TaxTMI 
2026 (11) TMI 525
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....e-tax Act, 1961 on November 25, 2011. It subsequently migrated to the new registration regime under Section 12AB. The Ld. CIT(E), rejected the Appellant's application for renewal of registration under Section 12A read with Section 12AB of the Act for which assessee is in appeal and has raised following grounds: "1. That on the facts and in the circumstances of the case and in law, the impugned order passed by the Ld. CIT(E) rejecting the application for renewal of registration under Section 12A of the Act is arbitrary, unjust, contrary to law and facts on record, and is therefore liable to be quashed. 2. That the Ld. CIT(E) has grossly erred in passing the impugned order without proper application of mind and in complete disregard of the detailed submissions, voluminous documentary evidence, and legal precedents filed by the Appellant, thereby violating the principles of natural justice. 3. That the Ld. CIT(E) has erred in law and on facts in treating the voluntary contributions received by the Appellant as 'anonymous donations' under Section 115BBC of the Act, merely on the pretext of incomplete addresses of some donors. He failed to appreciate that ....
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....has been duly registered under Section 12A since 2010 and has been complying with all statutory requirements, and its activities have been accepted as genuine in all preceding years, making the current rejection arbitrary. 11. The Appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal at or before the time of hearing." 3. Ld. AR has submitted that the Ld. CIT(E) has demonstrated a manifest failure to appreciate and engage with the material evidence on record. Ld. AR submitted that the Appellant had filed detailed written submissions addressing every query raised by the Ld. CIT(E), dated 11-12-2025 and 19-03-2026 and these submissions contained factual explanations, legal arguments, and a point-by-point rebuttal of the potential adverse inferences. The impugned order, however, makes no reference to these submissions, nor does it contain any reasoning to counter the specific arguments made by the Appellant. He allegedly ignored overwhelming evidence of genuine activities and completely disregards the voluminous documentary proof of the Appellant's extensive and genuine charitable work. Allegedly ld. CIT(E) overlooked an unblemished histor....
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.... of 30%. It does not prescribe the consequence of denial or cancellation of registration. Had the legislature intended for the receipt of anonymous donations to be a ground for rejecting registration, it would have been explicitly included in the definition of "specified violation" under the Explanation to Section 12AB(4).The absence of such a provision is a clear indicator of legislative intent. 3.3 Ld. AR submitted that the principle that the scope of inquiry at the registration stage is limited and distinct from the assessment stage is well-established by numerous judicial pronouncements. He relied the Hon'ble Supreme Court decision in Ananda Social & Educational Trust vs. CIT (2020) and other decision for the same proposition. 3.4 Ld. AR contended that the Appellant has duly maintained and furnished before the Department the donor details available in its records, including names, addresses, and PAN/Aadhaar particulars wherever available and reference was made to Pages 155-246 of PB. He has relied decision in ITO vs. Aishwarya Foundation (ITA No. 103/Pat/2020), to contend that Bench has held that where the assessee has maintained records of the name and address of the....
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....e of the objects of the trust, that is equally genuine. The scope of the inquiries thus have to be limited to examining the aforesaid two preconditions for grant of registration. 5. Now, in the case of the assessee before us, we find that the assessee is a registered society, and the objectives of the society, as framed and as they exist, are certainly of the nature that is generally laid down for philanthropic and charitable activities, including service to the society and address issues of national integrity. 6. We find that what the primarily learned prescribed authority has examined is the fact that in financial years 2022-23, 2023-24, and 2024-25, the assessee has received huge amounts of donation. Out of this, a majority of the funds are received in cash, and the assessee was unable to satisfy the prescribed authority by giving the complete address or PAN of the donors. Thus, according to the Ld. Prescribed Authority, these donations were suspicious, being anonymous donations which have been made taxable under Section 115BBC of the Act. As for completeness, the relevant findings of the learned Prescribed Authority are reproduced below. 2. The facts of the case ....
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....nce institutions under cooperative format by providing legal and documentation support in their formation, training research and guidance support. It further claimed to have undertaken extensive capacity building and knowledge creation initiatives. Despite making these claims the applicant has not provided any tangible evidence in support of its claimed activities. It has failed to show as what exactly it has done for which it has spent crore of rupees. The activities of the applicant are thus not appeared to be genuine. As per financials, the applicant has incurred main expense on salary and allowance. In FY 2024-25, it has incurred a total expense of Rs. 1,09,64,368, more than 72% of this was spent on salary & allowances. It is further seen from its reply filed on 20.03.2026 that almost all of its employees belong to one particular community and its workforce is not inclusive. It has failed to show on what basis employees are selected, what are their qualification. Such huge expense on salary further hints that public money has been misused and diverted for other than charitable work. 2.5 Relation with Human Welfare Foundation and Jammat-e-Islami Hind ....
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....eligious community from taking benefits. The applicant has thus committed specified violations as discussed supra in detail. Accordingly, its application for registration u/s. 12A is hereby rejected." 7. Thus the primary issue before us is whether, at this stage, the learned Prescribed authority could have examined the source of donations especially in the context of Section 115BBC. 8. We are of the considered view that, indeed, the scope of examination of the issues at the stage of grant of registration is limited. However, when the question is of examining the genuineness of activities, mere recitals of the activities or their performance in a token manner and in a camouflaged way cannot be considered to be a genuine activity. If otherwise, the circumstances giving rise to the establishment of the entity, its operations, and its management appear to be directed towards not for the general good of the beneficiaries but for some dubitable activities under the banner of society's name and pretentious objectives enshrined in the articles of association. 9. We are of the considered view that enquiry into genuineness of activities is not just a superfluous examination of d....
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....d charitable activities are not genuine. Not because they are not being performed, but because they do more harm to interest of State. Then, temporary and intermittent good of its citizens. 12. In the case before us we have examined the evidence of the assessee with regard to donations available at page numbers 155 to 246 of the paper book. At page 155 onwards till page 181, there is a list of 1315 donors for FY 2022-23. Then from page 182 onward till page 219, there is a list of 1839 donors for FY 2023-24 and page 220 onward till page 246 list of 1459 donors for FY 2024-25 has been provided. 13. When we consider these list of donors for 3 financials years we find that as with regard to Financial Year 2022-23 for a total of 1315 donors little less than for equal 62 assesse was able to provide PAN of the donors and around 73 donations were only through some banking mode. As for FY: 2023-24 of the total donors named 1839, PAN of 93 persons were provided and only 161 persons had given donations from some banking mode. Coming to FY: 2024-25 after total donors named 1459, PAN of none of the donors was provided and all the donations are shown to be in cash. 14. As we appreciate ....
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....plication for renewal is an independent one and on the basis of any principle of consistency an assessee cannot claim a benefit as such. 18. We are of the considered view that ld. CIT(E) has though referred to presumptive determination of tax liability u/s. 115BBE of the Act and the provision specified violation enshrined in Explanation 2 to Section 12AB(4), which in ordinary circumstances would be beyond the scope of inquiry for the purpose of renewal of registration or grant of approval u/s. 12AB and 80G respectively, yet when the evidence is so eminent to show that the funds being infused for said activity are not sourced from genuine individuals but more likely sourced from tainted money, then certainly these provision of the Act expand the scope of enquiry and consider that if ultimately exemption u/s. 11 or 12 is to be denied or registration already granted deserves to be cancelled, then certainly claim of approval or registration at the first instance has to be factually satisfied and the burden is on the assesse while seeking renewal of application to dispel all the suspicious circumstances which have a bearing on the mind of ld. CIT(E) questioning the genuineness of act....