Denial of 80G Approval for Non-Commencement of Activities and Expiry of Registration: ITAT Remits Matter to CIT(E) [Read Order]

The Jaipur Bench of Income Tax AppellateTribunal ( ITAT) remitted the matter to the Commissioner of Income Tax (Exemption) [CIT(E)] after finding that the rejection of approval under section80G(5)(iii) of Income Tax Act,1961,was based on the expiry of the earlier provisional registration and non-commencement of activities.

Sankalp Foundation,appellant-assessee, had applied before the CIT(E) on 23.11.2024 seeking approval under section 80G(5)(iii) of the Act. The application was rejected as the assessee’s earlier provisional registration granted on 07.04.2022 under section 80G(5)(iv) had expired in March 2024, and the CIT(E) held that he lacked authority to condone the delay in filing a fresh application. The approval was further denied on the ground that the assessee had not commenced its activities.

The assessee counsel submitted that the appellant was registered under section 12A(1)(ac)(i) for a period of five years. It was pointed out that, as per Central Board of Direct Taxes (CBDT) Circular No. 11 of 2022 dated 03.06.2022, any Form 10AC issued during the financial year 2021-22 with the heading “order for provisional approval” instead of “order for approval” due to technical issues was to be treated as an approval order.

The counsel also referred to CBDT Circular No. 06/2023 dated 24.05.2023, which clarified that existing trusts were required to reapply for registration or approval, and once granted, such approval would remain valid for five years.

Relying on these clarifications, the assessee counsel urged that the order dated 07.04.2022 granting provisional approval under section 80G(5) be treated as a regular approval valid up to the assessment year 2027-28.

The two member bench comprising Narinder Kumar (Judicial Member) and Rathod Kamlesh Jayantbhai (Accountant Member) noted that the CIT(E) had not examined the assessee’s submissions or the CBDT Circulars dated 03.06.2022 and 24.05.2023 while deciding the application for approval under section 80G(5).

Considering this lapse, the tribunal found it appropriate to remit the matter to the CIT(E) for fresh adjudication in light of the said circulars and in accordance with law, after giving the assessee an opportunity of being heard.

As for the issue of non-commencement of activities, the bench observed that the impugned order did not contain any detailed discussion on the matter.

Since the issue had already been remitted, the tribunal disposed of the appeal for statistical purposes with a direction to the CIT(E) to decide the application afresh under section 80G(5)(iii), in accordance with law, after providing reasonable opportunity of hearing to the assessee.

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