Help Foundation Vs CIT (E) (ITAT Jodhpur)
Jodhpur ITAT: Cancellation of Provisional U/s12A/80G Registration Cannot Automatically Follow Rejection of Final Registration-Specific Notice and Opportunity Required
The Jodhpur ITAT set aside the CIT(E)’s orders rejecting final registration under Section 12AB and approval under Section 80G, while also directing fresh consideration of the cancellation of the Foundation’s existing provisional registration and provisional 80G approval.
The CIT(E) had rejected Section 12AB registration mainly on two grounds: first, the Foundation was not registered under the Rajasthan Public Trust Act, 1959; and secondly, sufficient documents had allegedly not been furnished to verify the genuineness of its activities. The deficiencies noted included details of income and expenditure, supporting bills and vouchers, grants, TDS, payments to persons specified under Section 13(3), bank transactions, accounts and documents concerning the premises. The CIT(E) simultaneously cancelled the provisional registration granted on 31.05.2024.
Since Section 12AB registration had been rejected, the CIT(E) consequentially rejected the Section 80G application and also cancelled the provisional 80G approval granted on 11.06.2024.
Before the Tribunal, the assessee pointed out that it had subsequently obtained registration under the Rajasthan Public Trust Act. It also contended that compliance with another law is relevant under Section 12AB only where such compliance is material for achieving the objects of the trust or institution. According to the assessee, the CIT(E) had not demonstrated how absence of State registration affected its charitable objects or rendered its activities non-genuine.
An important additional contention concerned cancellation of the existing provisional registrations. The assessee argued that the notices issued by the CIT(E) never specifically proposed cancellation of the provisional Section 12A registration or Section 80G approval. Rejection of an application for final registration and cancellation of an already existing provisional registration were distinct actions, and cancellation could not automatically follow without independent consideration and a specific opportunity of hearing.
The ITAT found that the subsequent State registration as well as the disputed factual material concerning accounts, bank transactions, vouchers, declarations and activities required examination by the CIT(E). It therefore granted the assessee one more effective opportunity and restored both the Section 12AB and Section 80G applications for fresh adjudication.
Significantly, on cancellation of the provisional registrations, the Tribunal specifically directed that the issue must be decided afresh only after issuing a specific notice to the assessee and granting reasonable opportunity to respond to the proposed cancellation. Separate, reasoned orders were directed to be passed. The Tribunal expressed no opinion on ultimate eligibility under Sections 12AB or 80G.
Cases Discussed
- Trehan Seva Bharti Charitable Trust vs. CIT(E), Jaipur (ITAT Jaipur), ITA Nos. 1027 & 1028/JPR/2024
FULL TEXT OF THE ORDER OF ITAT JODHPUR
These two appeals filed by the assessee arise from two separate orders dated 11.06.2025 passed by the learned Commissioner of Income Tax (Exemption), Jaipur [“CIT(E)”] in Form No. 10AD. Since both the appeals concern the same assessee, arise from a common set of facts and involve interconnected issues relating to registration under section 12AB and approval under section 80G of the Income Tax Act, 1961 [“the Act”], they were heard together and are being disposed of by this common order.
2. The grounds raised by the assessee in ITA No. 646/Jodh/2025 are:
Ground No 1
The Learned CIT (Exemption), Jaipur, erred in law and on facts in rejecting the Appellant’s application for final registration under section 12AB, ignoring the fact that the Appellant had already initiated registration under the Rajasthan Public Trust Act, 1959, and submitted proof of the pending application.
Ground No.2
The CIT(E) failed to appreciate the ratio laid down in Trehan Seva Bharti Charitable Trust vs. CIT(E), Jaipur (ITA Nos. 1027 & 1028/JPR/2024), wherein the Hon’ble ITAT Jaipur held that registration under the RPT Act is not a precondition for granting registration under section 12AB, unless it is materially linked to the objects of the trust.
Ground No. 3
That the Learned CIT (Exemption) erred in not providing adequate and reasonable opportunity to the Appellant to furnish the Registration under RPT Act once issued & to prepare documents in specified format as desired in query letter, and the order passed is therefore bad in law and deserves to be quashed.
Ground No. 4
The Ld. CIT(E) has further erred on facts and in law in cancelling the provisional registration granted by CIT u/s. 12(1) (ac)(vi) of IT Act, 1961.
Ground No 5
The appellant prays for leave to add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal.
3. The grounds raised by the assessee in ITA No. 647/Jodh/2025 are:
Ground No 1
The Learned CIT (Exemption), Jaipur, erred in law and on facts in rejecting the Appellant’s application for final registration under section 12AB & 80G, ignoring the fact that the Appellant had already initiated registration under the Rajasthan Public Trust Act, 1959, and submitted proof of the pending application.
Ground No.2
The CIT(E) failed to appreciate the ratio laid down in Trehan Seva Bharti Charitable Trust vs. CIT(E), Jaipur (ITA Nos. 1027 & 1028/JPR/2024), wherein the Hon’ble ITAT Jaipur held that registration under the RPT Act is not a precondition for granting registration under section 12AB, unless it is materially linked to the objects of the trust.
Ground No. 3
That the Learned CIT (Exemption) erred in not providing adequate and reasonable opportunity to the Appellant to furnish the Registration under RPT Act once issued & to prepare documents in specified format as desired in query letter, and the order passed is therefore bad in law and deserves to be quashed.
Ground No. 4
The Ld. CIT(E) has further erred on facts and in law in cancelling the provisional registration granted by CIT u/s. 80G of IT Act, 1961.
Ground No 5
The appellant prays for leave to add, to amend, to delete, or modify the all or any grounds of appeal on or before the hearing of appeal.
Facts of the Case
4. The assessee filed an online application on 30.11.2024 in Form No. 10AB seeking regular registration under section 12A(1)(ac)(iii) of the Act. For examination of the application and verification of the genuineness of the assessee’s activities, the CIT(E) issued a questionnaire dated 18.02.2025, requiring compliance by 05.03.2025. The assessee furnished a reply, which was considered by the CIT(E) to be a partial compliance. Thereafter, a show-cause notice dated 01.05.2025 was issued, requiring compliance by 08.05.2025. The assessee furnished its reply on 08.05.2025.
5. The CIT(E) observed that the assessee was not registered under the Rajasthan Public Trust Act, 1959. According to the CIT(E), such registration was mandatory and its absence constituted non-compliance with another law material for achieving the objects of the assessee, within the meaning of section 12AB(1)(b)(i)(B) of the Act.
6. The CIT(E) further recorded that the assessee had not furnished a detailed note concerning its income and expenditure account, sources of income, supporting bills and vouchers for expenditure, details of grants and tax deducted at source and details of payments made to persons specified under section 13(3) of the Act. The CIT(E) also recorded that the declaration relating to section 13(1)(c), details of bank transactions exceeding Rs.20,000/-, certified accounts from inception, provisional accounts for the current year and complete supporting documents concerning the premises occupied under the rent agreement had not been furnished in the prescribed manner.
7. On the basis of the aforesaid deficiencies, the CIT(E) concluded that the activities of the assessee were not verifiable and that the genuineness of its activities could not be established. Consequently, by the impugned order dated 11.06.2025, the application for registration under section 12AB was rejected on the grounds of non-registration under the Rajasthan Public Trust Act, 1959 and failure to establish the genuineness of the activities. By the same order, the provisional registration granted to the assessee under section 12A(1)(ac)(vi) on 31.05.2024 was also cancelled.
8. The assessee had also filed an online application on 30.11.2024 in Form No. 10AB seeking approval under section 80G(5)(iii) of the Act. In connection with the said application, the CIT(E) issued a questionnaire dated 18.02.2025, requiring compliance by 05.03.2025. The order records that a reply was furnished by the assessee and examined.
9. The CIT(E) observed that registration under section 12A or section 12AB was a precondition for granting approval under section 80G. Since the application of the assessee for registration under section 12AB had been rejected by the separate order of even date the CIT(E) held that the application for approval under section 80G could not be accepted. The CIT(E) also referred to the objections concerning non-registration under the Rajasthan Public Trust Act, 1959 and non-verification of the genuineness of the activities. Accordingly, by order dated 11.06.2025, the application for approval under section 80G was rejected. The provisional approval granted under clause (iv) of the first proviso to section 80G(5) on 11.06.2024 was also cancelled.
10. Aggrieved by the orders of learned CIT(E), the assessee is now in appeal before us.
11. The learned Authorised Representative (AR) reiterated the facts and by way of written submission, contended that the CIT(E) was not justified in treating registration under the Rajasthan Public Trust Act, 1959 as an absolute and mandatory precondition for granting registration under section 12AB of the Act. He submitted that, during the proceedings before the CIT(E), the assessee had already initiated the process of registration under the Rajasthan Public Trust Act, 1959 and had placed a copy of the application before the CIT(E). The assessee was also duly registered as a society under the Rajasthan Societies Registration Act, 1958, and had furnished the registration certificate and its bye-laws in response to the notices issued by the CIT(E).
12. The learned AR submitted that compliance with any other law for the time being in force is relevant under section 12AB(1) only to the extent such compliance is material for achieving the objects of the trust or institution. According to him, the CIT(E) had not recorded any specific finding as to how the absence of registration under the Rajasthan Public Trust Act, 1959 materially affected the achievement of the assessee’s objects or rendered its activities non-genuine.
13. The learned AR further submitted that the absence of registration under the Rajasthan Public Trust Act, 1959 was, in any event, a curable deficiency. He stated that, subsequent to the passing of the impugned orders, the assessee had obtained registration under the Rajasthan Public Trust Act, 1959. Therefore, the principal objection raised by the CIT(E) no longer survived. He requested that the subsequent registration be taken into consideration while deciding the applications under sections 12AB and 80G.
14. As regards the finding concerning the genuineness of activities, the learned AR submitted that the enquiry at the stage of registration under section 12AB is confined to examining the charitable nature of the objects, the prima facie genuineness of the activities and compliance with such other laws as may be material for achieving those objects. According to him, proceedings for registration could not be converted into a detailed assessment-like scrutiny of every receipt, expenditure, voucher and application of income.
15. The learned AR submitted that the assessee had substantially complied with the notices issued by the CIT(E). The assessee had furnished, inter alia, its bye-laws, bank statements, rent agreement, proof of ownership of the rented premises, a copy of the application for registration under the Rajasthan Public Trust Act, 1959, and a declaration that no member would receive any profit or benefit from the society. Notwithstanding the production of these documents, the CIT(E) proceeded on the basis that the relevant declaration, bank details and ownership documents had not been furnished.
16. It was further submitted that, even if some information was not furnished in the precise format required by the CIT(E), the deficiency was procedural and capable of being cured. The learned AR undertook that, if one more opportunity was granted, the assessee would furnish the complete accounts, bank details, supporting bills and vouchers, declarations and all other documents required for verification of its objects and activities.
17. Regarding the cancellation of the provisional registration under section 12A and provisional approval under section 80G, the learned AR submitted that the notices issued by the CIT(E) did not contain any specific proposal to cancel the subsisting provisional registration or approval. The notices were confined to the applications for regular registration and final approval. The assessee was, therefore, not granted a specific opportunity to meet the proposed cancellation.
18. The learned AR contended that rejection of an application for regular registration and cancellation of an existing provisional registration were distinct actions. Cancellation of the provisional registration or approval could not follow automatically merely because the application for regular registration or final approval had been rejected. Such action required an independent examination and a specific opportunity of hearing.
19. In relation to approval under section 80G, the learned AR submitted that its rejection was consequential to the rejection of the application under section 12AB. He accordingly prayed that registration under section 12AB and consequential approval under section 80G be granted. In the alternative, he requested that both matters be restored to the file of the CIT(E) for fresh consideration after taking into account the subsequent registration under the Rajasthan Public Trust Act, 1959 and after granting the assessee a reasonable opportunity to furnish the requisite documents and explanations.
20. The learned Departmental Representative (DR) relied upon the findings recorded by the CIT(E) in the impugned orders. The learned DR, however, raised no objection to restoring the applications for registration under section 12AB and approval under section 80G to the file of the CIT(E) for fresh consideration in accordance with law, after granting the assessee a reasonable opportunity of being heard.
21. We have considered the rival submissions and perused the material available on record. The application for registration under section 12AB was rejected by the CIT(E) on two principal grounds. The first ground was the absence of registration under the Rajasthan Public Trust Act, 1959. The second ground was the failure of the assessee to furnish complete particulars and supporting documents to enable verification of the genuineness of its activities. The application for approval under section 80G was rejected substantially as a consequence of the rejection of the application under section 12AB. The provisional registration and provisional approval were also cancelled through the respective impugned orders.
22. Before us, the learned AR has stated that, subsequent to the passing of the impugned orders, the assessee has obtained registration under the Rajasthan Public Trust Act, 1959. The said registration was admittedly not available for examination before the CIT(E) when the impugned orders were passed. Its authenticity, effective date and relevance to the applications under sections 12AB and 80G necessarily require verification by the CIT(E).
23. We also find that the CIT(E) has recorded several deficiencies relating to the accounts, bank transactions, bills and vouchers, declarations, source of income, payments to specified persons and documents concerning the premises from which the assessee was operating. The assessee, on the other hand, claims that substantial information was furnished and has undertaken to submit the entire remaining material in the manner required by the CIT(E). These are factual matters that require examination with reference to the original documents and the responses furnished by the assessee.
24. In these circumstances, and having regard to the subsequent registration stated to have been obtained under the Rajasthan Public Trust Act, 1959, we consider it appropriate to provide the assessee one more effective opportunity to place the complete material before the CIT(E). The learned DR has also raised no objection to restoration of the matters.
25. Accordingly, the impugned orders dated 11.06.2025 are set aside and the applications for registration under section 12AB and approval under section 80G are restored to the file of the CIT(E) for fresh adjudication in accordance with law. The assessee shall furnish the registration certificate obtained under the Rajasthan Public Trust Act, 1959, together with complete accounts, bank statements, supporting bills and vouchers, declarations and such other documents as may be required by the CIT(E) for verification of the objects and genuineness of its activities.
26. The CIT(E) shall verify the documents so furnished and examine the applications afresh in accordance with the applicable statutory provisions. The issue concerning cancellation of the provisional registration under section 12A and provisional approval under section 80G shall also be decided afresh after issuing a specific notice to the assessee and granting it a reasonable opportunity to respond to the proposed action. The CIT(E) shall pass separate, reasoned orders dealing with the applications under sections 12AB and 80G and the issues concerning the respective provisional registration and approval.
27. The assessee is directed to cooperate with the proceedings and furnish the requisite information within the time allowed by the CIT(E). The CIT(E) shall afford a reasonable opportunity of being heard to the assessee before passing the fresh orders. We have not expressed any opinion on the merits of the eligibility of the assessee for registration under section 12AB or approval under section 80G, and all issues are left open for adjudication by the CIT(E).
28. In view of the above, Ground Nos. 1 to 4 in both appeals are allowed for statistical purposes. Ground No. 5 in each appeal is general in nature and requires no separate adjudication.
29. In the result, ITA No. 646/Jodh/2025 and ITA No. 647/Jodh/2025 filed by the assessee are allowed for statistical purposes.
Order pronounced in open court on 07/08/2026.
