ITAT Sets Aside Rejection of 12AB Registration to Ujjain-Based NGO: Remands Matter to CIT (Exemption) [Read Order]

The Income Tax Appellate Tribunal (ITAT), Indore Bench, has set aside the order of the Commissioner of Income Tax (Exemption), which had denied permanent registration under Section 12AB of the Income Tax Act, 1961, to Mahavir Yuva Sarva Shiksha Samajik Samiti, a Ujjain-based charitable society, and cancelled its earlier provisional registration.

The Tribunal held that the rejection was solely based on the absence of donor PAN and address details for small-ticket donations and that the CIT (Exemption) had not recorded any adverse finding against the genuineness of the society or its charitable objects.

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The assessee, Mahavir Yuva Sarva Shiksha Samajik Samiti, is a society registered under the Societies Registration Act, 1860. It had earlier been granted provisional registration under Section 12AB of the Act by the CPC for the Assessment Years 2022–23 to 2024–25.

The society subsequently filed Form 10AB to obtain permanent registration. In response, the CIT (Exemption) issued a notice seeking various details including a complete list of donations received over the last three financial years, specifying names, PAN, addresses, and other particulars of the donors.

The assessee submitted donation lists for FY 2020–21, 2021–22, and 2022–23, showing small contributions ranging between ₹1,100 to ₹2,000 by over 400 individuals, totaling approximately ₹6.21 lakhs. However, PAN and full address details were not available for many of the donors.

Based on this, the CIT (Exemption) rejected the application for permanent registration under Section 12AB and cancelled the earlier provisional registration as well, citing inability to verify the genuineness of the donations.

Aggrieved, the assessee filed an appeal before the ITAT under Section 253 of the Act. The Authorized Representative (AR) submitted that the donations received were in small amounts, mostly in cash, from local individuals for charitable purposes. It was argued that insisting on PAN and full address details for each of these minor donations caused undue hardship and was not in line with the practical realities of grassroots charitable work.

The assessee further contended that audit reports for all relevant years had disclosed the donation amounts transparently and that no finding had been recorded by the CIT (Exemption) against the society’s charitable activities or objectives. The Revenue argued that the CIT (Exemption) had acted within his rights in seeking basic information to verify the genuineness of donations. However, it was also submitted that if the Tribunal found it appropriate, the matter could be remanded for fresh consideration.

The Bench comprising Shri Bhagirath Mal Biyani (Accountant Member) and Shri Paresh M Joshi (Judicial Member) noted that the rejection was made entirely on the technical ground of incomplete donor details and not on the merits of the society’s activities.

The Tribunal observed that the society’s objects, such as tree plantation, free medical treatment, blood donation camps, and providing support to the differently abled, had not been questioned. It held that while the department is entitled to seek clarity on donations, the context and nature of donations must also be considered.

The ITAT found it appropriate to remand the matter back to the CIT (Exemption) for fresh adjudication. It directed that a reasoned order be passed after considering the overall circumstances, including the small value of donations and the genuineness of the society’s activities. As a result the appeal was allowed for statistical purposes and the impugned order was set aside. The matter was remanded to the file of the CIT (Exemption) for a de novo decision.

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