Fresh Section 80G Application Cannot Be Rejected merely Because Earlier Rejection Was Not Appealed

Mohammediya Educational Trust Vs ITO (Exemptions) (ITAT Bangalore)

ITAT Remands 80G Approval Case Because CIT(E) Applied Wrong Legal Provisions; Subsequent Form 10AB Filing Maintainable Because No Statutory Bar Exists Under Section 80G; 80G Approval Rejection Set Aside Because CIT(E) Viewed Case From Donor Perspective; Trust Gets Fresh Opportunity Because ITAT Rejects ‘Non-Est’ Finding on 80G Application.

In Mohammediya Educational Trust Vs ITO (Exemptions), the ITAT Bangalore considered an appeal against the order of the CIT(E), Bengaluru rejecting the assessee’s application in Form No. 10AB dated 27.03.2025 seeking approval under Section 80G of the Income Tax Act. The assessee trust had earlier obtained registration under Sections 12AA and 12AB and was also granted provisional approval under Section 80G. Its earlier application for final approval filed on 30.03.2024 was rejected by the CIT(E) on the ground that “fees collection” and “RTE fees” did not fall within the definition of donations under Section 80G. Subsequently, the assessee filed a fresh application on 27.03.2025. The CIT(E) rejected this second application as “non-est” and “void-ab-initio,” holding that the earlier rejection had attained finality because no appeal was filed before the ITAT. The CIT(E) further treated the fresh application as a collateral attack on a concluded decision.

Before the Tribunal, the assessee argued that there is no restriction under the Act against filing a fresh application for approval under Section 80G and contended that adequate opportunity of hearing was not granted. The assessee also submitted that its activities were genuine and that compliance with the conditions under Section 80G(5) had already been examined while granting registration under Section 12AB. The Departmental Representative supported the order of the CIT(E), arguing that the earlier rejection order had attained finality and that the assessee had failed to furnish details during the proceedings.

The Tribunal observed that the assessee trust was validly registered under Section 12AB and had also been granted provisional approval under Section 80G. It held that while considering an application for approval under Section 80G, the CIT(E) is required to examine only the genuineness of the activities and fulfillment of the conditions prescribed under clauses (i) to (v) of Section 80G(5). The ITAT held that there is no provision under the Act barring a trust from filing a subsequent application before the same authority merely because an earlier application was rejected and not appealed. According to the Tribunal, the only consequence of filing a later application would be that approval, if granted, would operate from the date of the fresh application and not from the earlier rejected application.

The Tribunal further observed that the CIT(E), while rejecting the earlier application dated 30.09.2024, incorrectly relied upon Sections 80G(1) and 80G(2), which relate to deductions claimed by donors, instead of Section 80G(5), which governs approval of institutions or trusts. The ITAT held that the CIT(E) misdirected herself by considering the issue from the perspective of the donor instead of the donee institution seeking approval. The Tribunal also noted contradictions in the CIT(E)’s order, as it simultaneously recorded that the assessee failed to appear and also stated that submissions were heard and considered on 18.08.2025.

Considering these aspects and in the interest of justice, equity, and fair play, the ITAT remitted the matter back to the file of the CIT(E), Bengaluru with a direction to reconsider the application filed on 27.03.2025 in accordance with law after granting reasonable opportunity of being heard to the assessee. The appeal was partly allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

This appeal at the instance of the assessee is directed against the order of ld. CIT (Exemptions), Bengaluru dated 3.9.2025 vide DIN & Notice No. ITBA/EXM/F/EXM45/2025-26/1080312385(1) rejecting the application for approval u/s. 80G of the Income Tax Act,1961 (in short” the Act”) filed in form 10AB dated 27/03/2025.

2. The assessee has raised the following grounds of appeal:-

3. Brief facts of the case as narrated by the ld. AR of the assessee are that the assessee in the present case is a Trust constituted by the deed of Trust dated 22/05/2006 along with first Supplementary Deed dated 20/08/2019 and second Supplementary Trust Deed dated 24/07/2020 and registered before the ld. Sub-Registrar, Basavakalyana. The assessee Trust was originally granted Registration u/s 12AA of the Act by the ld. CIT (Exemptions), Bangalore on 13/08/2020 vide Registration No. CIT Mohammediya Educational Trust, Bidar Order No. ITBA/EXM/S/12AA/2020-21/1027707438(1). Subsequently, the ld. CIT (Exemptions), Bangalore also granted registration u/s 12AB(1)(b) of the Act on 30/09/2024 vide Unique Registration No. (URN): AAFTM8420P24BL01 effective from AY 2023-24 to AY 2027-28.

3.1 Further, the assessee trust was also granted provisional approval by the ld. PCIT/CIT on 07/04/2022 under clause (iv) of first proviso to sub-section (5) of section 80G of the Act vide Unique Registration Number (URN): AAFTM8420PF20221 effective from 07/04/2022 to AY 2024-25. Thereafter, the assessee trust applied for final approval u/s. 80G of the Act on 30/03/2024 in Form No. 10AB. The ld. CIT(E), Bengaluru vide order dated 30/09/2024 had rejected the application in Form No.10AB dated 30/03/2024 filed for approval u/s. 80G of the Act by referring the provisions of section 80G(1) as well as section 80G(2) of the Act and observing that the receipts in the form of “fees collection” and “RTE fees” do not fall under the definition of donations and therefore provisions of section 80G of the Act are not found applicable in the case of the assessee.

3.2 The assessee trust after a gap of almost one year again filed a fresh application in Form No.10AB on 27/03/2025 for granting the approval u/s. 80G of the Act. The assessee was granted opportunity of being heard by the ld. CIT(E), Bengaluru. In the opinion of the ld. CIT(E), the assessee was mandated to submit necessary documents to prove the genuineness of the activities of the trust or institution and fulfillment of all the conditions laid down in clauses (i) to (v) of section 80G of the Act. In the present case, the assessee did not respond and failed to appear before the ld.CIT(E) and submit the necessary details/ documents as called for. On the other hand, the ld.CIT(E) also observed that on perusal of submissions and also heard on 18/08/2025, the assessee had earlier applied for regularization of the provisional approval u/s. 80G of the Act and the application was rejected vide order dated 30/09/2024. The rejection order has attended finality as no appeal was filed before the Hon’ble ITAT within limitation u/s. 253 of the Act. The proper course was to challenge that order in appeal. Further, ld. CIT(E) is also of the opinion that filing a fresh, identical application before the same authority and for the same purpose, amounts to collateral attack on a concluded decision and undermines the appellate framework recognized by law. As the assessee trust was also show caused for the rejection on the above basis with note sheet entry dated 18/08/2025 and no response had been submitted by assessee, accordingly, the application was held to be not maintainable as non-est and is thus void-ab-initio. In view of the application in Form No.10AB dated 27/03/2025 filed for approval u/s. 80G of the Act was cancelled by the ld. CIT(E).

4. Aggrieved by the order of ld. CIT(E), Bengaluru dated 03/09/2025, the assessee has filed the present appeal before this Tribunal. The assessee has also filed a paper book comprising of 262 pages containing therein the copy of the trust deed along with the supliment deeds, list of governing body, bank account details, copy of Form No. 10AC, rent agreement copy, copy of audit reports, supporting documents showing the activities of educational trust, copy of Form No.10AB, copy of audited financials as well as income tax returns along with the case law relied upon by the assessee.

5. Before us, the ld. A.R. of the assessee vehemently submitted that the ld. CIT(E), Bengaluru rejected the Form No. 10AB dated 27/03/2025 filed for approval u/s. 80G of the Act solely on the ground that filing a fresh, identical application before the same authority and for the same purpose amounts to collateral attack on a concluded decision and thus held that the application filed in Form No.10AB on 27/03/2025 is not maintainable as non-est and is thus void-ab-initio. Further, the ld. A.R. of the assessee vehemently submitted that the ld. CIT(E) erred in rejecting the application without providing adequate and effective opportunity of being heard which is a gross violation of principles of natural justice. Lastly, the ld. A.R. submitted that the assessee trust has complied with all the conditions as laid down under clauses (i) to (v) of section 80G of the Act and the genuineness of the activities of the trust had already been examined by the ld. CIT(E), Bengaluru at the time of granting registration u/s. 12AB of the Act and accordingly prayed that one more opportunity may be granted before the ld. CIT(E), Bengaluru to substantiate its claim with a direction to consider the Form No.10AB filed on 27/03/2025 for approval u/s. 80G of the Act.

6. The ld. D.R. on the other hand vehemently supported the order of ld. CIT(E), Bengaluru and submitted that as the assessee did not prefer the appeal against the rejection order dated 30/09/2024 passed by the ld. CIT(E), Bengaluru and the same attained the finality, the ld. CIT(E), Bengaluru has rightly treated the second application filed on 27/03/2025 as not maintainable and void-ab-initio. Further, the ld. D.R. submitted that during the course of proceedings before the ld. CIT(E), the assessee also did not respond and failed to appear before the ld. CIT(E), Bengaluru and submit the necessary details/ documents as called for and accordingly, the ld. CIT(E), Bengaluru had no option but to reject the application filed for approval u/s. 80G of the Act.

7. We have heard the rival submissions and perused the material available on record. It is an undisputed fact that the assessee trust is registered u/s. 12AB(1)(b) of the Act on 30/09/2024 vide Unique Registration No. (URN): AAFTM8420P24BL01 effective from AY 2023-24 to AY 2027-28. Thus, there is no dispute with regard to registration of the trust u/s. 12AB of the Act. Further, the assessee trust had also been granted provisional approval by the ld. PCIT/CIT on 07/04/2022 under clause (iv) of first proviso to sub-section (5) of section 80G of the Act vide Unique Registration Number (URN): AAFTM8420PF20221 effective from 07/04/2022 to AY 2024-25. Thereafter, the assessee trust applied for final approval u/s. 80G of the Act on 30/03/2024 in Form No. 10AB. The ld. CIT(E), Bengaluru vide order dated 30/09/2024 had rejected the application in Form No.10AB dated 30/03/2024 filed for approval u/s. 80G of the Act by referring provisions of section 80G(1) as well as section 80G(2) of the Act and hold that the receipts in the form of “fees collection” and “RTE fees” do not fall under the definition of donations and therefore the provisions of section 80G of the Act are not found applicable in the present case. Further, we also observed that the ld. CIT(E), Bengaluru vide order dated 27/03/2025 had rejected the application filed in Form No.10AB for approval u/s. 80G of the Act by observing that the assessee had earlier filed an application for regularization of provisional approval u/s. 80G of the Act and the application was rejected vide order dated 30/09/2024 and accordingly was of the view that the rejection order has attend finality as no appeal was filed before the ITAT within the limitation u/s. 253 of the Act. Therefore, the ld. CIT(E), Bengaluru hold that filing a fresh, identical application before the same authority and for the same purpose amounts to collateral attack on a concluded decision.

7.1 We are of the considered opinion that on receipt of an application for approval u/s. 80G of the Act, the ld. CIT(E) shall call for such documents or information or make such inquiries as he/she thinks necessary in order to satisfy himself/ herself about-

A. the genuineness of activities of such institution or fund; and

B. the fulfillment of all the conditions laid down in clauses (i) to (v).

After satisfying himself/ herself about the genuineness of the activities and fulfillment of all the conditions laid down in clauses (i) to (v), the ld. CIT(E) shall pass an order in writing granting approval for a period of 5 years or if he/ she is not so satisfied, pass an order in writing rejecting such application and also cancelling the approval after affording reasonable opportunity of being heard. Thus, we are of the considered opinion that there is no such bar/restriction under the Act on the assessee trust in filing the application in form 10AB for granting approval u/s. 80G of the Act before the same Authority subsequently if the assessee trust satisfy all the conditions for granting approval u/s. 80G of the Act. The ld. CIT(E) on receipt of the application on each occasion has to satisfy himself/herself only about the genuineness of the activities of the trust and fulfillment of all the conditions laid down in clauses (i) to (v) of Section 80G(5) of the Act. Merely because, the assessee trust had not preferred an appeal against the earlier order dated 30/09/2024 passed by ld.CIT(E), the assessee trust can not be barred from exercising its statutory right subsequently before the same Authority if it fulfills the conditions as laid down for approval u/s. 80G of the Act. The only consequence of subsequent filing of application before the ld.CIT(E) will be the effective date of granting the approval which will ultimately be the date of the application. Thus, while entertaining the application in Form 10AB filed on 27/03/2025, the ld. CIT(E) cannot grant the approval effective from the date of original application i.e. 30/03/2024. Therefore, in our considered opinion treating the application filed in Form No.10AB on 27/03/2025 to be not maintainable as non-est and void-ab-initio is highly unjustified and bad in law as there are no such provisions under the Act that once the application for approval is rejected then the assessee can never apply for approval before the same Authority for ever.

7.2 Further, on going through the order of ld.CIT(E), Bengaluru dated 30/09/2024, we noticed that the ld.CIT(E), Bengaluru had rejected the application on the sole ground that the receipts in the form of “fess collection” and “RTE fees” do not fall under the definitions of donations as defined in section 80G(2) of the Act and therefore, held that provisions of section 80G of the Act are not found applicable in the present case. Although the assessee trust had not preferred any appeal against the said Order, however we are of the considered opinion that the ld.CIT(E) without application of mind and more particularly without properly understanding the fact of the case had completely misdirected herself in holding that provisions of section 80G of the Act are applicable in the cases of receipts in the form of donations to certain funds as defined in section 80G(2) of the Act by reproducing some portion of sub-section(1) and sub-section(2) of section 80G of the Act. In our considered opinion the ld.CIT(E), Bengaluru had decided the issue from the perspective of donor who claims the deduction u/s. 80G of the Act (Chapter- VIA) from gross total income after paying donations and not from the perspective of the institutions/ trust being the donee, who is seeking approval u/s. 80G of the Act. Further, section 80G(1) of the Act affirm that in computing the total income of the assessee there should be deducted, in accordance with and subject to the provisions of this section. Sub­section (2) of 80G of the Act specify the sum referred to in sub-section(1), and therefore we are of the considered opinion that while considering the application of the assessee trust for granting of approval u/s. 80G(5) of the Act, the ld.CIT(E) on a wrong stand point had relied upon and reproduced the provisions of section 80G(1) of the Act and 80G(2) of the Act, which in our view is from the perspective of donor claiming deduction u/s. 80G of the Act. However, the assessee trust had applied for approval u/s. 80G(5) of the Act and therefore the provisions of section 80G(1) as well as 80G(2) of the Act are not applicable in the case of the assessee. In our view for the purposes of granting approval u/s. 80G of the Act, the relevant provisions are 80G(5) of the Act and not section 80G(1) and section 80G(2) of the Act.

7.3 In the present case, we observed that on the one hand the ld.CIT(E), Bengaluru contended that the assessee trust has not responded and failed to appear before the ld.CIT(E) and submit the necessary details/ documents as called for, however on the other hand also stated that he also heard the assessee on 18/08/2025 & perused the submissions of the assessee which itself is contradictory. However, we also noticed that in response to show cause notice, the assessee did not response. This being so, in the interest of justice, equity and fair play and as requested by ld. A.R. of the assessee, we deem it fit and proper to remit the entire issue to the file of ld.CIT(E), Bengaluru with a direction to consider the application filed in Form No.10AB on 27/03/2025 for approval u/s. 80G of the Act and decide in accordance with law as in our opinion there is no restriction under the Act on the assessee in applying the approval subsequently if the assessee able to demonstrate before the ld.CIT(E) about the fulfillment of conditions as required for granting the approval u/s. 80G(5) of Act. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. It is ordered accordingly.

8. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

Order pronounced in the open court on 30th Apr, 2026