SHIVAY JEE vs. EVA FOUNDATION,PALI, RAJASHTHAN

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ITA 177/JODH/2024Status: DisposedITAT Jodhpur06 August 202626 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(E)'s rejection of the Section 12AB registration was not justified as the grounds were based on presumptions and unsupported estimates, and directed the CIT(E) to grant registration. The Tribunal also set aside the rejection of the Section 80G approval, considering a subsequent CBDT circular that extended the filing deadline.

What were the facts?

The assessee's applications for registration under Section 12AB and approval under Section 80G were rejected by the CIT(E) due to alleged discrepancies in articles of association, benefit to interested persons, and non-genuineness of activities. The assessee also faced rejection for the 80G application due to absence of 12AB registration and delayed filing.

What were the issues?

Whether the rejection of registration under Section 12AB and approval under Section 80G by the CIT(E) was based on sufficient grounds, and if a subsequent CBDT circular can be applied to pending appeals.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 80G(5)(iii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR

Before: SHRI SAKTIJIT DEY, HON’BLE & SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE

For Appellant: Shri Rajendra Jain (Advocate) and Smt. Raksha Birla CA
For Respondent: Ms. Shivani Bansal CIT-DR

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI SAKTIJIT DEY, HON’BLE VICE PRESIDENT AND SHRI MAKARAND VASANT MAHADEOKAR, HON’BLE ACCOUNTANT MEMBER ITA No. 177/JODH/2024 and 357/JPR/2024 (Assessment Year: NA) Shivay Jeevseva Foundation CIT (Exemption), Jaipur C/o. Nenaram, Kothar Bali, Pali, Rajasthan-306504 PAN No. ABHCS2164C Assessee by Shri Rajendra Jain (Advocate) and Smt. Raksha Birla CA (Physically) Revenue by Ms. Shivani Bansal CIT-DR (Physically) Date of Hearing 03 / 08 / 2026. Date of Pronouncement 06 / 08 / 2026.

ORDER PER: SHRI MAKARAND VASANT MAHADEOKAR :

These two appeals filed by the assessee arise from two separate orders passed by the learned Commissioner of Income Tax (Exemption), Jaipur [“CIT(E)”], in Form No. 10AD. Since both appeals concern applications filed by the same assessee, arise from a common set of facts and involve interconnected issues, they are being considered together.

2 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) 2. The particulars of the impugned orders are as follows: Appeal Application Impugned order ITA No. 177/Jodh/2024 Registration under section 12AB Order dated 29.09.2023 ITA No. 357/Jpr/2024 Approval under section 80G(5)(iii) Order dated 29.09.2023

Condonation of Delay 3. Both appeals have been filed with a delay of 114 days. The assessee has filed separate petitions dated 21.03.2024 seeking condonation of the delay. It is stated in the petitions that the impugned orders were required to be challenged on or before 28.11.2023, whereas the appeals were filed on 21.03.2024. The assessee was under the bona fide impression that, after rejection of its applications under sections 12AB and 80G, it could submit fresh applications in Form No. 10AB and that it was not necessary to challenge the impugned orders before the Tribunal. The assessee further explained that its director subsequently consulted its Chartered Accountant and handed over the earlier applications and rejection orders for advice. Upon examining the records, the consultant advised that appeals were required to be filed before the Tribunal against the orders dated 29.09.2023. The assessee thereafter filed the present appeals, resulting in a delay of 114 days. According to the assessee, the delay was neither deliberate nor

3 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) attributable to any intention to abandon the statutory remedies but occurred because of a bona fide misunderstanding regarding the appropriate legal remedy. The assessee has, therefore, prayed that the delay be condoned by adopting a liberal and justice-oriented approach so that the disputes may be decided on their merits.

4.

Considering the submissions made in the condonation petitions, the explanation furnished by the assessee, and the fact that the learned Departmental Representative has not objected to the prayer for condonation, we are satisfied that the assessee was prevented by reasonable and sufficient cause from filing the appeals within the prescribed time. The delay of 114 days in filing both the appeals is accordingly condoned.

Facts of the Case 5. The assessee is a Section 8 company which filed an online application in Form No. 10AB on 31.03.2023 seeking registration under section 12AB of the Income Tax Act, 1961. The learned CIT(E) issued a notice dated 24.07.2023 requiring the assessee to furnish the prescribed documents and explanations by 08.08.2023. As no reply was initially

4 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) received, a reminder dated 10.08.2023 was issued fixing the matter for 16.08.2023. The assessee thereafter furnished a reply dated 15.08.2023.

6.

Upon examining the reply, the learned CIT(E) noticed certain discrepancies and issued a final show-cause notice dated 14.09.2023, requiring compliance by 20.09.2023. The assessee furnished a partial reply on 19.09.2023 and sought a further period of two to three days on the ground that one of its directors, Shri Harshad Rawal, was undergoing medical treatment. According to the learned CIT(E), the balance information and explanations were not furnished within the available time.

7.

The learned CIT(E) rejected the application principally on the following grounds:

 Discrepancy in the Articles of Association  Benefit to an interested person  Genuineness of activities and non-compliance

8.

The learned CIT(E) observed that the assessee had debited salary expenditure of Rs.1,60,050/- for the financial year 2022-23, whereas the expenditure reflected under charitable activities was Rs.77,390/-. Since

5 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) employee-wise particulars and supporting evidence were not furnished, the salary expenditure was treated as unverifiable.

9.

The learned CIT(E) further noticed that the assessee had received donations of Rs.3,60,305/- for the construction of bathrooms and had capitalised an amount of Rs.3,60,000/-. The assessee stated that three bathrooms measuring 5 feet × 6 feet, 5 feet × 6 feet and 6 feet × 8 feet had been constructed for the use of the staff working at the Gaushala and its visitors. The learned CIT(E), however, estimated the reasonable construction cost at Rs.75,600/- and considered the amount capitalised by the assessee to be excessive. He also observed that the land on which the construction was made was not reflected in the balance sheet and that the assessee had furnished only a no-objection declaration from Smt. Bhuri Devi without documentary evidence establishing ownership of the land.

10.

On the basis of the above observations, the learned CIT(E) held that the assessee had failed to establish the charitable nature of its constitution, the genuineness of the payments made to the director and the genuineness of its activities and expenditure. The application for registration under section 12AB was accordingly rejected on the grounds

6 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) of discrepancies in the Articles of Association, benefit to an interested person, and non-genuineness of activities and non-compliance.

11.

The assessee filed a separate application in Form No. 10AB on 31.03.2023 seeking approval under section 80G(5)(iii) of the Act. A notice dated 24.07.2023 was issued requiring the assessee to furnish the prescribed documents and explanations by 08.08.2023. The assessee subsequently furnished a reply, which was examined by the learned CIT(E). Upon noticing certain discrepancies, a further show-cause notice dated 14.09.2023 was issued requiring compliance by 20.09.2023.

12.

The assessee furnished a partial reply on 19.09.2023 and sought an additional period of two to three days. As no further submission was received, the learned CIT(E) decided the application on the basis of the material available on record.

13.

The learned CIT(E) rejected the application for approval under section 80G on the following two grounds:

 Absence of registration under section 12AB.  Application filed beyond six months from commencement of activities.

7 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) 14. The assessee stated before the learned CIT(E) that it was created on 02.11.2021, had applied for provisional approval on 12.03.2022 and had commenced its Gaushala activities on 15.05.2022. It further stated that Form No. 10AB had been filed on 31.03.2023. 15. The learned CIT(E) observed that, under clause (iii) of the first proviso to section 80G(5), an institution provisionally approved under section 80G was required to apply for regular approval at least six months before the expiry of the provisional approval or within six months of commencement of its activities, whichever was earlier. Since the assessee commenced its activities on 15.05.2022 but filed Form No. 10AB only on 31.03.2023, the application was treated as having been filed beyond the prescribed period.

16.

The assessee had contended that the application was filed before the extended date of 30.09.2023. The learned CIT(E), however, held that the extension then granted for filing Form No. 10AB was confined to applications under section 10(23C) and section 12A and did not extend the time prescribed for applications under clause (iii) of the first proviso to section 80G(5). The learned CIT(E) further held that he had no

8 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) statutory power to condone the delay in filing Form No. 10AB. The application was accordingly treated as non-maintainable and rejected.

17.

Aggrieved by the said orders, the assessee has raised the following grounds of appeal in ITA No. 177/Jodh/2024:

1.

The learned Commissioner of Income Tax (Exemption), Jaipur [“CIT(E)”] erred in fact and in law rejecting the application made for registration u/s 12AB, without affording proper opportunity and without considering the submission made by the appellant company on 28.09.2023. The order passed is against the principal of natural justice and therefore we pray to your honour to set aside the said order. 2. The Learned CIT(E) has erred in law and on facts in rejecting the application filed in form No.10AB for approval u/s 12AB of Income-tax Act on the following grounds:- A. Discrepancies in Article of Association B. Benefit to Interested Person C. Non-Genuineness of Activities and Non-Compliances The order passed without considering the submission made by the appellant company against the above stated and therefore we pray to your honour to grant the registration u/s 12AB to the appellant trust. 3. Your Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal. 18. In ITA No. 357/JODH/2024 the grounds of appeal are:

1.

The Learned CIT(E) has erred in law and on facts in rejecting the application filed in form No.10AB for approval u/s 80G(5) of Income-tax Act on the following grounds:- A. Approval u/s 80G cannot be granted without registration u/s 12AB. B. Commencement of activities.

9 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) 2. The order passed without considering the submission made by the appellant company against the above stated and therefore we pray to your honour to grant the registration u/s 80G(5) to the appellant trust. 3. Your Appellant craves the right to add to or alter, amend, substitute, delete or modify all or any of the above grounds of appeal. 19. Before us, the learned AR reiterated the grounds of appeal and relied upon the written submissions filed before us. He submitted that the learned CIT(E) had rejected the application on an incorrect appreciation of the facts, unwarranted presumptions and an unduly technical approach, without properly considering either the charitable objects of the assessee or the activities actually carried out by it.

20.

Addressing the objection relating to clause 37 of the Articles of Association, the learned AR submitted that the said clause was merely a standard enabling provision permitting the company to purchase its own shares or specified securities, subject to the provisions of the Companies Act and other applicable laws. The mere presence of such a clause in the Articles of Association could not lead to the conclusion that the assessee was not established for charitable purposes.

21.

It was contended that the learned CIT(E) had proceeded on a hypothetical assumption that the said clause might enable the assessee

10 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) to undertake non-charitable activities or distribute profits. There was no finding that the assessee had actually undertaken any buy-back of shares, distributed any profit, diverted charitable funds or carried out any activity contrary to its stated objects. The assessee was a section 8 company governed by the statutory restrictions applicable to such companies. Its charitable character was, therefore, required to be examined with reference to its objects and actual activities and not on the basis of a conjectural interpretation of one enabling clause in the Articles of Association.

22.

As regards the payments made to Shri Harshad Rawal, the learned AR submitted that the learned CIT(E) had presumed, merely because the recipient was a director, that the payments represented utilisation of the assessee’s funds for his personal benefit. The identity of the recipient by itself did not establish that the amounts had been misappropriated or applied for his personal purposes. The nature and purpose of each payment were required to be examined independently with reference to the books of account, ledger accounts, bills, vouchers and other supporting documents.

11 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) 23. The learned AR contended that sections 13(1)(c) and 13(3) could not be invoked without first establishing that the amounts in question had actually been used or applied, directly or indirectly, for the personal benefit of a specified person. The learned CIT(E) had not brought any positive material on record to establish that the amounts referred to in the impugned order were utilised for the personal purposes of Shri Harshad Rawal. The adverse conclusion was, therefore, based upon a presumption arising from the status of the recipient and not upon evidence concerning the actual application of the amounts.

24.

It was further submitted that even if any particular payment required examination under section 13, the consequence thereof was required to be determined in accordance with sections 11 to 13 while examining the assessee’s claim for exemption in the relevant assessment proceedings. An individual transaction requiring examination under section 13 could not, without anything further, establish that the institution itself was not genuine or that all its charitable activities were non-genuine.

25.

With regard to the salary expenditure of Rs.1,60,050/-, the learned AR submitted that the adverse inference had been drawn primarily

12 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) because employee-wise particulars were not furnished in the format prescribed by the learned CIT(E). The inability to furnish a particular detail in a specified format could not by itself establish that the entire expenditure was fictitious or that the charitable activities of the assessee were non-genuine. The genuineness of the expenditure was required to be examined on the basis of the books of account, payment records, vouchers and other relevant evidence. According to the learned AR, no positive material had been brought on record to establish either that the salary expenditure was fictitious or that no employees had been engaged by the assessee.

26.

Addressing the expenditure of Rs.3,60,000/- incurred on the construction of three bathrooms measuring 108 square feet in aggregate, the learned AR submitted that the learned CIT(E) had estimated the reasonable cost of construction at Rs.75,600/- by applying an assumed rate of Rs.700/- per square foot. Such an estimate was made without obtaining any technical valuation report, independent expert opinion, quotation from a contractor or other reliable evidence concerning the actual cost of construction.

13 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) 27. The learned AR submitted that the cost of construction depended upon several factors, including the quality of the material, labour charges, foundation work, plumbing, sanitary fittings, electrical work, transportation, site conditions and incidental expenditure. It could not be determined merely by examining photographs and applying an assumed rate per square foot. The bathrooms had been constructed for use by the staff and workers engaged in the Gaushala and by visitors. The construction was, therefore, directly connected with the charitable activities of the assessee. The learned CIT(E)’s estimate of the cost, even if accepted for the purpose of further verification, could not by itself establish that the assessee’s activities were non-genuine.

28.

As regards the non-reflection of the land in the balance sheet, the learned AR submitted that ownership of land was not a mandatory condition for carrying out charitable activities. A charitable institution could undertake activities on land made available by a third party through permission, licence, consent or any other permissible arrangement. The assessee had furnished a declaration or no-objection from Smt. Bhuri Devi regarding the use of the land and had also furnished evidence relating to the construction and use of the

14 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) bathrooms. The mere fact that the land was not owned by the assessee or reflected as an asset in its balance sheet did not establish that the construction was fictitious or that the charitable activities were not undertaken.

29.

On the legal scope of the registration proceedings, the learned AR submitted that the inquiry under section 12AB was confined to examining the charitable nature of the objects and the genuineness of the activities. The registration authority was not required to determine at that stage whether exemption under sections 11 and 12 would ultimately be available for a particular assessment year or whether any provision of section 13 would apply to a specific transaction. Such matters, according to him, were required to be examined by the Assessing Officer in the relevant assessment proceedings on the basis of the complete material available for that year.

30.

The learned AR relied upon judicial principles laid down in the judgement of Hon’ble Supreme Court in Ananda Social and Educational Trust Vs. CIT [(2020) 426 ITR 340] to the effect that, at the stage of registration, the authority is required to examine whether the objects are charitable and whether the activities are genuine and in consonance with

15 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) those objects. The registration proceedings are not intended to determine the ultimate availability of exemption under sections 11 and 12.

31.

He further relied upon the principle that the applicability of section 13 concerns the allowability of exemption during assessment and cannot, merely by itself, constitute a ground for refusing registration. The relevant extract relied upon by the learned AR from the decision of Hon’ble High Court in case of CIT(Exemptions) Vs. Bayath Kutchhi Dasha Oswal Jain Mahajan Trust [(2016) 74 taxmann.com 199] reads as under:

“Thereafter to suggest that the activities were carried out only for such purposes would be entering into the realm of granting exemption in terms of section 13 of the Act, which would be the task of the Assessing Officer to be undertaken at the time of assessment on the basis of material that may be brought on record.” 32. The learned AR placed reliance on the decision of Co-ordinate Bench in case of Visan Foundation Vs. CIT(Exemption) in ITA No. 3604/Del/2026 where the above referred judicial principles were followed.

16 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) 33. It was accordingly submitted that the objections concerning the Articles of Association were hypothetical; the allegation of benefit to the director was unsupported by evidence of personal benefit; and the observations concerning salary expenditure, construction expenditure and use of land did not establish that the assessee’s charitable activities were non-genuine. The learned AR, therefore, prayed that the impugned order be set aside and the learned CIT(E) be directed to grant registration to the assessee under section 12AB.

34.

The learned DR relied upon the impugned orders passed by the learned CIT(E) and supported the reasons and findings recorded therein for rejecting the assessee’s applications under section 12AB and section 80G(5)(iii).

35.

We have considered the rival submissions and perused the material available on record.

36.

The principal controversy in ITA No. 177/Jodh/2024 is whether the objections recorded by the learned CIT(E) establish that the objects of the assessee are not charitable or that its activities are not genuine so as to justify rejection of registration under section 12AB. The learned CIT(E) rejected the application principally on account of clause 37 of the

17 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) Articles of Association, payments made to Shri Harshad Rawal, salary expenditure of Rs.1,60,050/-, expenditure of Rs.3,60,000/- on the construction of three bathrooms and the fact that the land on which the construction was made was not reflected in the assessee’s balance sheet. The learned AR has offered a specific explanation on each of these objections, whereas the learned DR has relied upon the impugned orders.

37.

In this regard, we find that a Coordinate Bench of the Tribunal, in its order dated 24.07.2026 in ITA No. 3604/Del/2026, considered a substantially similar situation where registration had been rejected on account of expenditure allegedly not supported by adequate evidence and payments routed through a managing trustee. Paragraphs 7 to 9 of the said decision read as under:

“7. In the above factual matrix of the case, the issue that warrants our adjudication is whether on the facts the assessee is entitled to the registration u/s 12AB of the Act claimed for in Form 10AB under Section 12A(1)(ac)(ii) of the Act. It is observed that the Ld. CIT(E) has primarily rejected the registration on the ground that the assessee has incurred expenditure which were not substantiated by cogent documentary evidences, as to whether the same pertained to the charitable activities or not and, further, the apprehension of the Ld. CIT(E) that the said expenditure is alleged to have been routed through the Managing Trustee without adequate evidence and as the same is for the payment towards CSR projects on the basis of contractual agreements,

18 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) and hence the same cannot be held to be for the benefit of public at large. Pertinently, it is now a settled proposition of law that the Ld. CIT(E), at the time of registration, is duty bound to consider whether the objects of the Trust are charitable in nature and whether the activities carried on are genuine as in accordance with the objects of the Trust. We place reliance on the decision of the Hon’ble Apex Court in the case of M/s Ananda Social and Educational Trust vs. CIT, reported in AIR 2020 SUPREME COURT 1189, wherein this proposition was reiterated and that it is for the Commissioner to establish the fact that the assessee was undertaking activities which were contrary to the objects of the Trust for the purpose of denying registration. It further held that though the facts in the said case was, where the assessee had not carried out any activities, it has been held that the Commissioner will have to emphasise on whether the activities undertaken by the Trust are contrary to the objects of the Trust and only upon satisfying the same the Commissioner is entitled to deny registration.

8.

We also draw support from the decision of the Hon’ble Allahabad High Court, Lucknow Bench in the case of CIT vs. Red Rose School (2007) 163 TAXMAN 19 (All) which has dealt with this issue at length, wherein it was held that at the time of considering the application for registration made under Section 12A of the Act, the Commissioner shall call for such document or information from the Trust in order to satisfy about the genuineness of the activities of the Trust and to carry on such inquiries as he may deem necessary and only upon satisfying himself about the objects of the Trust or institution and the genuineness of the activities, registration shall be granted, else, he may refuse the registration. It held that for the purpose of claiming exemption under Section 11 or 12 of the Act and, consequently, for the applicability of Section 13 of the Act, the Commissioner is only required to look into two aspects, viz., the genuineness of activities and also about the objects of the Trust. Further, it is always open for the Revenue to assess the income and to levy tax if in case it is found that the income derived is not out of the activities of the Trust or if the expenditure cannot be attributed to the objects of the Trust. The Court reiterated that if registration was not granted in genuine cases, then, the assessee would be deprived of claiming such benefit which it would be entitled to. It was further held that only when

19 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) the objects of the Trust are against the public policy or are not of charitable purpose, then, registration shall be refused. Further emphasis was also laid on sub-section (3) which was inserted w.e.f. 01.10.2004 where the Commissioner was granted the power of cancellation of registration if it was found that there was any violation of the provision or in case of satisfying that the activities are not genuine. Therefore, registration cannot be rejected on mere presumptions and surmises that the Trust has misused its income or with regard to the applicability funds for the purpose of charitable activities. Also, whether the Trust was earning profit or was misusing income derived from the Trust would be a ground for denying exemption only with respect to that income which is alleged to have been as per the violation of the provisions or the objects of the Trust. It also clarified that mere registration of the Trust does not entitle the assessee to the exemption claimed, but, it merely enhances the process of determining whether the assessee’s claim of exemption under Section 11 or 12 of the Act to be allowable or not.

9.

In the present case in hand, we do not find any discussion as to the objects of the Trust, neither as to the genuineness of its activities. Rather, it was with regard to the expenditure claimed by the assessee towards food, rent and training expenses, more specifically with regard to the food expenses incurred by the assessee. This, in our view, is not justifiable reasoning for denial of registration. By respectfully following the proposition laid down by the Hon’ble Apex Court and the Hon’ble High Courts, we deem it fit to set aside the order of the ld.CIT(E) with a direction to grant the assessee registration, subject to the condition that the assessee satisfies the requirements mandated as per Section 12A of the Act. Therefore, the grounds of appeal raised by the assessee are hereby allowed on the above terms.” 38. Applying the above principles, we find that the learned CIT(E) has not recorded any categorical finding that the substantive objects of the assessee are non-charitable. The objection relating to clause 37 of the Articles of Association proceeds on the apprehension that the assessee

20 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) may purchase its own shares or specified securities and may thereby undertake a non-charitable activity. The clause is, however, expressly subject to the Companies Act and other applicable laws. The assessee is a section 8 company and no material has been brought on record to show that it has actually undertaken any buy-back of shares, distributed profits or diverted its funds contrary to its charitable objects. Registration cannot be refused on the basis of a hypothetical possibility when there is no actual transaction or activity contrary to the stated objects.

39.

The objection concerning payments aggregating to Rs.98,547/- made to Shri Harshad Rawal also does not, by itself, establish that the funds were applied for his personal benefit. The status of the recipient as a director may justify examination of the transactions, but it cannot substitute evidence concerning their actual nature and purpose. The impugned order does not identify any specific payment shown to have been appropriated by the director for his personal use. Consequently, the mere identity of the recipient does not establish a violation of sections 13(1)(c) and 13(3) or prove that the activities of the assessee are non-genuine.

21 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) 40. Similarly, the non-furnishing of employee-wise particulars in a specified format could justify further verification of the salary expenditure of Rs.1,60,050/-, but it does not establish that no employees were engaged or that the entire expenditure was fictitious. No positive material has been referred to in the impugned order to demonstrate that the salary payments were false or unrelated to the activities of the assessee.

41.

The finding concerning the construction expenditure is also based upon an estimate. The learned CIT(E) considered the reasonable cost of constructing three bathrooms measuring 108 square feet to be Rs.75,600/- by applying an assumed rate of Rs.700/- per square foot, as against the expenditure of Rs.3,60,000/- recorded by the assessee. No valuation report, technical estimate, contractor’s quotation or comparable material has been brought on record in support of the rate adopted. The cost of construction depends upon the nature of construction, material, labour, plumbing, sanitary fittings, electrical work, transportation and site conditions. The difference between the expenditure recorded and the estimate made by the learned CIT(E), without supporting technical material, cannot conclusively establish that

22 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) the expenditure was fictitious or that the activities of the assessee were non-genuine.

42.

The non-reflection of the land in the balance sheet also cannot, by itself, lead to the conclusion that no charitable activity could have been undertaken thereon. Ownership of the land is not an indispensable condition for carrying out charitable activities. The assessee had furnished a declaration or no-objection from Smt. Bhuri Devi permitting the use of the land. There is also no finding that the bathrooms were not constructed or that they were used for purposes unrelated to the activities of the assessee.

43.

The objections recorded by the learned CIT(E) may be relevant for verification of particular expenditure or for determining the assessee’s entitlement to exemption in the appropriate assessment proceedings. The Assessing Officer remains entitled to examine the nature and purpose of payments made to specified persons, the genuineness and reasonableness of salary and construction expenditure, the application of income and compliance with sections 11 to 13. Those matters, however, cannot justify refusal of registration unless the material

23 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) establishes that the objects are non-charitable or that the activities themselves are fictitious, a camouflage or contrary to the stated objects.

44.

In the present case, the impugned order does not establish either that the substantive objects of the assessee are non-charitable or that its activities are contrary to those objects. The rejection rests substantially upon presumptions arising from individual transactions, the absence of particulars in a particular format and an unsupported estimate of construction cost. Such considerations do not constitute sufficient grounds for denying registration under section 12AB.

45.

We, therefore, set aside the order dated 29.09.2023 passed by the learned CIT(E) rejecting the assessee’s application for registration under section 12AB. The learned CIT(E) is directed to grant registration under section 12AB on the basis of Form No. 10AB filed by the assessee on 31.03.2023, for the period permissible in accordance with law. We clarify that the grant of registration shall not preclude the Assessing Officer from examining the assessee’s entitlement to exemption and its compliance with sections 11 to 13 for any relevant assessment year.

46.

The application for approval under section 80G was rejected on two grounds. First, the application for registration under section 12AB

24 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) had been rejected by the separate order of even date. Secondly, the learned CIT(E) held that the assessee had commenced its activities on 15.05.2022 but filed Form No. 10AB only on 31.03.2023 and, therefore, the application was beyond the period prescribed under clause (iii) of the first proviso to section 80G(5).

47.

The first objection no longer survives in view of our direction to grant registration to the assessee under section 12AB.

48.

As regards the second objection, the CBDT, by Circular No. 7/2024 dated 25.04.2024, subsequently extended the due date for filing Form No. 10AB under clause (iii) of the first proviso to section 80G(5) up to 30.06.2024. Paragraph 3(ii) of the Circular expressly covers applications under the aforesaid provision. Paragraph 4 extends the relaxation to pending applications, while paragraph 4.1 grants relief even where applications had already been rejected solely on account of delayed filing or use of an incorrect section code.

49.

The assessee filed Form No. 10AB on 31.03.2023, which is well before the extended date of 30.06.2024. The correctness of the order rejecting that application remained pending in appeal when the relaxation was issued. An appeal is a continuation of the original

25 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) proceedings and the subsequent beneficial relaxation, expressly intended to mitigate genuine hardship, is required to be taken into consideration while deciding the surviving controversy. Insisting upon the filing of another identical application would serve no substantive purpose when the original application containing the relevant particulars is already before the authority and its rejection remains under appellate consideration.

50.

Consequently, the application filed on 31.03.2023 cannot be treated as time-barred. The impugned order under section 80G does not record any other independent statutory disqualification against the assessee. Both grounds on which the application was rejected, therefore, cease to survive.

51.

We accordingly set aside the order dated 29.09.2023 passed by the learned CIT(E) rejecting the assessee’s application for approval under section 80G. The learned CIT(E) is directed to grant approval under section 80G on the basis of Form No. 10AB filed on 31.03.2023, for the period permissible in accordance with law.

52.

Accordingly, the substantive grounds raised by the assessee in both appeals are allowed.

26 ITA No. 177/Jodh/2024 AND 357/JPR/2024 (Assessment Year: NA) 53. In the result, ITA No. 177/Jodh/2024 and ITA No. 357/Jpr/2024 are allowed.

Order pronounced in open court on 06 / 08 / 2026.

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) ACCOUNTANT MEMBER VICE PRESIDENT Dated : 06 / 08 / 2026. Pritesh Vaishnav PS True Copy Copies to : (1) The appellant. (2) The respondent. (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File

BY ORDER,

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