Loading judgment…
Facts
The assessee, Yoga Sanskar Foundation, challenged the CIT(E)'s rejection of its applications for registration under Section 12AB and approval under Section 80G of the Income-tax Act, 1961. The rejections were primarily based on a delay in filing the application for regular registration and the assessee's alleged failure to substantiate its charitable activities with sufficient evidence. The CIT(E) also noted that the trust's financial statements did not reflect expenditure on charitable objectives, only establishment and administrative costs.
Held
The Tribunal acknowledged the marginal delay in filing the application for final approval and noted that recent legislative amendments (Finance Act, 2024) allow for condonation of delay with reasonable cause. It emphasized a need for a flexible approach to procedural laws and an opportunity for the assessee to explain the delay and present necessary evidence. Consequently, both the applications for Section 12AB registration and Section 80G approval are restored to the file of the CIT(E) for a de novo adjudication.
Key Issues
1. Whether the rejection of applications for registration under Section 12AB and approval under Section 80G was justified due to delayed filing. 2. Whether the assessee failed to substantiate its charitable activities, thereby warranting rejection of the applications.
Sections Cited
12AB, 80G, 12A, 12A(1)(ac), 12A(1)(ac)(iii), 12A(1)(ac)(vi), 12AB(1)(b)(i), 10(23C), 80G(5)
AI-generated summary — verify with the full judgment below
Before: JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR&
Date of Hearing 15.10.2025 Date of Pronouncement 03.11.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The above captioned appeals have been filed by the assessee Trust against the orders passed by the Learned Commissioner of Income- tax(Exemptions), Pune [hereinafter referred to as “CIT(E)”] pertaining to orders passed u/s. section 12AB and 80G of the Income-tax Act, 1961 [hereinafter referred to as “Act”]. Since the issues are inter-connected and also the fact that these appeals were heard together, they are being taken P a g e | 2 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai up together for adjudication vide this composite order for the sake of brevity.
The grounds of both the appeals are as under:
1. 1. The Ld. Commissioner of Income Tax (Exemption) erred in rejecting the application made in Form No.10AB seeking registration u/s.12AB of the Income Tax Act, 1951 alleging that there was delay in filing the application. That the rejection is bad in law.
2. The Ld. Commissioner of Income Tax (Exemption) erred in rejecting the application made in Form 10AB u/s. 12A of the Act alleging that the appellants failed to substantiate activities without appreciating the documentary evidences and the replies filed during the proceedings. That rejection on this ground is arbitrary and unwarranted.
Ground no.1 pertains to the rejection of application for registration u/s 12AB of the Act as the ld.CIT(E) who was of the opinion that the application was delayed. According to him, the assessee filed application for registration in Form No. 10AB under clause (iii) of section 12A(1)(ac) of the Act. The information/details were called for under the provisions of section 12AB(1)(b)(i) of the Act from which it was noticed that the activities were commenced at least from F.Y. 2023- 24. Further, as per the copy of order of provisional registration under section 12AB read with section 12A(1)(ac)(vi) of the Act, the date of provisional registration was 04/07/2023. As per the provisions of section 12A(1)(ac)(iii) of the Act, where a trust or institution has been P a g e | 3 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai provisionally registered under section 12AB of the Act, the application for regular registration under section 12AB was required to be filed within six months from the date of commencement of activities. Since, activities had already commenced before the date of provisional registration, the trust was required to file the application within six months from the date of provisional registration i.e. on or before 03/01/2024. The extended due date for filing of such application was 30/06/2024 as per CBDT, Circular No.7/2024, dated 25/04/2024, whereas it filed the present application on 16/12/2024. Thus, it was observed that it did not file the present application within the time limit allowed under section 12A(1)(ac)(iii) of the Act. 3.1 Before him, it was contended by the assessee that there was no delay in making the application as activities of the trust had not yet commenced. Reliance was also placed on the case of Aggarwal Sabha Puran Enclave old Faridabad vs. C.I.T(E) 1171 taxmann.com 837 {Delhi - Trib.)[12-02-2025] wherein it was held that “Where assessee trust was otherwise eligible for approval under section 80G, non-filing of application for approval under section 80G within six months of commencement of activities should not be an impediment in granting. registration under section 8OG. The real activity of the foundation will start from now as the trust will be granted final registration u/s 12A of P a g e | 4 ITA No. 5144 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai the Act. The reply of the assessee was however, not found to be acceptable holding that the trust had not filed the present application within the time limit allowed under section 12A(1)(ac)(iii) of the Act. He rejected the application on this count as well apart from the non- genuineness of the activities of the trust as dealt in the grounds and paras to follow.
On careful consideration of the facts, we find that the activities of the Trust had already started in FY 2023-24 as rightly pointed out by the ld.CIT(E) which is evident from the financials submitted before us by the ld.AR. Therefore, the time limit needs to be examined accordingly. We find that the assessee filed provisional registration application in time which is undisputed. Moreover, the delay in filing application for final approval was marginally delayed for which the assessee needs to explain any reasonable cause in this regard to the satisfaction of the authority concerned. We are of the considered view that flexible and pragmatic approach to such procedural laws is necessary as against recognising a strict adherence to do which could sometime lead to injustice. The Hon'ble Supreme Court in plethora of cases always emphasised that while considering delay, one must first ascertain bonafides of the explanation offered by the party seeking condonation. Thereafter, there must be sufficient cause which is sustainable based on P a g e | 5 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai genuine reasonable explanation. In our considered opinion the assessee must get an opportunity to present its case before the ld.CIT(E) and to explain the reason that caused the delay who shall consider the application of assessee seeking condonation of delay in accordance with law keeping in view to the above principles of natural justice.
4.1 We further find that the legislature has vide the Finance Act, 2024 from 01.10.2024 made available on the statute a “Proviso” to section 12A(1)(ac) of the Act that formally allows the CIT(E) to condone the delay if reasonable cause is shown. Currently, timely application for registration under section 12AB of the Act is crucial as failure may result in loss of exemption status. The amendment enables the Commissioner to condone delays in filing such applications, treating them as timely if reasonable cause is shown. This provision aims to alleviate situations where trusts or institutions miss deadlines due to unforeseen circumstances, ensuring they can continue under the exemption regime without incurring tax liabilities on accreted income. Accordingly, we allow the ground above for statistical purposes.
In ground no.2, it is submitted that the ld.CIT(E) erred in rejecting the application for registration on the observations that the assessee could not substantiate the charitable activities with cogent evidences.
P a g e | 6 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai 6. On verification of the details submitted by the assessee, it was noted by the ld.CIT(E) that the financial statement provided did not reflect any expenditure on the trust's objectives or activities which pertained solely to establishment and administrative costs. Although the date of commencement of activities, it was seen that the date of incorporation of the trust / institution was stated to be 02/06/2023 and it was also noted by him from the financial statements that expenditure on objects was shown right from the F.Y. 2023-24. Accordingly, a show cause was issued as to why the application should not be rejected and why the registration granted under section 12AB of the Act, should not be cancelled. The assessee did not submit complete details of activities carried out but only few letters from various institutions / academy / organisation were submitted and stated that the assessee was taking up charitable and social projects and some of them are charitable yoga classes / programs / sessions. However, the said activities were not supported with any photographs. In fact, the assessee trust had furnished detailed profile of Shri Girish Kadam and yoga brochure. However, these details were found to be very general in nature and no specific details as what actual activities were carried out, no credible evidence such as photographs of charitable activities, bills / vouchers etc. were submitted in support of these claim. Also, the photographs P a g e | 7 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai furnished were that of felicitation and mostly concentrating on the trustee only. Upon verification of the financial statements, it was noted that the no expenses were made on charitable activities/objects. In this connection, the assessee was specifically given another opportunity of being heard vide the notice dated 07/04/2025. However, the assessee trust failed to substantiate its charitable activities. 6.1 Considering the above facts and discrepancies noticed, the ld.CIT(E) was not satisfied about the genuineness of activities of the assessee and compliance of requirements of any other law for the time being in force by the assessee which were material for the purpose of achieving its objects. In view of the above, the application filed by the assessee was rejected and the provisional registration granted earlier under section 12AB read with section 12A(1)(ac)(vi) of the Act was cancelled.
In this regard, before us, the ld.AR has filed two paper books explaining the object clause to develop, establish, promote, facilitate, promotion, improvement of Yoga, sports, Yoga education, sports education, educational, social, cultural, economical and medical relief to the poor , youth , all sections of the society and advancement of any other charitable and developmental objects of general public utility and community welfare with specific object such as to provide, promote, P a g e | 8 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai propagate, train , teach ,workshops, camps , education institutions in the field of YOGA as well to promote traditional therapies like Yoga, Naturopathy,Meditation, Acupressure, Acupuncture, [Massage Therapy, Ayurveda, Homeopathy, Reiki etc. 7.1 It is further submitted that Dr. Girish Kadam, the Founder, is a renowned and highly respected figure in the field of Yoga. Prior to the establishment of the Foundation, Dr. Kadam was engaged in Yoga instruction in his personal capacity under the name “Yog Sutra.” Over time, he expanded his reach beyond individual teaching to promote Yoga education and awareness among corporates, educational institutions, and other organizations. His sincere efforts have been widely acknowledged through various achievement awards, letters of appreciation, etc. It is further pleaded that these initiatives could only be meaningfully and sustainably implemented with support in the form of grants, contributions, and partnerships from corporates, institutions, and government agencies, a goal that the Foundation is actively pursuing for which the grant of final approval under Sections 12A and 80G is necessary for the Trust. The provisional approval, which is valid only until 31.03.2026, is considered by these entities to be a temporary measure and insufficient for establishing long-term partnerships for this noble cause. It is contended that genuineness of objects and not P a g e | 9 ITA No. 5144 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai activities are relevant for registration. Trust may not have commenced activities and this cannot be the ground for denial of registration if objects are charitable and genuine. 7.2 The ld.CIT(DR) has placed reliance on the order of the authority below stating that he was justified in rejecting the application on the twin reasons of delay in submission of the application and non- genuineness of the activities.
We have duly considered the rival submissions. We find that the assessee did not furnish necessary evidences to the satisfaction of the ld.CIT(E ) resulting in rejection of its application. Having considered the facts and circumstances of the present case, we deem it appropriate to restore the application for seeking registration under section 12AB of the Act to the file of the ld.CIT(E) for de novo adjudication with a direction to the assessee to make available necessary evidences so as to satisfy the genuineness of the activities of the trust. Consequently, both the above grounds are allowed for statistical purposes.
ITA No. 5145/MUM/2025 1. The Ld. Commissioner of Income Tax (Exemption) erred in rejecting the application made in Form 10AB u/s. 80G of the Act alleging that the appellants failed to substantiate activities without appreciating the documentary evidences and the replies filed during the proceedings. That rejection on this ground is arbitrary and unwarranted.
P a g e | 10 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai 2. The Ld. Commissioner of Income Tax (Exemption) erred in rejecting the application made in Form 10AB seeking registration under section 80G of the Income Tax Act, 1961 due to the rejection of its application for registration u/s. 12AB. That rejection for application seeking registration u/s. 12AB is itself unlawful and consequently this order is also bad in law.
Both the above grounds are inter connected and are dealt with accordingly. In the instant case, it was noticed that the assessee was neither registered u/s 12AB read with section 12A(1)(ac)(i)/ 12A(1)(ac)(iii) nor approved u/s 10(23C) read with clause (i) / (iii) of first proviso to the said section and the case was not covered under the exclusions provided vide proviso to clause (i) of section 80G(5) of the Act. In fact, the application of the assessee in Form No.10AB for registration u/s 12AB filed under the provisions of section 12A(1)(ac)(iii) of the Act had already been rejected vide order dated18/06/2025. Therefore, the conditions prescribed under clause (i) of section 80G(5) of the Act, were not fulfilled in this case. Accordingly, he was not satisfied about the genuineness of activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act and therefore, rejected the application for registration u/s 80G of the Act.
In this regard, it is submitted by the ld.AR before us that the ld.CIT(E) erred in failing to appreciate that the assessee is a genuine charitable organization and the denial of registration would P a g e | 11 ITA No. 5144 & 5145/Mum/2025 Yoga Sanskar Sutra Foundation, Mumbai consequently deprive it of eligible exemptions under the Act, thereby adversely impacting its ability to source funds for application towards its objectives of social and public welfare.
Since we have already remanded the issue of grant of registration under section 12AB of the Act to the file of the ld. CIT(E) for de novo adjudication as per para 8 above while dealing with its application for registration, the instant order rejecting the application for registration under section 80G of the Act being consequential, is also set aside and the matter is restored to the file of the ld.CIT(E) for deciding it afresh. As a result, both the above grounds raised by the assessee are allowed for statistical purposes.
In the result, both the appeals in and 5145/Mum/2025 are allowed for statistical purposes.
Order pronounced in the open court on 03/11/2025. [Justice (Retd.) C.V.BHADANG] [PRABHASH SHANKAR] PRESIDENT ACCOUNTANT MEMBER