Cherry Blossom Foundation Vs CIT (Exemption) (ITAT Lucknow)
Summary: Cherry Blossom Foundation appealed against the CIT (Exemption), Lucknow’s rejection of its application dated 29 September 2025 for approval under Section 80G(5) of the Income-tax Act, 1961. The Commissioner proceeded on the basis that the foundation had no earlier Section 12A registration or valid registration documentation and concluded that it had failed to satisfy Section 80G(5)(ii).
The foundation disputed that premise, claiming earlier registration under Section 12A and subsequent registration under Section 12AB. It also submitted that it had received exemption under Section 11 in preceding assessment years on processing under Section 143(1), and alleged that the Commissioner had rejected its application without giving it an opportunity of being heard. No one appeared for the foundation at the hearing, but the Tribunal examined a paper book submitted on its behalf. The documents showed that the DIT (CPC) had granted provisional Section 80G(5) approval in Form 10AC and provisional registration under Section 12A(1)(ac)(i) on 31 May 2021, both covering AYs 2022–23 to 2026–27. The Departmental Representative acknowledged that the Commissioner appeared to have overlooked these grants.
He pointed out that the annexure offered as the Form 10AD renewal order covering AYs 2027–28 to 2036–37 was actually the order rejecting the Section 80G(5) application. He therefore sought verification and fresh consideration by the Commissioner. The Tribunal found that the rejection rested on a mistaken premise about the foundation’s earlier provisional status. It restored the matter to the CIT (Exemption) to verify the registration facts, including the claimed renewal through AY 2036–37, and reconsider the Section 80G(5) application in accordance with law. The appeal was allowed for statistical purposes, with the application left for fresh decision by the Commissioner.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
This is an appeal filed by the assessee against the order of the ld. CIT(Exemption), wherein the ld. CIT(Exemption) has rejected the application of the assessee for granting of approval under section 80G(5). The grounds of appeal are as under: –
“1. That on the facts and in the circumstances of the case, the learned Commissioner of Income Tax (CIT) (Exemption) Lucknow has erred on law and on facts by passing an order for rejection of Approval u/s 80G on the ground that the Appellant had never been granted approval u/s 12A and no valid Registration on Form 10AC/10AD are placed on record which is factually incorrect and wrong as the Appellant was having registration u/s 12A even before 01.04.2021 as well as u/s 12AB and relevant registration certificates were placed on record hence such rejection u/s 80G being arbitrary, erroneous, and against the provisions of law and therefore Approval u/s 80G of the Act ought to have been granted.
2. That on the facts and in the circumstances of the case, the learned CIT (Exemption), Lucknow has erred on law and on facts by passing an order for rejection of Approval u/s 80G of the Income Tax Act 1961 on the ground that The applicant failed to comply with the terms and conditions of section 80G (5)(ii) of the Act, as derived fund of the institution is liable to be inclusion in its total income under the is factually incorrect and wrong as the Appellant has been complying with all the conditions u/s 80G(5)(ii) and was continuously been allowed exemption under section 11 of the Income Tax Act 1961 in all the preceding assessment years on the basis of assessment done u/s 143(1) of the Act, hence such order for rejection of approval u/s 80G being arbitrary, wrongful and against the provisions of law and therefore Approval u/s 80G of the Act is liable to be granted in the interest of justice.
3. That on the facts and in the circumstances of the case, the learned CIT (Exemption), Lucknow has erred in law and on facts by passing an order of rejection of Approval u/s 80G of the Income Tax Act without providing an opportunity of being heard before passing such order hence such rejection order u/s 80G being arbitrary and against the principles of natural justice therefore Approval u/s 80G of the Act is liable to be granted in the interest of justice.
4. That Appellant craves leave to modify any of the ground of appeal mentioned herein above and/0R to add any fresh ground as and when it is required to do so subject to however approval of your honour.”
2. The facts of the case are that the assessee filed an application for granting of approval under section 80G(5) on 29.09.2025. The ld. CIT (Exemption) noted that as per the record, the trust had not been previously granted approval under section 12A of the Income Tax Act, nor had it earlier applied for registration under section 12 of the Act and as such there was no valid Form 10AC/10AB available. Therefore, as the assessee had failed to comply with the terms and conditions of section 80G(5)(ii) of the Act, the derived fund of the institution was liable to be included in its total income under the provisions of section 11 and 12 of the Act. Considering the above fact, the application filed in Form No. 10AB for registration under section 80G of the Act was rejected.
3. The assessee is aggrieved with the said rejection and has accordingly filed this appeal. On the appointed date of hearing, nobody was present on behalf of the assessee but a paper book was received on behalf of the Secretary of the assessee society. On going through the said paper books, we find that the assessee society had been granted provisional approval under section 80G(5) in Form 10AC by the DIT (CPC) on 31.05.2021. We also find that the assessee had been granted provisional registration under section 12A(1)(ac)(i) by the DIT (CPC) on 31.05.2021. We notice from the above that the assessee trust has been provisionally registered from A.Y. 2022-23 to A.Y. 2026-27. Similarly, the approval under section 80G(5) from assessment years 2022-23 to 2026-27. These facts were brought to the knowledge of the ld. CIT DR to seek his response as to whether the order of the ld. CIT(Exemption) was passed under any misconception. The ld. CIT DR submitted that it would appear from the order of the ld. CIT(Exemption) that he was not aware of the said provisional registrations having been granted. However, he pointed out that the assessee had not been able to establish that it had been granted renewal of registration under section 10AB on Form 10AD valid from A.Y. 2027-28 to A.Y. 2036-37 as claimed by it because the annexure to the paper book their claimed to be such order, was in fact the order of rejection of application for approval under section 80G(5). Accordingly, the ld. CIT DR submitted that the facts were required to be verified in the matter and it would be appropriate to refer the matter back to the file of the CIT (Exemptions) to consider all the facts at hand and take a considered decision.
4. We have duly considered the paper book filed by the assessee and the submissions made by the ld. CIT DR. It appears that the order of the ld. CIT(Exemption) has been passed under a fundamental misconception that the assessee has not obtained provisional approval in Form 10AC and that it had not obtained registration in Form 10AB, prior to the filing of this application for approval under section 80G(5). Now that, it is fairly clear that the provisional registration under section 12A and provisional approval under section 80G(5) was granted to the assessee uptil assessment year 2026-27 and it also appears that the assessee may have been granted renewal of registration under section 12A upto 2036-37, we believe it to be in the interest of justice to restore this matter back to the file of the ld. CIT(Exemption) so that the ld. CIT(Exemption) may verify these facts and thereafter reconsider the application of the assessee to pass such orders as he deems appropriate in accordance with law.
5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 30.10.2026 in the open Court.
