Facts of the Case

The assessee-society applied for approval under Section 80G of the Income-tax Act, 1961 to enable donors to claim deduction for donations. The Commissioner of Income Tax (Exemption) rejected the application on the grounds that the society’s registration under the Societies Registration Act had expired and that sufficient documentary evidence regarding charitable activities, donations, and expenditure was not furnished.The society contended that it was already registered under Section 12AA of the Act and that renewal of its registration under the Societies Registration Act was delayed due to the COVID-19 pandemic but was subsequently granted with retrospective effect. Aggrieved by the rejection, the assessee filed an appeal before the Income Tax Appellate Tribunal.

Issues Involved

  1. Whether rejection of approval under Section 80G was justified due to expiry of registration under the Societies Registration Act.
  2. Whether failure to furnish documents proving charitable activities warranted denial of approval.
  3. Whether retrospective renewal of registration cured the defect.
  4. Whether the application required reconsideration on merits.

Petitioner’s (Assessee’s) Arguments

  • The assessee submitted that it held valid registration under Section 12AA, demonstrating its charitable status.
  • It argued that renewal of registration under the Societies Registration Act was delayed due to pandemic-related restrictions and was later granted retrospectively.
  • The assessee contended that approval under Section 80G should be granted or at least reconsidered on merits.
  • Reliance was placed on judicial precedents supporting grant of approval where activities are charitable and procedural lapses are rectified.

Respondent’s (Revenue’s) Arguments

  • The Revenue supported the order of the Commissioner (Exemption).
  • It was submitted that at the time of decision, the society did not possess valid registration under the Societies Registration Act.
  • The Department argued that the assessee failed to produce original vouchers, books of account, details of donations, and confirmation of cash donations exceeding prescribed limits.
  • In the absence of verifiable evidence, genuineness of activities could not be established.

Court Order / Findings (ITAT)

  • Grant of approval under Section 80G requires satisfaction regarding genuineness of activities and compliance with statutory conditions.
  • The assessee had subsequently obtained renewal of registration under the Societies Registration Act with retrospective effect.
  • However, necessary documents and evidence regarding activities and donations required verification by the Department.
  • Approval could not be granted mechanically without proper inquiry.

Important Clarification

The Tribunal emphasized that inquiry into the genuineness of activities under Section 80G read with Rule 11AA is not a mere formality. Approval can be granted only after proper verification of documents, activities, and statutory compliance, even where registration under Section 12AA exists.

Link to download the order –

https://itat.gov.in/public/files/upload/1626252852-04%20Patit%20Pawani%20Tara%20Tapo%20Sadhna.pdf

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