AGGARWAL SABHA PURAN ENCLAVE OLD VS. CIT (EXEMPTION), CHANDIGARH, ITA 1799/DEL/2024
In a significant development for charitable organizations, the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled in favor of Aggarwal Sabha Puran Enclave, setting aside the denial of registration under Section 12A and approval under Section 80G of the Income-tax Act, 1961.
📌 Background
The assessee, a registered trust formed in 2015, had earlier obtained provisional registration under Section 12A via Form 10AC dated 23.09.2022 for AY 2023-24 to AY 2025-26. As per procedure, it filed Form 10AB on 26.09.2023 for conversion into regular registration.
However, the CIT(Exemption), Chandigarh rejected:
- The 12A registration application citing “failure to conclusively prove genuineness of activities” despite acknowledging charitable operations;
- The 80G approval application, deeming it time-barred, as it was not filed within 6 months of commencement of activities.
⚖️ Tribunal’s Observations
On Rejection of 12A Registration
The ITAT found several lapses in the CIT(E)’s reasoning:
- The assessee had submitted all necessary documents including audit reports and details of charitable activities.
- The CIT(E) admitted the presence of charitable activities but rejected the registration for want of “conclusive” proof—a reasoning the Tribunal found vague and non-specific.
- The assessee had requested additional time and even offered a physical verification of its activities, which was ignored by the CIT(E).
▶️ Ruling: The Tribunal restored the matter to the CIT(E) with a direction to grant a fair opportunity of hearing and decide afresh after properly examining the documentary evidence.
On Rejection of 80G Approval
- The CIT(E) denied approval on the grounds that the application under Section 80G was not filed within 6 months of the commencement of operations—which in this case began in 2015, prior to the grant of provisional registration in 2022.
However, the Tribunal, relying on its earlier decision in Tomorrow’s Foundation v. CIT(E) (ITA No. 367/Kol/2024), held:
“An institution cannot be denied 80G registration on the ground that its activities started before the grant of provisional registration. The six-month condition is not applicable retroactively.”
Further, it noted that:
- The assessee could not apply earlier due to pending 12A rejection.
- CBDT Circular No. 7/2024 permits extended timelines that are not intended to bar institutions from legitimate applications.
▶️ Ruling: The ITAT directed the CIT(E) to re-examine the application under Section 80G, and not to treat the 6-month rule as a barrier if the assessee is otherwise eligible.
🧾 Key Takeaways
- Procedural technicalities must not override substantive compliance.
- Where charitable activities are evidenced, denial of registration must be based on cogent reasons—not vague doubts.
- Timing of operations vis-à-vis provisional registration does not invalidate applications under Section 80G, particularly when CBDT circulars and tribunal precedents provide relief.
- The decision ensures legitimate charitable entities are not unfairly penalized due to interpretational rigidity by tax authorities.