ITAT Directs Section 12AB Renewal as PCIT Exceeded Three-Year Inquiry Scope

By CA Sandeep Kanoi Income Tax Judiciary August 26, 2026

TaxGuru Citation: 2026 taxguru.in 11489
Case Name: Lakhmi Chand Charitable Society Vs PCIT (ITAT Delhi)
Appeal Number: Only available for paid members
Date of Judgement/Order: Only available for paid members
Related Assessment Year: NA
Courts: All ITAT, ITAT Delhi

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Lakhmi Chand Charitable Society Vs PCIT (ITAT Delhi)

Summary: The assessee, Lakhmi Chand Charitable Society, appealed against the order dated 31.03.2026 of the Principal Commissioner of Income-tax (Central), Delhi-3 rejecting its Form 10AB application for renewal of registration under Section 12A(1)(ac)(ii) and consequently cancelling registration granted under Section 80G(5) of the Income-tax Act. The Society, registered under the Society Registration Act, 1860 since 18.09.1996, had obtained registration under Section 12A on 22.08.1997 and approval under Section 80G on 02.06.2008. Under the new registration regime, it was granted registration under Section 12(1)(ac) for 2022-23 to 2026-27 and corresponding Section 80G approval. Its Form 10AB application was filed on 19.09.2025. The Competent Authority rejected the application after relying substantially on allegations and material arising from search and investigation proceedings relating to FY 2014-15 to FY 2020-21. The assessee contended, inter alia, that Section 12AB(1)(b) confines the renewal inquiry to genuineness of activities and compliance with other material laws, that the prescribed three-year period under Rule 17A(2)(g) was exceeded, and that matters forming part of earlier cancellation proceedings had already been considered by the Tribunal. The Department contended that the earlier Tribunal order was under challenge and that the Competent Authority could examine past conduct while determining genuineness. The ITAT Delhi held that the scope of inquiry under Section 12AB(1)(b) concerns whether the activities are genuine and whether the applicant has complied with other material laws. It noted that the notice dated 26.12.2025 sought information for the last three years and that the assessee had furnished responses and supporting evidence, but the impugned order did not materially examine those submissions and instead relied on search and investigation material concerning earlier periods. The Tribunal also considered Rule 17A(2)(g), which refers to annual accounts for not more than three years immediately preceding the year in which the application is made. It observed that the assessee had held registration under the new regime for AY 2022-23 to AY 2026-27 and was seeking renewal, and concluded that the inquiry could not extend beyond the immediately preceding three years for calling for information in the renewal proceedings. The Tribunal further noted that the assessment proceedings for FY 2021-22 did not record adverse findings concerning specified violations, genuineness of activities or violation of material law. It also noted that the communication dated 13.03.2026 referred to “Meenakshi Foundation”, an entity wholly unconnected with the assessee, and treated this as demonstrating non-application of mind. The Tribunal held the impugned order unsustainable in law, allowed the assessee’s appeal and directed the Competent Authority to grant registration by allowing the Form 10AB application and consequently grant approval under Section 80G(5) within four weeks from receipt of the order.