessee shall update its return of income for the financial years as specified in the order within 90 days of receipt of this order, failing which registration u/s 12A shall cease its validity. After considering the above registration process, in our view, one hand the officer is satisfied with the objects and activities of the society and on the other hand, he is framing additional conditions to withdraw the registration. The whole process adopted to harass the applicant, particularly the society which was in existence since 1982 and also registration was granted in the past and particularly when they demonstrated proper track record. There is no material brought on record to show that the society was indulged in any activity which is against the objects of the society. That being the case, the way the registration granted with such superficial conditions was not proper. Therefore, the conditions mentioned for granting registration particularly point no 12 is unjustified and in our view, the cancellation of the society can be carried only by due process of law. The conditions for grant of Registration cannot be imposed at the time of granting registration itself. The society was granted registrations earlier. Hence, once the objects and activities are genuine, it cannot deny the registration, we direct the Ld CIT(A) to grant the registration without any condition as discussed above.
With regard to the appeal filed by the assessee against the rejection of the registration u/s 80G, since we directed the Ld CIT(E ) to grant registration u/s 12AB and also it was granted registration u/s 80G in the past, we are inclined to remit the same back to the Ld CIT(E ) to consider the application filed by the assessee and grant the same as per law after considering the relevant material on record. It is needless to say that the assessee may be given proper opportunity of being heard. In the result, appeal filed by the assessee challenging the rejection of registration is allowed for statistical purposes.
In the result, appeals filed by the assessee vide ITA Nos. 5737/Del/2026 and 6327/Del/2026 are allowed and the appeal filed vide ITA No. 5738/Del/2026 is allowed for statistical purposes.