Assessee Society's 80G Registration Appeal Allowed Despite Procedural Errors and Activity Concerns

The ITAT Hyderabad allowed the appeal of the assessee society against the rejection of registration u/s 80G. The CIT(Exemption) had denied registration on the ground of no substantial charitable activity and procedural non-compliance in filing Form 10AB instead of Form 10A. The tribunal found that the assessee had demonstrated activities aligned with its charitable objects and there was no evidence of non-charitable activities or violation of section 2(15). The procedural irregularity of using the wrong form was held insufficient to reject the application, especially for an existing registered entity. The order of the CIT(Exemption) was found non-speaking and lacking proper consideration of facts. The matter was restored to the CIT(Exemption) for fresh consideration of the registration application. The appeal was allowed for statistical purposes.

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ISSUES:

Whether the application for registration under section 80G of the Income-tax Act, 1961 can be rejected on the ground that no substantial charitable activity is being carried out by the applicant society without specific findings or evidence.Whether procedural non-compliance, specifically filing Form 10AB instead of Form 10A as required by CBDT Circular No. 7 of 2024, justifies rejection of the application for registration under section 80G.Whether the Commissioner of Income Tax (Exemptions) is required to issue a speaking order with proper application of mind based on facts and materials before rejecting an application under section 80G.

RULINGS / HOLDINGS:

The rejection of the application on the ground that "no substantial charitable activity was being carried out" is not sustainable where the authority has neither identified any particular instance of non-compliance nor pointed out any deficiency in the documents filed, and "there is no finding or evidence to support" such conclusion.The procedural irregularity of filing "Form 10AB" instead of "Form 10A" "is not a valid basis for denial of registration" under section 80G, particularly when the applicant is an existing registered entity and the charitable nature of its activities is not disproved; "procedural irregularities or usage of a wrong form should not be the sole ground for rejecting an otherwise valid application."The order passed by the CIT(Exemption) "is not a speaking order and suffers from non-application of mind to the facts and materials available on his record," and therefore the matter must be remanded for fresh consideration with a reasoned and speaking order after affording due opportunity of being heard.

RATIONALE:

The Court applied the statutory framework under section 80G of the Income-tax Act, 1961, including the proviso to section 2(15) and procedural requirements prescribed by CBDT Circular No. 7 of 2024.The Court emphasized the principle that rejection of charitable registration must be based on clear findings supported by evidence, not on vague or unsubstantiated observations.The Court relied on precedent that procedural errors, such as using an incorrect form, should not defeat substantive rights when the charitable nature of activities is established, citing the ITAT Nagpur order in Gospel India Ministries.The Court underscored the requirement of a "speaking order" demonstrating application of mind, in line with principles of natural justice and administrative fairness, mandating that the authority must consider all material facts and provide reasons for rejection.

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