TaxTMI 
TaxTMI 
2026 (9) TMI 1234
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....e to common issues, these are heard analogously and are disposed of by a common order for the sake of convenience. ITA No. 5040/Del/2026 and ITA No. 5041/Del/2026 3. The brief facts leading to this case is this that the appellant is a society formed under the Society Registration Act, 1860 lying and situated at Plot No. 18, Sector 22, Phase-1, Sector-6, Dwarka, South West Delhi 110075 relevant documents whereof are annexed to Page 1 of the Paper Book filed before us. Such certificate of registration was granted by and under registration No. S/34007 of 1998 from the office of the Registrar of Societies, Government of NCT of Delhi under the Society Registration Act XXI of 1860. The Assessee was subsequently granted registration under Section 12AA(1b) of the Act on 29.12.2006 appearing at Page 2 of the Paper Book filed by the Assessee. Similarly, certificate of registration of exemption/continuation of exemption under Section 80G of the Act was issued by the DIT(Exemption) by and under its order dated 14.01.2011 appearing at page No. 236 of the Paper Book. On 15.02.12, the Assessee amended the Memorandum and by laws of the society along with Rules and Regulations therein. On 12.....
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....ssessee filed a fresh application on 25.09.2025 in Form 10AB for grant of registration/ and/or approval and/or renewal of Registration under Section 12A(1)(ac)(ii) filed with the DIT, Exemption Delhi. Copy of the application is annexed to the paper book at page Nos. 26 to 35. 7. Thereafter on receipt of the said application a notice was issued under Section 12A(1)(ac)(ii) by the PCIT (Central), Delhi-3, directing the assessee to furnish details copy whereof is reproduced as under:- 8. The Assessee duly filed its reply initially on 09.01.2026 followed by several replies on 15.01.2026, 22.01.2026, 02.02.2026. 09.02.2026. Thereafter, on 17.02.2026 notice under Section 12A(1)(ac)(ii) and 80G(5)(ii) of the Act were issued/replies whereof were duly filed by the Assessee on 27.02.2026. 9. On 30.03.2026, the Ld. PCIT declined to grant registration to the appellant Society for Assessment Years 2027-28 to 2031-32 by issuing order under Section 12AB(1)(b)(ii)(B)of the Act which is impugned before us. 10. Approval under Section 80G(5) which was applied in Form 10AB dated 28.09.2025 was also been rejected on the ground of registration/approval under Section 12A/12AB being the mandat....
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.... Vigyan Trust Society, evidences have been found which reveal that the activities of the assessee society were contrary to the aims and objects and conditions subject to which registration was granted to the assessee. 3.3 During the assessment proceedings, the assessing officer of Central Circle-29, Delhi was satisfied that the trust has committed specified violation as defined in Explanation to sub-clause (4) of section 12AB and therefore, referred the case of the assessee to the Of the Pr. CIT (Central) 3, Delhi as per the provisions of second proviso to sub-section (3) of section 143 substituted by the Finance Act, 2022, proposing the cancellation of registration of the assessee trust. 3.4 In light of the above, the order u/s 12AB(4) was passed in the case of the society on 30.12.2024 cancelling the registration of the assessee society for the previous year relevant to AY 2011-12 and all subsequent assessment years on the ground as under: a. The assessee society was engaged in collecting funds in cash as well as cheque from parents of students studying in their schools and also from public at large under Ponzi investment scheme (MPRS & PRS) run by the ....
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....h Memorial Jeevan Vigyan Trust Society to Sh. Akash Tomer, brother-in-law of Sh. Gurmeet Singh Matharoo without rendering any services. The funds of society were siphoned off and were actually used for personal benefit of relatives of Sh. Gurmeet Singh Matharoo. 3.5 Aggrieved with the order u/s 12AB(4) dated 30.12.2024, the assessee society filed an appeal before the Hon'ble ITAT. The Hon'ble ITAT vide order dated 16.06.2025 in the ITA no. 10/DEL/2025 restored the registration of the assessee society by relying upon the decision of Coordinate Bench in the case of M/sMeenakshi Foundation vs. PCIT(Central)-3 in ITA No. 3952/Del/2024 and Human Welfare Foundation vs DCIT(Exemptions) wherein the appeal was allowed on the following technical issues: a. The order passed by the PCIT(Central) cancelling the registration is without jurisdiction. b. Specified violation, if any, existed prior to 01.04.2022 cannot be the basis for invoking section 12AB(4) of the Act. 3.5.2 The Hon'ble ITAT in the above-mentioned order relied upon case of M/s Meenakshi Foundation vs. PCIT(Central)-3 allowed the appeal of the assessee thereby, restored the registrat....
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....ation. This resulted in a regulatory gap, as entities were not subjected to continuous scrutiny to ensure that their activities remained genuine and in accordance with their stated charitable objects. 5.2 In contrast, Section 12AB provides for time-bound registration, requiring trusts and institutions to seek renewal at prescribed intervals based on verification of their activities, compliance with applicable laws, and adherence to their declared objects. The provision also contemplates provisional registration for newly established entities, thereby balancing ease of entry with subsequent verification of actual activities. This framework enables the prescribed authority to undertake periodic and evidence-based assessment of the continued eligibility of such entities for availing exemption. 5.3 Thus, the legislative intent underlying Section 12AB is to ensure transparency, accountability, and effective regulatory oversight by making the grant and continuance of registration contingent upon satisfaction regarding the genuineness of activities and compliance with statutory requirements. The scheme clearly envisages that exemption is not a perpetual entitlement but i....
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....icial forums on the said ratio: "i) 290 ITR 35 (Del) Glaxo Smith Kline Asia (P) Ltd. vs. CIT ii) 347 ITR 43 (Del) Maruti Suzuki India Ltd. vs. DCIT iii) 432 ITR 384 (Del) Pr. CIT v. Anand Kumar Jain (HUF)" 15. Having regard to the order impugned quashed by the Ld. PCIT on the same ground as passed in the earlier order dated 30.12.2024 while cancelling the registration of the Appellant Trust with retrospective effect it was further contended by the Ld. AR that in that view of the matter the order passed by the Ld. PCIT is suffered from the doctrine of constructive res-judicata. 16. It was further argued by the Ld. AR that the Ld. PCIT has failed to appreciate that while examining the application under Section 12A of the Act, the scope was merely to examine the object of the society/trust/institution and the genuineness of its activities and whether the activity is being carried out with the objects of the society at this stage and therefore, the cancellation of registration on the same issues which could be the matter of assessment is bad in law and liable to be quashed. So far as the rejection of renewal of the registration of the trust alleging vio....
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....tion' and 'diversion of income'. has rightly been expressed. The Ld. PCIT has rightly exercised his jurisdiction in going into the merit of the matter while rejecting the application for renewal of registration of the trust and also denying the grant under Section 80G(5) of the Act. The Pr. CIT (Central) validly assumes jurisdiction in the present case, and the provisions of Section 12AB(4) are fully applicable to violations committed by the assessee society even for the period prior to 1.4.2022 as was the crux of the submissions made by the Ld. DR. However, he has not been able to justify the action of the Ld. PCIT against the principle of judicial propriety as the earlier decision on the basis of the same material unearthed during the course of search stood quashed by the Co-ordinate Bench and the issue is subjudice before the Hon'ble High Court. The DR relied upon the judgement passed in the matter of Advantage India vs PCIT, in ITA No. 64/D/2019. He further relied upon the judgement as already quoted in the impugned order passed by the Learned PCIT in the matter of Legal Initiative For Forest &Environment (Life Trust Vs PCIT, Central-2) in SA No. 129/D/2024 dated 07.02.20 24. ....
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.... I 2023-24 24,63,25,001 22,02,36,139 1,84,61,028 23,86,97,167 76,27,834 ii 2024-25 27,64,64,441 2,29,181,638 1,43,84,750 24,35,66,388 26,26,83,822 3,28,98,053 iii 2025-25 28,46,36,196 24,84,92,485 14,191,337 2,19,52,374 26. Apart from that as per the provision of law the Ld. PCIT has to be satisfied himself about the object of the Trust or Institution and the genuineness of its activities and compliance of such requirements of any other law for the time being in force and to pass an order in writing registering the trust or institution for a period of five years or ten years as the case may be and in the event the Ld. PCIT is not satisfied, he can pass the order rejecting such application. 27. In this case, the Ld. PCIT, is supposed to decide the application for registration dated 25.09.2025 filed by the appellant Trust for A.Y 202728 onwards; the application was supported by the audited Financial Statement for F.Ys 2022-23, 2023-24, 2024-25 relevant to A.Ys 202324, 2024-25 and 2025-26 i.e. three previous years immediately preceding the previous years in accordance with Rules 17A sub Rule (g) of Income Tax ....
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..... PCIT as it appears from the order impugned. It was contended that all the beneficiaries companies which were benefited through Ponzi schemes were related to the said Shri Devendra Gupta and Smt. Sudha Gupta as per the impugned order itself, categorical observation whereof is appearing from paid 77 to 78 of the said order. 31. So far as the judgement relied upon by the Ld DR in the matter of Advantage India -Vs- PCIT, in ITA No. 64/D/2019, it was objected by the Ld. AR that in that case the Ld. PCIT was entrusted to deal with the matter. However, in the case in hand no such power has been given in the hands of the Ld. PCIT under Section 127 of the Act and the transfer was made to the hands of the Ld. CIT(E) only. It was further contended by the Ld. AR that order of advantage India is per incuriam having regard to the decision of the Hon'ble Tribunal in assessee's case in ITA No. 10/D/2025 dated 16.06.2025. In that view of the matter the judgment passed by the Coordinate Bench in the matter of Advantage India -Vs- PCIT (supra) is not applicable in the case in hand as argued by the Ld AR. Having regard to the factual and legal aspect of the matter particularly since the order imp....
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....o proceedings, namely, cancellation of registration vis-a-vis renewal of registration wherein scope of enquiry is separate in each proceeding. The Ld. Commissioner has taken up issues which were considered earlier while cancelling the registration but denied the renewal. Such issues did not meet the concurrence of ITAT in the earlier proceedings also and issue of cancellation is sub-judice before the Hon'ble High Court. The Department itself approved the registration for assessment year 2022-23 to 2026-27. Therefore, Id. PCIT is not justified in rejecting the renewal application while considering those very materials which were considered in the first round of litigation. The Id. PCIT has not made out that assessee has violated any laws. He has made some reference about user of land without getting approval. We have been apprised that CLU has been granted by the Competent Authority for its Campus in Village Gharuan. Those documents have been placed before us." 33. Once the order cancelling registration stood quashed, the denial of renewal on the same ground by the Ld. PCIT is not permissible when the same issue is pending adjudication before the Hon'ble High Court and more p....
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.... such institution is earning profit. The language used in the section only requires that activities of the trust or the institution must be genuine, which accordingly would mean, they are in consonance with the objects of the trust/institution, and are not mere camouflage but are real, pure and sincere, nor against the proposed objects. The profit earning or misuse of the income derived by charitable institution from its charitable activities, may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution." 37. Consideration has also been made on the judgment relied upon by the Ld AR passed by the Chandigarh Tribunal in the case of Indian Institute of Model Education Society Vs. CIT, (Supra) wherein the following observations were made: "29. We have carefully considered the rival submissions and perused the material available on record. In so far as the objection of the Ld. CIT(E) regarding the alleged violation of section 13 of the Act is concerned, we find that the said issue has weighed with the Ld. CIT(E) in denying registration to the assess....
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....ection 12AA of the Act as once registration is granted, the entire income of the institution would become exempt. The said view, in the light of precedents referred above is wholly opposed to law. Under section 12AA of the Act, the Commissioner is entitled to see that whether the objects are charitable in nature, which term has been well defined in the Act and also to see whether the activities are genuine or not. The genuineness of activities would mean to see that activities are not camouflage, bogus, artificial and whether these are in accordance with the objects of the institution. The scope of enquiry does not extend beyond that point..." 40. The issue decided by the Chandigarh bench in the case of Indian Institute of Model Education Society Vs. CIT (supra) has been reiterated here defining the scope of the competent authority to examine the object of the trust with the charitable in nature and activities whereof whether in accordance with such object of the trust at the stage of granting registration/renewal of the assessee trust. 41. Thus, considering the entire aspect of the matter, we find that the Ld. PCIT has exercised beyond his jurisdiction in issuing the order i....
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....w the exemption of the trust if such alleged violation under Section 13 of the Act could at all finds place during assessment and not at the stage of registration / renewal of registration by any authority under the provision of law. Thus, having regard to the entire aspect of the matter the order impugned is found to be in excess of jurisdiction. When the statute has conferred a particular right and/or power to be exercised by a particular authority, the statutory authority should confine themselves to act strictly within the boundaries framed under the provision herein Rule 17A r.w. Sub Rule (g) and the impugned order is therefore, found to be arbitrary, whimsical, erroneous and devoid of any jurisdiction and thus, liable to be quashed. 42. In that view of the matter, we quash the order impugned and, thus, allow the appeals on the grounds as contained therein preferred by the Assessee and further direct the Ld. Competent authority to grant requisition/renewal registration forthwith to the Assessee trust upon allowing the application made under Form 10AB and consequential grant of approval under Section 80G(5) of the Act. 43. In the result, Appeals filed by the Assessee are ....
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....irectly for the benefit of any person specified in section 13(1)(c) of the Income Tax Act, 1961 and that no part of the income or property of the Trust/ Society/Company was ever used or applied for the benefit of any person specified in section 13(1)(c) of the Income Tax Act, 1961, duly signed by the Authorized Signatory. (vii) Please submit a confirmation that none of the objects of the Trust deed/Memorandum of association/ Memorandum of article of the Trust/ Society/ Charitable Company or any other charitable institution is in the nature of trade business or commerce. (viii) A certificate to the fact that all the requirements of law has been complied with which are essential for the purpose of achieving the objects of society /trust or company. (ix) Please furnish telephone number and e-mail address of assesse society/trust/company. (x) Please quote the order no. of the last rejection order alongwith copy of order, if any and explain the change in facts and circumstances of the case since the last rejection order. Also provide the current status of appellate proceedings against the rejection order, if any. (xi) Please specify the category of charitable purposes ....
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....t three years & till 31.03.2025 /since 25 inception & till 31.03.2025COME DEPARIS (xix). Copy of ITRs filed forlast three years and form 26AS. (xx). Details of remuneration/ re-imbursement if any drawn by the Trustee/ Member/Director against the services provided by them to the Trust/Society/Company. (xxi). Details of business/source of income of the Trustees/ Members/Directors and their ID proof and address proof. (xxii), Whether the Trustee/ Member/Director are associated with any other Trust/Society/Non Profit Company? If yes, details thereof. (xxiii). Details of vehicles owned by the Trust/Society/Company along with ownership proof. (xxiv). Details of scrutiny assessment made u/s. 143(3) of the Income Tax Act, 1961 during the past 10 years and copy of assessment orders, appeals filed if any and present status of such appeals. (xxv). Please provide details of activities undertaken and also furnish the documentary evidences such as bills, vouchers, photographs, list of beneficiaries, etc. to substantiate the charitable activities carried out by you in past three years and till 31.03.2025. In the absence of such sufficient evidences it will be held that you ha....