Srinivasan Charitable And Educational Trust Vs PCIT (ITAT Chennai)
SEO Title: ITAT Chennai Restores 12AB Renewal Application for Fresh Merits Review
SEO Description: ITAT Chennai sets aside rejection of 12AB renewal and 80G approval applications, directing the PCIT to reconsider them after restored registration.
Summary: The assessee is a charitable and educational trust which had registration under the erstwhile section 12AA from 18.04.2007 and was subsequently granted registration under section 12A(1)(ac)(i) on 24.09.2021, valid from AY 2022-23 to AY 2026-27. The assessee filed an application dated 26.09.2025 in Form No. 10AB seeking continuation of registration under section 12A(1)(ac)(ii) of the Income-tax Act, 1961. The PCIT rejected the application on the ground that the earlier section 12AA registration had been cancelled by order dated 11.11.2025 and, consequently, the registration granted on 24.09.2021 was treated as having no surviving basis.
Before the Tribunal, the assessee submitted that the very cancellation order relied upon by the PCIT had subsequently been quashed by the Coordinate Bench in its order dated 15.07.2026 in ITA No.3318/Chny/2025, which restored the assessee’s registration under sections 12A/12AB. The Departmental Representative supported the PCIT’s order, contending that the assessee did not have a valid registration and had not carried out charitable activities.
The Tribunal noted that the Coordinate Bench had already quashed the cancellation of registration and restored the assessee’s registration after holding that cancellation could not be sustained merely on the allegation of collection of capitation fees based on loose sheets, particularly when the activities of the trust, viewed holistically, were found to be genuine and in accordance with its objects. Consequently, the foundation on which the PCIT rejected the application no longer survived. The Tribunal held that the application under section 12A(1)(ac)(ii) could not be rejected on the ground of absence of a subsisting registration and directed the PCIT to consider the application afresh on merits in accordance with law, taking into account the Tribunal’s order dated 15.07.2026 and the revived registration dated 24.09.2021, after providing the assessee a reasonable opportunity of being heard.
The rejection of approval under section 80G was also treated as consequential to the absence of valid registration. Accordingly, that appeal too was restored to the PCIT for fresh consideration with similar directions. Both appeals were therefore allowed for statistical purposes. The order was pronounced on 19.08.2026 at Chennai.
List of Cases Discussed / Relied Upon
- Coordinate Bench of ITAT Chennai, ITA No.3318/Chny/2025, dated 15.07.2026 — quashed the PCIT’s order cancelling the assessee-trust’s registration under section 12AA and restored its registration under sections 12A/12AB; this restored registration formed the basis for directing fresh consideration of the present renewal application.
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Chennai ITAT Restores 12AB & 80G Renewal Applications: Once Cancellation of Trust Registration Is Quashed, Foundation for Rejecting Renewal Ceases to Exist
In Srinivasan Charitable and Educational Trust v. PCIT (Central)-2, ITA Nos. 2330 & 2331/Chny/2026 (AY 2025-26), order dated 19.08.2026, the Chennai ITAT considered rejection of the Trust’s applications for continuation/renewal of registration under Section 12AB and approval under Section 80G. The Trust had originally obtained registration under Section 12AA on 18.04.2007 and subsequently registration under the new regime on 24.09.2021, valid from AY 2022-23 to AY 2026-27.
The Trust applied in Form 10AB on 26.09.2025 for continuation of registration. The PCIT rejected the application because the original Section 12AA registration had meanwhile been cancelled with effect from AY 2012-13 onwards. Consequently, according to the PCIT, the registration granted in 2021 also became non-existent for want of a valid underlying registration, leaving nothing capable of being renewed or extended.
However, a crucial subsequent development changed the position. In an earlier appeal of the same Trust, the Chennai ITAT by order dated 15.07.2026 in ITA No. 3318/Chny/2025 had quashed the cancellation of registration and restored the Trust’s Section 12A/12AB registration. The Tribunal had held that registration could not be cancelled merely on allegations of collection of capitation fees from a few students based on loose sheets, when viewed holistically the Trust’s activities were genuine and in accordance with its objects. Any addition arising from seized material could instead be dealt with in assessment proceedings.
In the present proceedings, the ITAT therefore held that the very foundation on which the PCIT rejected the renewal application had ceased to exist. Once the earlier cancellation was quashed and the registration restored, the PCIT could no longer reject Form 10AB merely on the premise that there was no subsisting registration capable of renewal.
The Tribunal accordingly set aside the rejection and restored the Section 12AB application to the PCIT for fresh consideration on merits, taking into account the restored registration and the other statutory requirements. Importantly, the ITAT did not itself grant renewal, but directed the PCIT to reconsider the application after giving reasonable opportunity of hearing.
Since the rejection of Section 80G approval was consequential to the absence of valid Section 12A/12AB registration, that rejection was also set aside and remanded to the PCIT for fresh consideration. Both appeals were allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
These appeals by the assessee are against the separate orders of the Principal Commissioner of Income Tax (Central), Chennai-2, (in short “PCIT”) both dated 24.03.2026 rejecting the application made by the assessee seeking registration u/s. 12A of the Income-tax Act, 1961 (in short “the Act”) and approval u/s. 80G of the Act.
2. The assessee is a charitable and educational trust having registration under erstwhile regime u/s. 12AA of the Act dated 18.04.2007. The assessee was granted registration under new regime u/s. 12A(1)(ac)(i) of the Act on 24.09.2021 from AY 2022-23 to 2026-27. Subsequently, the assessee made an application for renewal of registration on 26.09.2025. The PCIT, Central Circle rejected the application made by the assessee by holding that:
“6. On examination of the case records, the submissions and the case back records, it is noticed that the assessee trust has filed the present application dated 26/09/2025 in Form 10AB under Rule 17A seeking extension of registration under sub-clause (ii) of clause (ac) of sub- section (1) of section 12A of the Income Tax Act, 1961. On examination of the back records of the case, it is noticed that the approval for order for registration in Form 10AC with URN AAGTS1793NE20064 dated 24.09.2021 by PCIT, CPC, Bengaluru is also subject-matter of the show cause issued by this office dated 06.02.2026 vide DIN No. ITBA/EXM/F/EXM43/2025-26/1085702457(1).
7. Therefore, in view of the detailed speaking order dated 11.11.2025 cancelling the registration granted u/s 12AA w.e.f. 01.04.2011, i.e. AY 2012-13 onwards, it is clear that there exists no cause for granting extension by PCIT, CPC as that order emanates out of an order that is non-est. Simply put, the extension by CPC does not have a base order from which the extension is granted. Hence, the registration granted under section 12A(1)(ac) (i) of the Income-tax Act 1961 vide proceedings of the Pr. CIT (CPC) in Form 10AC bearing URN AAGTS1793NE20064 on 24.09.2021 valid for AYs 2022-23 to 2026-27 stands revoked. Therefore, the assessee does not have an existing order in operation granting recognition to the trust u/s 12AA or 12AB as on the date of these proceedings. Hence, the application for extension of registration is rejected now for the reasons detailed above.
8. Under the facts and circumstances of the case and by virtue of provisions as above, the application filed by the applicant on 26/09/2025 in Form 10AB u/s.12A(1)(ac)(ii) seeking registration us/12AB of the Act is rejected.”
The assessee is in appeal before the Tribunal against the order of the PCIT.
3. The Ld. Authorized Representative (AR) of the assessee submitted that the sole reason for rejection of the renewal application is that the original registration dated 18.04.2007 was cancelled by the PCIT and that the extension by CPC granted on 24.09.2021 was also cancelled consequently.
The Ld. AR further submitted that the assessee filed an appeal against the order cancelling the registration before the Coordinate Bench of the Tribunal and that the Tribunal vide order dated 15.07.2026 (ITA No.3318/Chny/2025) has reversed the cancellation by holding that:
years.
“57. In light of the above discussed facts and circumstances and the decisions (supra) which we find are squarely applicable on the facts of the instant case, we hold that Ld. PCIT erred in cancelling the registration granted to the assessee-Trust u/s. 12A of the Act solely on the allegation of alleged collection of capitation fees during a specified period from few students on the basis of loose sheets (as discussed earlier), even when overall and holistically the activities of the assessee-Trust are found to be genuine and are in accordance with the objects of the trust. As observed earlier, addition, if any, emanating out of the seized record can be taken care by the AO in the assessment proceedings. We thus quash the order passed by the Ld. PCIT cancelling registration of the assessee-Trust under Section 12AA(3) of the Act and restore the registration of the assessee- Trust u/s 12A/12AB of the Act.”
4. Accordingly, the ld. AR submitted that when the original registration gets restored in the light of the above order of the Tribunal, the extension granted automatically u/s. 12A(1)(ac)(i) of the Act also gets restored. The ld. AR therefore submitted that the denial of extension of registration on the said ground therefore cannot be sustained.
5. The Ld. Departmental Representative (DR), on the other hand, vehemently argued that the reason for PCIT to reject the renewal is that the assessee has not carried out charitable activities and does not hold a valid registration u/s. 12A of the Act. Accordingly, the Ld. DR supported the order of the PCIT.
6. We have heard the rival submissions and perused the material available on record. The undisputed facts are that the assessee-Trust was granted registration under the erstwhile provisions of section 12AA on 18.04.2007 and subsequently granted registration under section 12A(1)(ac)(i) of the Act on 24.09.2021, valid from AY 2022-23 to AY 2026-27. The assessee thereafter filed the present application dated 26.09.2025 in Form No.10AB seeking continuation of registration under section 12A(1)(ac)(ii) of the Act. We notice that the sole basis for rejection was that the registration granted under section 12AA had been cancelled by the PCIT vide order dated 11.11.2025 and, consequently, the registration granted under section 12A(1)(ac)(i) on 24.09.2021 was also treated as having no surviving basis. Thus, according to the PCIT, there was no subsisting registration which could be extended. However, this very foundation of the impugned order no longer survives considering that the Coordinate Bench of the Tribunal, vide its order dated 15.07.2026 in ITA No.3318/Chny/2025, has quashed the order dated 11.11.2025 cancelling the registration and has restored the registration of the assessee-Trust under section 12A/12AB of the Act. The coordinate bench, after considering the activities of the assessee-Trust and the material relied upon by the PCIT, has held that the registration could not have been cancelled merely on the basis of the alleged collection of capitation fees and that the activities of the assessee-Trust, viewed holistically, were genuine and in accordance with its objects. Thus, the very order which formed the basis for treating the registration granted on 24.09.2021 as having been revoked has been set aside. In these circumstances, we are of the view that the PCIT could not have rejected the assessee’s application on the premise that there was no subsisting registration for the reason that once the cancellation of the earlier registration has been quashed by the Tribunal and the registration has been restored, the consequential basis adopted by the PCIT for rejecting the application also ceases to exist. Accordingly in our view the application filed by the assessee under section 12A(1)(ac)(ii) cannot be rejected on the said ground and that the application requires consideration on the basis of the registration as restored by the Tribunal along with other requirements prescribed under the Act. We, therefore, set aside the impugned order and restore the impugned application back to the file of the PCIT for fresh consideration on merits in accordance with law, considering the order of the Tribunal dated 15.07.2026 whereby the existing registration dated 24.09.2021 is revived. Needless to say that the assessee be given a reasonable opportunity of being heard.
7. With regard to rejection of approval u/s.80G of the Act, we notice that the same is consequential and rejected on the premise regarding the absence of a valid registration under section 12A/12AB of the Act. Considering that we have restored the appeal pertaining to denial of registration u/s.12AB back to the file of the PCIT for fresh consideration on merits in accordance with law, the appeal against rejection of approval u/s.80G also is restored back to the PCIT with similar directions. It is ordered accordingly.
8. In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced on 19th day of August, 2026 at Chennai.
