Shishu Kalyan Educational Society Vs CIT(Exemption) (ITAT Delhi)
The Delhi Income Tax Appellate Tribunal considered an appeal against the order of the Commissioner of Income Tax (Exemptions), Chandigarh dated 19.02.2026 rejecting the assessee society’s application for renewal of registration under Section 12AB filed in Form No. 10AB under Section 12A(1)(ac)(ii) of the Income-tax Act, 1961.
The assessee society, established on 23.01.2009 for educational activities, stated that its activities fell within the definition of charitable purpose under Section 2(15). It had earlier been granted registration under Section 12AA and thereafter under Section 12AB. Along with its renewal application dated 26.09.2025, it furnished its memorandum of association, financial statements and other supporting records.
During examination of the application, the CIT (Exemptions) observed from the financial statements that substantial amounts had been advanced to various persons and entities, including persons closely connected with the society. A notice dated 06.02.2026 was issued seeking details regarding the nature, purpose and justification of the advances. The assessee replied that the loans and advances had since been recovered and produced ledger accounts. However, the CIT (Exemptions) noted that the assessee had not furnished confirmations from the parties, loan agreements, board resolutions or documentary evidence establishing the purpose, necessity and terms of the advances. Holding that such advances amounted to diversion of charitable funds for non-charitable purposes, the CIT (Exemptions) rejected the renewal application.
