Smt. Basanti Devi Foundation Vs CIT (Exemption) (ITAT Jodhpur)
Summary: The Income Tax Appellate Tribunal, Jodhpur Bench, allowed two appeals filed by Smt. Basanti Devi Foundation against separate orders dated 23 December 2024 of the Commissioner of Income Tax (Exemption), Jaipur, rejecting its application for registration under Section 12AB and approval under Section 80G of the Income-tax Act, 1961. The Foundation, incorporated as a Section 8 company, had obtained provisional registration and approval on 24 May 2022, valid up to Assessment Year 2025-26, and applied for regular registration and approval through Form 10AB on 29 June 2024. The Commissioner rejected both applications on the ground that the genuineness of the Foundation’s charitable activities had not been established, and also cancelled its provisional registration and approval. The Tribunal first condoned delays of 32 and 34 days in filing the respective appeals, accepting the explanation concerning the illness and death of a director whose email address had been used for official communications.
The Foundation submitted that it had furnished extensive documentary evidence of its charitable activities, including its incorporation documents, memorandum and articles of association, three years’ annual accounts, donor lists, bank details, bills, vouchers, photographs, and detailed replies dated 11 November and 12 December 2024. Its activities included organising a blood donation camp, distributing food packets to poor persons and donating steel benches to a government hospital. It specifically explained expenditure of Rs.8,282 on refreshments at the blood donation camp, Rs.11,000 on food distribution and Rs.21,000 on hospital benches. It also stated that no payments had been made to persons specified under Section 13(3). The Revenue maintained that the Commissioner had found the evidence insufficient and that the activities required verification.
The Tribunal found that the Commissioner’s conclusion was contradicted by the material already on record. The documents were specifically identified in the paper book, and the Commissioner had neither examined them adequately nor recorded any finding that they were false, unreliable or unrelated to charitable purposes. The Tribunal emphasised that the enquiry under Section 12AB concerns the charitable nature of the objects and the genuineness of activities, not the scale or quantum of charitable expenditure. No diversion of funds, private benefit, violation of Section 13, non-charitable application of income or profit-making activity had been established. As the relevant evidence was already available, remanding the matter for another examination would merely prolong the proceedings.
Accordingly, the Tribunal quashed the rejection of the Foundation’s Section 12AB application and the cancellation of its provisional registration, directing the Commissioner to grant registration in accordance with law. It also held that the rejection of Section 80G approval was consequential upon the rejection of Section 12AB registration, with no independent breach of Section 80G or Rule 11AA identified. The Tribunal therefore quashed the rejection and cancellation of provisional approval under Section 80G and directed the Commissioner to grant approval in accordance with law. Both appeals were allowed.
List of Cases Discussed
1. Kogta Foundation v. CIT(E), Jaipur, ITA Nos. 288 and 289/Jpr/2024, dated 27.09.2024: Cited regarding the examination of supporting documents and opportunity to establish the genuineness of charitable activities before rejecting registration.
2. Satguru Public Shiksha Samiti v. CIT(E), Jaipur, ITA Nos. 396 and 404/Jodh/2024, dated 01.05.2025: Relied upon concerning proper consideration of evidence in proceedings relating to charitable registration and approval.
3. Bhamashah Sundarlal Daga Charitable Trust v. CIT(E), Jaipur, ITA No. 278/Jodh/2023, dated 10.11.2023: Cited in support of objective examination of the charitable objects and genuineness of activities.
4. Vishwakarma Shram Seva Nyash v. CIT(E), Jaipur, ITA Nos. 685 and 686/Jpr/2024, dated 13.01.2025: Relied upon concerning curable documentary deficiencies and the consequential nature of Section 80G proceedings.
5. Hindusthan Tea Trading Co. Ltd. v. Commissioner of Income-Tax, 263 ITR 289 (Calcutta High Court): Referred to in the assessee’s grounds of appeal concerning the authority’s duty to examine explanations furnished and communicate any dissatisfaction.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
These two appeals filed by the assessee are directed against two separate orders, both dated 23.12.2024, passed by the learned Commissioner of Income Tax (Exemption), Jaipur [“CIT(E)”]. Since both appeals pertain to the same assessee, arise out of applications filed on the same date and involve interconnected issues concerning 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.
Condonation of Delay
2. The appeal in ITA No. 314/Jodh/2025 is accompanied by a petition dated 25.03.2025 seeking condonation of delay of 32 days in filing the appeal. In the petition, the assessee has stated that the orders rejecting its applications under sections 12AB and 80G were sent to the e-mail address of Shri Saurabh Varshney, one of the directors of the assessee-company. It has been stated that Shri Saurabh Varshney was suffering from cancer and passed away on 15.08.2024 and, therefore, information regarding the impugned orders was not available with the assessee. According to the petition, the assessee came to know about the impugned orders upon verification of the income-tax portal on 21.03.2025, whereafter the e-mail address of the present director was changed. The appeal in ITA No. 329/Jodh/2025 is accompanied by a separate petition dated 27.03.2025 seeking condonation of delay of 34 days. The explanation furnished by the assessee in this petition is substantially the same as the explanation furnished in the petition accompanying ITA No. 314/Jodh/2025.
3. The Departmental Representative (DR) raised no objection in condoning the delay.
4. We have considered the explanation furnished by the assessee in the respective condonation petitions. Having regard to the circumstances explained therein, particularly the illness and subsequent demise of the director to whose e-mail address the impugned orders were communicated, we are satisfied that the assessee was prevented by sufficient cause from filing the appeals within the prescribed period. The delays are neither deliberate nor attributable to any want of bona fides on the part of the assessee. Accordingly, the delay of 32 days in ITA No. 314/Jodh/2025 and the delay of 34 days in ITA No. 329/Jodh/2025 are condoned. Both appeals are admitted for adjudication on merits.
5. The grounds raised by the assessee in ITA No. 314/Jodh/2025 are:
Ground No. 1
Ld. CIT(E) has wrongly rejected the application for registration of assessee u/s 12A wrongly stating that there is Non-Genuineness of activities whereas the assessee is a Section 8 company registered under Companies Act, 2013 works for charitable activities such as providing relief to the poor and needy people, organizing blood donation camp for welfare of the general public and general public utility . Hence CIT(E) order should be made null and void and CIT(E) may be directed to grant for 12A registration and rejection/cancellation of provisional registration u/s 12A must be quashed.
Ground No. 2
That the Commissioner of Income Tax (Exemption) Jaipur should have consider the document submitted before him and should have accepted the claim of the assessee of granting registration for 12A of Income Tax Act. That the assessee fullfill all the requirement/condition of the law as provided regarding obtaining registration under section 12A of the IT Act therefore the order of the CIT(E) is liable for quash. That the Commissioner of Income Tax (Exemption) ignore the communication which was incumbent upon the CIT(E) to examine the explanation and arrive at conclusion as to whether the explanation was satisfactory, if not satisfactory, has to communicate the assessee in view of 263 ITR page 289(CAL) Hindusthan Tea Trading Co.Ltd. vs Commissioner Of Income-Tax.
Ground No. 3
The appellant prays your honor to add amend or alter all or any of the grounds of the appeal on or before the date of hearing.
6. The grounds raised by the assessee in ITA No. 329/Jodh/2025 are:
Ground No. 1
CIT(E) has wrongly rejected the application for registration of assessee company u/s 80G stating that the Approval u/s 80G cannot be granted without registration u/s 12AB whereas CIT(E) wrongly rejected the application for registration of assessee u/s 12A against which appeal is being filed before Hon’ble ITAT, Jodhpur. Also, the assessee company has valid registration u/s 12A valid till AY 2025-26 vide Unique Registration No. ABGCS3441RE20221 in Form 10AC. Hence CIT(E) order should be made null and void and CIT(E) may be directed to grant for 80G registration and rejection/cancellation of provisional registration u/s 80G must be quashed.
Ground No. 2
That the Commissioner of Income Tax (Exemption) Jaipur should have consider the document submitted before him and should have accepted the claim of the assessee of granting registration for 80G of Income Tax Act. That the assessee full fill all the requirement/condition of the law as provided regarding obtaining registration under section 80G of the IT Act therefore the order of the CIT(E) is liable for quash. That the Commissioner of Income Tax (Exemption) ignore the communication which was incumbent upon the CIT(E) to examine the explanation and arrive at conclusion as to whether the explanation was satisfactory, if not satisfactory, has to communicate the assessee in view of 263 ITR page 289(CAL) Hindusthan Tea Trading Co.Ltd. vs Commissioner of Income-Tax.
Ground No. 3
The appellant prays your honor to add amend or alter all or any of the grounds of the appeal on or before the date of hearing.
Facts in brief
7. The assessee is a company incorporated under section 8 of the Companies Act, 2013. As stated in the appeal papers, it undertakes charitable activities, including providing relief to poor and needy persons, organising blood donation camps for the welfare of the general public and carrying out activities of general public utility.
8. The assessee was granted provisional registration and provisional approval in Form No. 10AC on 24.05.2022, stated to be valid up to assessment year 2025-26. On 29.06.2024, the assessee filed an online application in Form No. 10AB under clause (iii) of section 12A(1)(ac), seeking regular registration under section 12AB of the Act. The learned CIT(E) issued a questionnaire dated 03.09.2024 requiring the assessee to furnish the specified documents and explanations. Thereafter, a reminder dated 19.10.2024 and a show-cause notice dated 08.12.2024 were also issued. The impugned order records that the assessee sought an adjournment in response to the first notice and subsequently furnished part replies through DAK.
9. For examining the genuineness of the activities, the learned CIT(E) required the assessee to furnish, inter alia, the list of donors, annual accounts, bank statements, bills and vouchers, ledger accounts, photographs of activities, particulars of beneficiaries, details of blood donation camps and particulars of payments made to persons specified in section 13(3) of the Act.
10. The learned CIT(E) observed that the assessee had not furnished complete supporting records relating to its expenditure and charitable activities. It was further observed that the assessee had not furnished complete particulars of the blood donation camps, beneficiaries, payments made to persons specified in section 13(3), mementos given to blood donors and food packets stated to have been distributed to poor persons. The learned CIT(E), therefore, held that the activities of the assessee were not verifiable and that their genuineness had not been established.
11. Accordingly, by order dated 23.12.2024 passed in Form No. 10AD, the learned CIT(E) rejected the application seeking registration under section 12AB on the ground of non-genuineness of activities. By invoking section 12AB(1)(b)(ii)(B), the learned CIT(E) also cancelled the provisional registration granted to the assessee on 24.05.2022.
12. The assessee had separately filed an application in Form No. 10AB on 29.06.2024 seeking approval under section 80G(5)(iii). The learned CIT(E) observed that registration under section 12A or section 12AB, or notification under section 10(23C), was a precondition for granting approval under section 80G. Referring to the rejection of the assessee’s application under section 12AB and observing that the genuineness of its activities remained unverified, the learned CIT(E) rejected the application seeking approval under section 80G.
13. Consequently, by a separate order dated 23.12.2024 passed in Form No. 10AD the learned CIT(E) rejected the application under section 80G(5)(iii) and also cancelled the provisional approval granted to the assessee on 24.05.2022.
14. Aggrieved by the aforesaid orders, the assessee is in appeal before us.
15. Before us, by way of written submission, the learned Authorised Representative (AR) submitted that the assessee-company was incorporated on 02.07.2021 under section 7(2) read with section 8(1) of the Companies Act, 2013. The learned AR submitted that the objects of the assessee are charitable in nature and extend throughout India. He referred to the objects contained in the memorandum of association and submitted that the assessee was established, inter alia, to promote and facilitate educational, social, economic and medical relief to poor and downtrodden persons; undertake objects of general public utility and community welfare; promote commerce, art, science, sports, education, research, social welfare, religion, charity and protection of the environment; and promote the study, practice and knowledge of music, art and science.
16. Adverting to the finding of the learned CIT(E) regarding non-genuineness of the activities, the learned AR submitted that the finding was contrary to the documentary evidence furnished by the assessee. According to him, the assessee had furnished all the documents called for by the learned CIT(E), but the same were neither properly examined nor dealt with in the impugned order. He submitted that the assessee had specifically explained that its objects and activities fell within the category of charitable purposes and general public utility and were carried out without any distinction based on caste, colour, creed, section or sex.
17. The learned AR submitted that the assessee had furnished the following documents before the learned CIT(E) and had again placed them in the paper book:
- list of donors at page 169 of the paper book;
- annual accounts for the preceding three years at pages 26 to 58;
- bills and vouchers relating to charitable expenditure at pages 69 to 74;
- details of bank accounts for the preceding three years at page 170;
- photographs and particulars of charitable activities at pages 60 to 68; and
- detailed replies dated 11.11.2024 and 12.12.2024 at pages 166 to 176.
18. The learned AR contended that the learned CIT(E) had incorrectly recorded that the assessee had furnished only repeated copies of its memorandum and articles of association. He submitted that the aforesaid documentary evidence demonstrated that the assessee had undertaken genuine charitable activities, including providing relief to poor and needy persons, providing medical relief to poor patients, donating benches to a hospital and distributing food to poor and needy persons. It was contended that the learned CIT(E) failed to give due consideration to these documents and, therefore, erroneously rejected the application seeking registration under section 12AB.
19. With regard to the observation concerning non-production of bills, vouchers, bank statements, bank book, cash book and payment particulars, the learned AR submitted that the assessee had furnished detailed replies dated 11.11.2024 and 12.12.2024, copies of which were placed at pages 166 to 176 of the paper book. The bills and vouchers relating to charitable expenditure, along with photographs of the activities, were placed at pages 60 to 74. The financial statements and related accounts were stated to have been furnished at pages 26 to 58 of the paper book.
20. As regards the details of bank transactions exceeding Rs.10,000/-, the learned AR submitted that the requisite particulars had been furnished along with the detailed reply dated 12.12.2024 and were placed at page 174 of the paper book. In relation to the query concerning payments to persons specified in section 13(3), he submitted that the assessee had not made any payment to such persons either for services, reimbursement or under any other description. This fact was also explained in the reply placed at page 174 of the paper book.
21. With regard to the blood donation camp, the learned AR submitted that the relevant particulars had been furnished through the reply dated 12.12.2024, placed at pages 174 and 175 of the paper book. He submitted that a Government doctor had been deputed for the blood donation camp and no payment was made by the assessee to the doctor. Compounders from the Government hospital had attended the camp with the requisite kit and collected blood from the donors.
22. The learned AR submitted that the blood donation camp was organised at CYB-4, BLG House, Cyber Park, near Saras Dairy, Heavy Industrial Area, Jodhpur-342003, Rajasthan. The blood collected at the camp was handed over to the Government Hospital, Jodhpur, for use by needy persons. He further submitted that the assessee incurred expenditure of Rs.8,282/- during the financial year 2021-22 towards refreshments, including tea, coffee and samosas, supplied at the camp. Mementos were also given to the blood donors who participated in the camp during that year.
23. The learned AR further referred to the details of the charitable activities undertaken by the assessee. He submitted that the assessee had incurred expenditure of Rs.11,000/- on distribution of food packets to poor persons. The payment was made to the Annapurna Family Restaurant and the corresponding ledger and bill were placed at pages 69 to 74 of the paper book. He also submitted that the assessee had incurred expenditure of Rs.21,000/- on donation of steel benches to MDM Hospital. The payment was made to Krishna Decor Furniture and the corresponding ledger and bill were also placed at pages 69 to 74. It was submitted that neither of the aforesaid parties was related to the management of the assessee.
24. On the strength of the aforesaid material, the learned AR contended that the assessee had duly responded to the queries raised by the learned CIT(E) and had furnished documentary evidence demonstrating the genuineness of its charitable activities. It was submitted that the applications under sections 12AB and 80G had been rejected without proper appreciation of the evidence and without affording an effective opportunity to the assessee.
25. In support of his contentions, the learned AR relied upon the following orders:
1. Kogta Foundation v. CIT(E), Jaipur, ITA Nos. 288 and 289/Jpr/2024, order pronounced on 27.09.2024.
2. Satguru Public Shiksha Samiti v. CIT(E), Jaipur, ITA Nos. 396 and 404/Jodh/2024, order pronounced on 01.05.2025.
3. Bhamashah Sundarlal Daga Charitable Trust v. CIT(E), Jaipur, ITA No. 278/Jodh/2023, order pronounced on 10.11.2023.
4. Vishwakarma Shram Seva Nyash v. CIT(E), Jaipur, ITA Nos. 685 and 686/Jpr/2024, order pronounced on 13.01.2025.
26. Per contra, the learned Departmental Representative referred to page 5 of the impugned order and submitted that, in response to the show-cause notice, the assessee furnished a reply on 12.12.2024 in which only a resolution contained in the articles of association was submitted. Learned DR pointed out that the learned CIT(E) had recorded that the assessee failed to furnish complete documentary evidence concerning its charitable activities and expenditure, payments to persons specified in section 13(3) of the Act, mementos given to blood donors and distribution of food packets to poor persons.
27. The learned DR submitted that, in the absence of the aforesaid particulars and supporting evidence, the activities of the assessee were not verifiable and it could not be ascertained whether the assessee was genuinely carrying out charitable activities. He, therefore, submitted that the particulars need to be verified again in light of submission of the assessee.
28. We have heard the rival submissions and perused the material available on record. The learned CIT(E) rejected the application seeking registration under section 12AB principally on the ground that the assessee had not furnished complete documentary evidence concerning its charitable activities and expenditure. The learned CIT(E) recorded that the assessee had not furnished bills and vouchers, ledger accounts, payment particulars, photographs of activities, details of payments to persons specified in section 13(3), particulars of mementos given to blood donors and supporting evidence concerning the distribution of food packets to poor persons.
29. On the other hand, the learned AR has specifically referred to the documents placed in the paper book, including the annual accounts at pages 26 to 58, photographs and particulars of charitable activities at pages 60 to 68, bills and vouchers at pages 69 to 74, detailed replies at pages 166 to 176, list of donors at page 169, bank particulars at page 170 and the details furnished in response to the queries at pages 174 and 175. It is, therefore, the case of the assessee that the requisite documents had been furnished, but were not properly examined or considered by the learned CIT(E).
30. We have heard the rival submissions and perused the material available on record. The learned CIT(E) rejected the application seeking registration under section 12AB on the ground that the assessee had not furnished sufficient documentary evidence to establish the genuineness of its charitable activities. The learned CIT(E) recorded that the assessee failed to furnish bills and vouchers, ledger accounts, payment particulars, photographs of activities, details of payments to persons specified in section 13(3), particulars of mementos given to blood donors and supporting evidence concerning the distribution of food packets to poor persons.
31. The aforesaid findings, however, are not borne out by the material placed before us. The assessee furnished its certificate of incorporation, memorandum and articles of association at pages 1 to 25 of the paper book; annual accounts for the preceding three years at pages 26 to 58; photographs and particulars of charitable activities at pages 60 to 68; bills and vouchers relating to charitable expenditure at pages 69 to 74; detailed replies submitted before the learned CIT(E) at pages 166 to 176; list of donors at page 169; bank-account particulars at page 170; and the details furnished in response to the specific queries at pages 174 and 175.
32. The memorandum of association shows that the assessee was incorporated under section 8 of the Companies Act, 2013 for charitable objects, including educational, social and medical relief to poor and downtrodden persons, community welfare and other objects of general public utility. There is no finding in the impugned order that any of the objects of the assessee is non-charitable or that its activities were undertaken for the benefit of any particular religious community or caste.
33. The material placed on record further shows that the assessee undertook charitable activities consisting of organisation of a blood donation camp, distribution of food packets to poor persons and donation of steel benches to MDM Hospital. The assessee furnished bills, vouchers, ledger accounts, photographs and payment particulars relating to these activities. In relation to the blood donation camp, the assessee explained that a Government doctor and compounders from a Government hospital attended the camp, that no payment was made to them and that the blood collected during the camp was handed over to the Government Hospital, Jodhpur, for use by needy persons.
34. The assessee also furnished an explanation that no payment was made to any person specified in section 13(3) of the Act. In respect of the other charitable activities, the assessee produced evidence of expenditure of Rs.11,000/- on distribution of food packets to poor persons and Rs.21,000/- on donation of steel benches to MDM Hospital. The corresponding ledger accounts and bills were placed at pages 69 to 74 of the paper book. The learned CIT(E) has neither discussed these documents nor recorded any finding that they were false, unreliable or unrelated to the stated charitable activities.
35. The learned CIT(E) proceeded on the premise that the assessee had furnished only a resolution contained in its articles of association. This observation is contrary to the replies and supporting documents placed in the paper book. The impugned order does not deal with the contents of the replies dated 11.11.2024 and 12.12.2024 or with the supporting accounts, bills, vouchers, bank particulars and activity records furnished by the assessee. The rejection is, therefore, founded upon an incomplete appreciation of the material available on record.
36. We have noted the judicial precedents relied on by the assessee. The collective ratio emerging from the decisions is that an application seeking registration under section 12AB cannot be rejected without a proper examination of the documents and explanations furnished by the applicant. Where the alleged deficiencies relate to non-production or incomplete production of supporting documents, such deficiencies are curable and the applicant must be afforded an effective opportunity to place the requisite material on record. These decisions further recognise that the satisfaction concerning the genuineness of the activities must be founded upon an objective consideration of the evidence and not merely upon an allegation of non-compliance. They also hold that where approval under section 80G is rejected as a consequence of rejection of registration under section 12AB, the decision concerning section 80G must necessarily follow the determination made in the proceedings under section 12AB.
37. The aforesaid principles squarely apply to the present case. The assessee had furnished the documents and explanations relating to its objects, accounts, expenditure and charitable activities. The learned CIT(E) did not examine the documents on their merits and did not identify any falsity or infirmity therein. The rejection based on an alleged failure to furnish documents, without dealing with the documents specifically referred to by the assessee, cannot be sustained.
38. Ordinarily, where further factual verification is required, the matter may be restored to the learned CIT(E). In the present case, however, the relevant documents are already available on record and have been specifically identified by the assessee. The learned DR has not pointed out any particular defect in these documents or any activity of the assessee which is contrary to its stated charitable objects. The dispute does not concern the absence of material but the failure of the learned CIT(E) to consider the material furnished. In these circumstances, restoring the matter merely for reconsideration of the same evidence would unnecessarily prolong the proceedings.
39. The scope of enquiry under section 12AB is to ascertain whether the objects of the applicant are charitable and whether its activities are genuine. The genuineness of the activities does not depend upon the scale or quantum of the charitable expenditure. What is required is that the activities should be real, consistent with the stated objects and supported by credible material. The documents placed on record satisfy these requirements.
40. The assessee is a section 8 company and its activities are consistent with its stated charitable objects. There is no allegation or finding concerning diversion of funds, private benefit, violation of section 13, non-charitable application of income or carrying on of activities for profit. The documentary evidence furnished by the assessee has also not been found to be false or unreliable. We, therefore, hold that the charitable nature of the objects and the genuineness of the activities stand established.
41. We, therefore, hold that the objects of the assessee are charitable and that the genuineness of its activities stands established by the material placed on record. Since the relevant documents are already available and no further factual verification has been shown to be necessary, restoration of the matter to the learned CIT(E) would amount to directing reconsideration of the same material and would unnecessarily prolong the proceedings.
42. Accordingly, the order dated 23.12.2024 passed by the learned CIT(E) is set aside. The rejection of the application in Form No. 10AB and the consequential cancellation of the provisional registration granted on 24.05.2022 are quashed. The learned CIT(E) is directed to grant registration to the assessee under section 12AB in accordance with law pursuant to its application dated 29.06.2024.
43. Coming to the application under section 80G(5)(iii), the learned CIT(E) rejected the application principally because the application seeking registration under section 12AB had been rejected. No independent violation of any condition prescribed under section 80G or rule 11AA of the Income Tax Rules, 1962 has been identified in the impugned order.
44. Since the assessee is held entitled to registration under section 12AB and the learned CIT(E) has not recorded any independent ground of ineligibility under section 80G, the very foundation of the rejection under section 80G ceases to survive. The genuineness of the activities is established by the material placed on record and no useful purpose would be served by restoring the application for reconsideration.
45. We accordingly set aside the order dated 23.12.2024. The rejection of the application seeking approval under section 80G and the cancellation of the provisional approval granted on 24.05.2022 are quashed. The learned CIT(E) is directed to grant approval to the assessee under section 80G(5)(iii), in accordance with law, pursuant to its application dated 29.06.2024.
46. In the result, ITA No. 314/Jodh/2025 and ITA No. 329/Jodh/2025 filed by the assessee are allowed.
Order pronounced in open court on 06/08/2026.
