Case Law Details
Chandigarh Educational Society Vs DCIT/ACIT (ITAT Chandigarh)
The ITAT Chandigarh allowed the assessee’s appeals for statistical purposes and remanded the matter relating to approval under Section 80G of the Income-tax Act, 1961, to the competent authority for fresh consideration.
The assessee, a charitable institution claiming to be engaged in charitable activities, had applied for approval under Section 80G. The Principal Commissioner of Income Tax (Central), Gurgaon rejected the application primarily on the ground that the assessee’s application for registration under Section 12AB had already been rejected by an order dated 26.12.2025. The authority held that the absence of registration under Section 12AB meant that one of the essential conditions for grant of approval under Section 80G remained unfulfilled.
Before the Tribunal, the assessee submitted that the rejection of approval under Section 80G was solely based on the denial of registration under Section 12AB. It was pointed out that a Coordinate Bench of the Tribunal, by order dated 21.04.2026 in the assessee’s own case, had already directed the Revenue authorities to grant registration under Section 12AB.
The Tribunal noted that the primary basis for rejecting the Section 80G application no longer survived because registration under Section 12AB had subsequently been directed to be granted. Therefore, the impugned order rejecting approval under Section 80G could not be sustained to that extent.
However, the Tribunal accepted the Revenue’s contention that the competent authority had not independently examined whether the assessee fulfilled the other statutory requirements prescribed under Section 80G. Since the application had been rejected at the threshold due to the absence of Section 12AB registration, there had been no occasion to verify compliance with the remaining conditions.
The Tribunal further observed that the issue concerning the charitable nature of the assessee and its entitlement to registration under Section 12AB stood concluded by the earlier Tribunal order and did not require reconsideration. Accordingly, the matter was restored to the competent authority to examine afresh whether the remaining statutory conditions under Section 80G were satisfied, after providing adequate opportunity of hearing and passing a speaking order. The findings were directed to apply equally to the connected appeal involving identical facts and issues.
FULL TEXT OF THE ORDER OF ITAT CHANDIGARH
The present two appeals have been filed by the assessee feeling aggrieved by the separate orders dated 26.12.2025 passed by the ld. Pr. Commissioner of Income Tax (Central) Gurgaon) [in short ‘the PCIT’] on the grounds mentioned herein below :
ITA No. 406/CHD/2026 :
1. On the facts and circumstances of the case, the order passed by PCIT(C),Gurgaon is bad both in the eye of law and against the circumstances of the case.
2. That the observations recorded by the CIT(C) in the order rejecting registration under section 12AB have already been challenged before the Hon’ble ITAT, and the findings so recorded are erroneous and disputed; consequently, the rejection of approval under section 80G(5), being solely based on such impugned observations, is also bad in law and unsustainable.
3. That the PCIT (Central),Gurgaon erred in law in rejecting the application filed under clause(ii) of first proviso to Section 80G(5), without specifying the exact clause of Section 80G(5) under which the application has been rejected, thereby rendering the impugned order vague, non-speaking, and unsustainable in law.
4. That the Ld. CIT(E) has erred in rejecting the approval under section 80G(5) by observing that registration under section 12AB had already been rejected, whereas as a matter of record, the order rejecting approval under section 80G(5) was passed earlier at 5:38 p.m., and the order under section 12AB was passed subsequently at 6:16 p.m.; therefore, the finding of the Ld. CIT(E)/PCIT is factually Incorrect and based on an erroneous assumption of chronology, rendering the impugned order unsustainable in law.
ITA No. 406/CHD/2026 :
1. On the facts and circumstances of the case, the order passed byPCIT(C), Gurgaon is bad both in the eye of law and against the circumstances of the case.
2. That the observations recorded by the CIT(C) in the order rejecting registration under section 12AB have already been challenged before the Hon ‘ble ITA T, and the findings so recorded are erroneous and disputed; consequently, the rejection of approval under section 80G(5), being solely based on such impugned observations, is also bad in law and unsustainable.
3. That the PCIT (Central), Gurgaon erred in law in rejecting the application filed under clause(ii) of first proviso to Section 80G(5), without specifying the exact clause of Section 80G(5) under which the application has been rejected, thereby rendering the impugned order vague, non-speaking, and unsustainable in law.
4. That the order passed u/s 80G(5) is solely premised on the alleged cancellation of registration u/s 12AB; however, the said order under section 12AB is unsigned and invalid in the eyes of law and therefore cannot be relied upon. Consequently, the rejection under section 80G(5), being founded on an invalid and non-est order, is itself bad in law and liable to be quashed.
5. The appellant craves leave to add, amend or alter any of the grounds of appeal.
2. Briefly stated, the facts of the case are that the assessee is a charitable institution engaged in carrying out activities stated to be charitable in nature. The assessee had filed an application before the competent authority seeking approval under section 80G of the Act. During the course of proceedings, the ld. noticed. PCIT that the assessee’s application for registration under section 12AB of the Act had already been rejected by the Revenue authorities vide order dated 26.12.2025. Taking note of the said fact, the ld. PCIT held that one of the essential conditions for the grant of approval under Section 80G stood unfulfilled and, accordingly, rejected the application of the assessee.
3. Aggrieved by the aforesaid order, the assessee has preferred the present appeal before the Tribunal.
4. During the course of hearing, the ld. Authorised Representative submitted that the sole and substantive basis on which the application under section 80G had been rejected was the rejection of registration under section 12AB of the Act. Inviting our attention to the order of the Coordinate Bench of the Tribunal dated 21.04.2026, passed in ITA Nos. 225 & 226/CHD/2026, the ld. AR submitted that the Tribunal has already adjudicated the controversy relating to registration under section 12AB and has directed the Revenue authorities to grant registration to the assessee under section 12AB of the Act. It was contended that once the registration under section 12AB has been directed to be granted by the Tribunal, the very foundation of the impugned order ceases to exist and, therefore, the approval under section 80G deserves to be granted. It was further submitted that the charitable nature of the institution and its objects already stand accepted by the Tribunal and no impediment survives for the grant of approval under section 80G.
5. Per contra, the ld. Departmental Representative fairly admitted that the application under section 80G was rejected primarily on account of the rejection of registration under section 12AB of the Act. However, she submitted that the competent authority had not examined the assessee’s case on merits vis-à-vis the other statutory requirements prescribed under section 80G of the Act. It was argued that, since the authority had proceeded on the premise that the assessee did not possess a valid registration under section 12AB, there was no occasion to examine the remaining conditions necessary for the grant of approval. It was, therefore, submitted that in the event the Tribunal finds merit in the contention of the assessee, the matter may be restored to the file of the competent authority for examining the fulfilment of the remaining statutory requirements.
6. We have heard the rival submissions and perused the material available on record. We have also carefully gone through the impugned order as well as the order passed by the Coordinate Bench of the Tribunal in the assessee’s own case concerning registration under section 12AB of the Act.
7. The controversy involved in the present appeal lies in a narrow compass. The record reveals that the application seeking approval under section 80G was rejected principally on the ground that the assessee was not holding registration under section 12AB of the Act, the application for such registration having been rejected by the competent authority vide order dated 26.12.2025. It is not in dispute before us that the aforesaid rejection order has subsequently been examined by the Coordinate Bench of the Tribunal in ITA Nos. 225 & 226/CHD/2026 and vide order dated 21.04.2026 the Tribunal has directed the Revenue authorities to grant registration to the assessee under section 12AB of the Act.
8. Thus, the primary objection which formed the basis of the impugned order no longer survives. The requirement regarding registration under section 12AB, which was considered fatal by the competent authority while rejecting the application under section 80G, now stands satisfied in view of the directions issued by the Tribunal. To that extent, the impugned order cannot be sustained.
9. At the same time, we find substance in the contention advanced by the ld. DR that the application of the assessee under section 80G was not independently examined on the touchstone of the remaining statutory conditions prescribed under the Act. Section 80G contemplates fulfilment of various conditions relating to the nature and objects of the institution, maintenance of regular books of account, application of income and assets for charitable purposes, and other statutory requirements. Since the application itself was rejected at the threshold for the absence of registration under section 12AB, the competent authority had no occasion to verify whether the remaining requirements were fulfilled.
10. We further note that while directing the grant of registration under section 12AB, the Tribunal has already accepted the charitable character of the assessee and has recognised that the institution exists for charitable purposes. The issue regarding the charitable nature of the assessee and its eligibility for registration under section 12AB, therefore, stands concluded and need not be re-examined by the competent authority while considering the application under section 80G.
11. In these circumstances, and in the interest of substantial justice, we deem it appropriate to set aside the impugned order and restore the matter to the file of the competent authority, under the Act, for the grant of approval for Section 80G.
12. The competent authority shall reconsider the assessee’s application for approval under section 80G afresh in accordance with law and shall examine whether the assessee fulfils the remaining statutory requirements prescribed for the grant of such approval. However, the issue relating to registration under section 12AB and the charitable nature of the assessee’s activities shall be treated as concluded in view of the directions contained in the Tribunal’s order dated 21.04.2026. The competent authority shall afford an adequate opportunity of hearing to the assessee and thereafter pass a speaking order in accordance with law, expeditiously.
13. In the result, the appeal of the assessee is allowed for statistical purposes.
14. Since the facts and issues involved in the connected appeal are identical, our findings and conclusions recorded herein shall apply mutatis mutandis to the said appeal as well.
15. In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on 3rd June,2026.
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