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Judgment
PER BRAJESH KUMAR SINGH, AM,
These two appeals by the assessee are directed against the order of Ld. Commissioner of Income Tax (Exemption), Delhi [hereinafter referred to as the ‘Ld. CIT(E)] two separate order both dated 23.09.2025 pertaining to Assessment Year (A.Y.) 2025-26, rejecting the respective applications filed by the assessee for registration under section 12A(i)(ac)(iii) of the Income-tax Act, 1961, (hereinafter referred to as the ‘Act’) and for grant of approval under clause (iii) of first proviso to section 80G(5) of the Act (hereinafter referred to as the ‘Act’). Since common issues are involved in both the appeals, the same are being disposed of by way of this common order for the sake of convenience and brevity. The appeal of the assessee in ITA No.- 7547/Del/2025 rejecting the application filed by the assessee for registration under section 12A(i)(ac)(iii) of the Act, is taken as a lead case.
Brief facts of the case : The applicant is a trust and date of incorporation of the trust is 08.03.2021. The applicant had filed an application dated 03.03.2025 in Form 10AB for registration u/s 12A(1)(ac)(iii) of the Income Tax Act, 1961. Based on documents submitted by the assessee, following discrepancies were noted by the Ld. CIT(E).
“i)The applicant has not provided audited financials for F.Y. 2023-24. As per provisional financial statement for F.Y. 2024-25: total receipt for FY 2023-24 is Rs. 5.02.554/- which is above the threshold limit. It was required to get its account audited as per section 12A(4)(b) Thus its accounts are not reliable in absence of same actual doing of claimed activity remains unproved.
ii) The applicant has not provided donor/contributors details
iii) The applicant has claimed some expenses incurred in financial statement for F.Y. 2022-23 & FY 2024-25 but no bills/vouchers are provided.”
The Ld. CIT(E) further in view of the facts stated in his order held that since the applicant had not submitted the requisite details required for verifying the genuineness of the activities, the applicant had failed to satisfy the genuineness of charitable nature of its activities and rejected the application filed by the assessee for registration under section 12A(i)(ac)(iii) of the Act.
The relevant extracts of the order of the Ld. CIT(E) are reproduced as under:
“2.The applicant is a trust and date of incorporation is 08.03.2021. The applicant has filed an application dated 03.03.2025 in Form 10AB for registration u/s 12A(1)(ac)(iii) of the Income Tax Act, 1961. The applicant was issued a questionnaire dated 24.04.2025 with a request to furnish certain details / documents/clarifications in support of its claim of registration u/s 12A(1)(ac) (iii). The case was fixed for compliance on 09.05.2025.
2 The applicant has filed details by way of copy of trust deed, copy of bank statement financial statement. Form 10AC etc.
3.On perusal of the documents filed by the applicant, it is noted that the applicant has not submitted complete details required vide questionnaire dated 24.04.2025. Hence, further opportunity was afforded vide letter dated 11.08.2025 to file the remaining details and some additional details/clarification/documents by 18.08.2025. It was also mentioned that in case of failure, the proceedings shall be decided on the basis of information available on record and no further opportunity will be granted being limitation matter.
4.Based on documents submitted following discrepancies are noted:
i)The applicant has not provided audited financials for F.Y. 2023-24. As per provisional financial statement for F.Y. 2024-25: total receipt for FY 2023-24 is Rs.5.02.554/- which is above the threshold limit. It was required to get its account audited as per section 12A(4)(b) Thus its accounts are not reliable in absence of same actual doing of claimed activity remains unproved.
ii) The applicant has not provided donor/contributors details
iii) The applicant has claimed some expenses incurred in financial statement for F.Y. 2022-23 & FY 2024-25 but no bills/vouchers are provided
As per procedure for registration from 01.04.2021, various sub clauses u/s 12A(1)(ac) are introduced describing different scenarios under which an institution can apply to seek registration u/s 12A, as per procedure described in section 12AB of IT Act.
For the application filed u/s 12A(1)(ac)(ii)/(iii)/(iv)/(v) and (vi-B), where activities of institution are already commenced before seeking approval, for such application it is important for competent authority to satisfy himself/herself about genuineness of actual activities undertaken by the applicant vis a vis the intended activities mentioned in its objects. To do so, it is important that the applicant provides list of donors, bills/vouchers for expenses claimed, source of funds received, list of beneficiaries if applicable etc. In absence of same genuineness of its activities can't be ascertained. Since the applicant has not submitted the above details required for verifying the genuineness of the activities, the applicant has failed to satisfy the genuineness of charitable nature of its activities.
5.In view of above discussion, the applicant has failed to satisfy genuineness of charitable nature of its activities. In light of above the application filed in Form 10AB for grant of registration u/s 12A(1)(ac) (iii) is hereby rejected.
6.Since, the application filed in Form 10AB seeking registration u/s 12A(1)(ac)(iii) is rejected, the provisional registration granted vide order dated 13.02.2025 having Unique Registration Number ABBTS5644LE20241 issued for the period from A.Y. 2025-26 to A.Y. 2027-28 is also cancelled.”
Aggrieved with the said order, the assessee has filed an appeal before us, on the following grounds of appeal:
“ 1. That the order passed by the Learned CIT (Exemption), Delhi dated 23.09.2025 under section 12AB(1)(b)(ii)(B) rejecting the application in Form 10AB is contrary to law, facts, and the principles of natural justice, and therefore liable to be quashed.
2.That the Learned CIT (Exemption) erred in holding that the genuineness of activities could not be verified, despite the appellant having furnished all material documents including trust deed, bank statements, financial statements, Form 10AC, and other details as called for.
3.That the Learned CIT (Exemption) erred in concluding that audited financials for FY 2023-24 were mandatory, ignoring that the appellant's receipts were below the statutory limit at the time of filing, and that non-availability of audit in one year cannot be a valid ground to reject registration when all activities and accounts are duly verifiable.
4.That the Learned CIT (Exemption) failed to appreciate that the appellant is a newly formed charitable organization, carrying out genuine charitable activities since inception, and all expenses, receipts, and vouchers were available and could have been verified through further inquiry, which was not conducted.
5.That the Learned CIT (Exemption) erred in rejecting the application without granting adequate opportunity, and the conclusion that details were incomplete is arbitrary, mechanical, and in violation of the principles of natural justice.
6.That the Learned CIT (Exemption) erred in cancelling the valid provisional registration granted on 13.02.2025 without any legal basis, although cancellation under section 12AB requires satisfaction regarding falsity of activities, which was neither established nor evidenced in the order.
7.That the Learned CIT (Exemption) misinterpreted the scope of verification under section 12AB, where only prima facie satisfaction regarding genuineness of activities is required, not exhaustive scrutiny akin to assessment proceedings.
8.That the order is based on assumptions, presumptions, and conjectures, and ignores the documentary evidence and charitable nature of the appellant's objects and activities on record.
9.That without prejudice, even if any document was perceived as insufficient, the Learned CIT (Exemption) ought to have exercised powers of further inquiry under section 12AB(1)(a) instead of outright rejection.
10.That the appellant craves leave to add, alter, modify or withdraw any ground at the time of hearing.”
At the time of hearing before us, the Ld. AR filed a written submission and relying upon the same requested that the order of the Ld. CIT(E) may be set aside and the matter may be set aside to the file of the Ld. CIT(E) for fresh consideration of the application filed by the assessee for registration under section 12A(i)(ac)(iii) of the Act. The Ld. AR also filed a Paper book containing pages 1-105 which included Notes on Activities alongwith the photographs (pg. 45-77) in support of the charitable activities carried out by it. The relevant extracts of the written submission filed by the assessee are reproduced as under:
We on behalf of, SHAKTI SEWA SANSKRITI FOUNDATION, a charitable trust duly registered under the Indian Trusts Act, 1882, on 8th March 2021, having registered office in Delhi, humbly submit this appeal before the Honorable Income Tax Appellate Tribunal (ITAT). The Trust was established with the primary objective of carrying out general welfare activities and promoting objects of general public utility.
Background of the Case
The appellant initially applied for provisional registration under Section 12A Based on this application, the appellant was granted provisional registration under Form No. 10AC, with URN No. ABBTS5644LE20241, dated 19TH February 2025, valid from Assessment Year (AY) 2025-26 to AY 2027-28 and similarly appellant applied for provisional registration under Section 80G Based on this application, the appellant was granted provisional registration under Form No. 10AC, with URN No. ABBTS5644LF20251, dated 19TH February 2025, valid from Assessme Year (AY) 2025-26 to AΥ 2027-28
Subsequently, in compliance with the statutory requirements, the appellant applied for permanent registration under Section 12A/80G by submitting Application Form 10AB on 3th March 2025 through the Income Tax e-filing portal, with all necessary supporting documents and disclosures.
Consequently, the Hon'ble CIT (Exemption) passed orders under Form 10AD dated 23.09.2025, rejecting the applications under section 12A as well as 80G. Additionally, the CIT (Exemption) also cancelled the provisional registrations earlier granted under both sections le 12A & 80G.
Grounds for Rejection as Stated by the CIT (Exemption):
In the rejection order, it has been stated that:
The applicant failed to furnish complete details required for verification of its activities. Also it was observed that the applicant did not submit audited financial statement of F.Y. 2023-24 even through the total receipts exceeded the prescribed limit requiring audit under the income Tax Act. Further the applicant failed to provide the details of donors/contributors and also did not furnish supporting bills and vouchers for the expenses claimed in the financial statement. The applicant also did not fully comply with the questionnaire issued by the department seeking clarification and supporting documents. In absence of these documents, the competent authority was not satisfied about the genuineness of the activities carried out by the trust.
Our Humble Submission against the Grounds of Rejection:
We respectfully submit that
a)Note on Activities with Photographs
b.) Copy of trust deed
c.) Copy of last 3 years Financials including ITRV
d.) Bank Statement.
Key Criteria for Granting Registration Under Section 12A & 80G
We further wish to highlight that the following three essential criteria for granting registration under Section 12A & 80G have been fully satisfied by the appellant
1. Charitable Objectives:
The Trust is established exclusively for charitable purposes.
The Honorable CIT (Exemption) has not raised any adverse comments or objections regarding the genuineness of the Trust's objectives or the nature of its activities.
2. Previous Compliance:
The appellant has complied with all applicable regulatory and statutory requirements.
There are no pending compliance issues or unresolved matters from previous assessments.
3. Desired Submissions as Required by CIT:
The Trust has provided all necessary documentation and clarifications as sought by the Honorable CIT (Exemption).
4.We are here providing the following documents for your reference:
S. No. Particulars Page 1. Copy of Trust Deed 1-32 2. Order of Rejection in form no. 10AD of 12A & 80G 33-40 3. Order for provisional registration under sec 12A & 80G (Form 10AC) 41-44 4. Notes on Activities along with Photographs 45-77 5. Copy of 26AS 78-85 6. Last 2 years Financials including ITRV 86-95 7. Copy of Bank Statement 96-105 Prayer:
In light of the above it is most respectfully prayed that the Hon'ble Tribunal may kindly set aside and remand back to the Learned CIT (Exemptions), Delhi or pass any other relief deemed fit in the interest of justice.
We assure the Honorable Tribunal of our utmost sincerity in adhering to all legal and statutory requirements and remain hopeful of a favorable consideration of this appeal.”
The Ld. CIT(DR) supported the order of the Ld. CIT(E). However, she did not raise any serious objection to the request of the assessee for remanding back to the Ld. CIT(E) for fresh consideration of the application of the assessee for application filed by the assessee for registration under section 12A(i)(ac)(iii) of the Act.
We have heard both the parties and perused the material available on record. The Ld. CIT(E) in view of the facts noted in his order and as summarized in para no. 2 of this order took an adverse view against the assessee. Further, the Ld. CIT(E) held that since the applicant had not submitted the above details required for verifying the genuineness of the activities, the applicant has failed to satisfy the genuineness of charitable nature of its activities. On the other hand, the assessee in its grounds of appeal more particularly in ground no. 5 submitted that the Learned CIT (Exemption) erred in rejecting the application without granting adequate opportunity, and the conclusion that details were incomplete is arbitrary, mechanical, and in violation of the principles of natural justice. In this regard, the assessee has filed a detailed submission in support of its claim alongwith a paper book (1-105), which appears to have not been examined in detail by the Ld. CIT(E). Therefore, in the given facts of the case, we are of the view that the ld. CIT(E) should have given adequate opportunity to the assessee to explain its case. We therefore, in the interest of the principle of natural justice, set-aside the impugned order of the Ld. CIT(E) rejecting the application of the assessee for registration under section 12A(i)(ac)(iii) of the Act to the file of the Ld. CIT(E) for afresh adjudication, after giving reasonable opportunity of being heard to the assessee and in accordance with law. The assessee is also directed to participate and furnish evidences/documents as and when required by the Ld. CIT(E).
In the result, the appeal of the assessee in ITA No.- 7547/Del/2025 is allowed for statistical purposes.
ITA No.- 7548/Del/2025
The Ld. CIT(E) had rejected the application filed in Form 10AB for grant of approval u/s 80G of the Act on the ground that by an order of even date the application of the assessee in registration u/s 12A was rejected. Therefore, our decision rendered in ITA No. 7547/Del/2025 shall apply mutatis mutandis to ITA No. 7548/Del/2025 as well. Accordingly, the appeal in ITA No. 7548/Del/2025 is also allowed for statistical purposes.
To sum up, both the appeals filed by the assessee are allowed for statistical purposes.