SOCIETY FOR BRIGHT FUTURE,NEW DELHI vs. CIT(EXEMPTION) DELHI, NEW DELHI

Heard and perused the records. As per ld. AR, its primary objects are directed towards public welfare, including disaster relief, medical assistance, rehabilitation, and educational support for the underprivileged. The Appellant, was established on September 11, 2008. It was first granted registration under Section 12A of the Income Tax Act, 1961, on September 3, 2009. It successfully migrated to the new registration regime and was granted registration on September 24, 2021, which was valid until A. Y. 2026-27. In compliance with statutory requirements, the Appellant filed applications in Form 10AB for the renewal of its registration under Section 12AB September 24, 2025 which was rejected for which assessee is in appeal and has raised following grounds:

On hearing both sides and after perusal of the material on record and the written submissions filed by the assesse we find that primary contention of the assesse is that going beyond the scope of inquiry needed u/s 12AB and ignoring material evidences on record said to be exhibit charitable nature of the activities the impugned order has been passed and reliance has been made on extraneous material. It was contended thatthe Ld. CIT(E) has fundamentally erred in law by holding that an alleged nonpayment of tax under Section 115BBC constitutes a "specified violation" for questioning the genuineness of activities. He has failed to appreciate that Section 115BBC is a specific taxing provision to be invoked during assessment proceedings and is not a condition for the grant or rejection of registration. The Ld. CIT(E) has made a presumptive determination of a potential tax liability under Section 115BBC and has used this presumption as a basis to deny the renewal of registration, which is a gross jurisdictional overreach.

Ld. Counsel contended that there is an incorrect allegation of benefit of a particular religious community and it was submitted that there is a flaw in demographic analysis of the beneficiaries. Reliance has been placed on the decision passed by Hon’ble Supreme Court in case of CIT, Ujjan Vs. M/s Dawoodi Bohara Jamat (SC) and Coordinate Bench decision of ITAT, Nagpur in case of Social Educational and Welfare Association Vs. CIT(E) vide ITA No. 71 & 72/Nag/2025). Further, ld. Counsel submitted that the overlooking specific and verifiable facts, which were on record before the Ld. CIT(E), and which establish the Appellant's long- standing credentials and the Department's consistent acceptance of its genuine charitable status, the application was rejected. In all preceding years, the genuineness of the Appellant's activities has been accepted by the Department. Crucially, the nature of the Appellant's charitable activities has remained consistent. There has been no material change in its objects or the manner of carrying out its activities that would warrant a sudden, adverse re-evaluation. The principle of consistency and decision in Radhasoami Satsang vs. CIT' [1992] 193 ITR 321 (SC) was relied to submit same have been overlooked.

It was submitted that the Ld. CIT(E) has drawn adverse inferences against the Appellant by referring to other organizations like the Human Welfare Foundation (HWF) and Jamaat-e-Islami Hind (JEIH), seemingly because of some common personnel. This approach is fundamentally flawed and contrary to the established principles of law. Each Assessee is a Distinct Juridical Person: It is a settled position of law that a society registered under the Societies Registration Act, or a trust, is a distinct juridica person, separate from its members, trustees, or other associated entities. Its legal rights, liabilities, and obligations must be assessed on the basis of its own actions, as evidenced by its own records and activities. The Income Tax Act does not contain any provision that makes one charitable institution vicariously liable for the alleged misconduct of another, merely on account of common management. The Ld. CIT(E)'s approach of imputing guilt is an attempt to pierce the corporate/juridical veil without any justification. Such piercing is permissible only in exceptional cases of proven fraud or where an entity is shown to be a sham, none of which has even been alleged, let alone proven, against the Appellant. Ld. AR relied decision in Ram Saran Das Kishori Lal Charitable Trust vs CIT(E) [ITAT Delhi, Order dated 12.11.2025], to contend that the Tribunal held that a trust cannot be held vicariously liable for the alleged criminal acts committed by doctors or employees using its facilities, especially when the trust or its trustees were not charged. The same logic applies here: the Appellant cannot be penalized for unproven allegations against separate legal entities.

Ld. AR submits that the impugned order is replete with references to "public domain information" and actions of other investigative agencies (like an alleged NIA raid) concerning third parties.This material is extraneous, irrelevant, and lacks any probative value in the Appellant's case. He submitted that it is a cornerstone of tax jurisprudence that anassessment or quasi-judicial order cannot be based on mere suspicion, conjecture, or surmise. The Ld. CIT(E) has not brought on record any final, conclusive order or finding from any agency that directly implicates the Appellant in any wrongdoing. Relying on the mere existence of an investigation into a third party to deny registration to the Appellant is a decision based on suspicion, not evidence.

He contended that material relied upon by quasi-judicial authority must be legally admissible. Unverified news reports or "information in the public domain" do not meet the standard of evidence required to pass an adverse order. The Ld. CIT(E) was obligated to conduct his own independent inquiry and base his findings on credible evidence pertaining directly to the Appellant's activities. The findings of the Ld. CIT(E) are based on a legally impermissible clubbing of identities, reliance on irrelevant and unverified information, and a complete disregard for the principles of natural justice. The order is thus vitiated by bias and extraneous considerations

Now, in the case of the assessee before us, we find that the assessee is a registered society, and the objectives of the society, as framed and as they exist, are certainly of the nature that is generally laid down for philanthropic and charitable activities, including service to the society and address issues of national integrity.

We find that what the primarily learned prescribed authority has examined is the fact that in financial years 2022-23, 2023-24, and 2024-25, the assessee has received huge amounts of donation. Out of this, a majority of the funds are received in cash, and the assessee was unable to satisfy the prescribed authority by giving the complete address or PAN of the donors. Thus, according to the Ld. Prescribed Authority, these donations were suspicious, being anonymous donations which have been made taxable under Section 115BBC of the Act. As for completeness, the relevant findings of the learned Prescribed Authority are reproduced below. “2. The facts of the case are discussed as under, based on the submission filed by the applicant and in light of provisions of Income Tax Act: 2.1 Source of donation: - The applicant during last three years has received substantial amount as donation. The data for last three years is tabulated as under. FY: 2022-23 FY 2023-24 FY 2024-25 Amount of donation 1,78,84,096 1,55,29,386 1,78,26,013 received in a year 2.1.1 Considering that applicant's substantial receipts are through donation, it was specifically asked to provide complete details of donors. Relevant part of notice in this regard is reproduced as under: "... please provide complete donor details(PAN or complete address) 2.1.2 The applicant did file its reply physically. After going through the list submitted it is seen that all of its donors are individuals and for most of them only district/city/state name is given as address. Thus, identity of most of its donors is not revealed. Such donors are anonymous as described in section 115BBC of the Act. Relevant part of the section is reproduced as under.

Thus the primary issue before us is whether, at this stage, the learned

We are of the considered view that, indeed, the scope of examination

Thus to our mind, it is not just that the entity has been able to arrange funds on its own, which otherwise were scarce for the State, justifies grant of registration but the genuineness of activity should be reflected in the manner in which the funds are also arranged. The Robin Hood Principle and redistributive justice, are not the foundation for grant of registration and to examine the genuineness of activity. These provisions of grant of registration and approval under Section 12AB or Section 80G of the Act are not State’s policies to address systemic inequalities, reduce poverty, and promote social justice by ensuring a more equitable distribution of resources gathered by surreptitious means and in clandestine manners. Anonymous donations should be justified on some principles of prudence, human values and integrity of individuals known to law.

Thus, we are of the considered view that accepting the assertion of the assessee that at this stage of examination of application for registration, the source of donations or their anonymity cannot be examined, because that would be a stage later when the question of examination of claim of exemption has to be determined, would be frustrating the purpose of inquiry. Provisional registration once granted automatically on the basis of previous registration under the old regime does not give a vested right to get a registration or its renewal. The prescribed authority is very much bound under law to examine the genuineness of charitable activities, examining the modalities of financing the same while granting registration or its renewal. If the source is found to be tainted or the money is proceeds of a crime or otherwise arranged by way of money laundering, that would certainly give the prescribed authority opportunity to allege that so-called charitable activities are not genuine. Not because they are not being performed, but because they do more harm to interest of State. Then, temporary and intermittent good of its citizens.

In the case before us we have examined the evidence of the assessee with regard to donations available at page numbers 225 to 308 of the paper book. At page 225 onwards till page 260, there is a list of 739 donors for FY 2022-23. Then from page 261 onward till page 283, there is a list of 418 donors for FY 2023-24 and page 284 onward till page 308 list of 495 donors for FY 2024-25 has been provided.

When we consider these list of donors for 3 financials years we find that as with regard to Financial Year 2022-23 for a total of 739 donors only 188 assesse were able to provide PAN/Adhaar of the donor. For FY: 2023- 24 of the total donors 418, PAN of 90 persons were provided. Coming to FY: 2024-25 after total donors named 495 PAN/Adhaar of 174 of the donors was provided. As we appreciate the address of the donors we find that for FY: 2024-25 of the donations are shown to be a various distinct places in the state of Kerala with a very few from other parts of the country. Similarly, in FY: 2023-24 the names and address of the donor are scattered through out the country and primarily all distinct places of Kerala so is the case for FY: 2022-23. Now, where the donations are primarily received in cash by a society registered in Delhi and operating from Delhi if the donations are shown to be received in cash from distinct from numerous persons through PAN were not available and their other details with regard to their identity are not available then that to our mind makes it questionable as to if the donations are accounted in the books are actual donations coming out of same value based contribution of individuals towards the objects of the society or the donations are merely camouflaged and attributed to individuals through society and locations is difficulty for the tax authorities and thereby the donations not only are rendered anonymous to appear to be outcome of some clandestine surreptitious activities.

In the aforesaid circumstances the plea of the assesse that ld. CIT(E) has referred to extraneous information about the assesse being tagged with some notorious institutions allegedly engaged in anti-national activities becomes significant and we are of the considered view when the issue of genuineness of activity of nature to be examined such information about the management and control of the assesse have in the hands of persons associated with tainted organizations gives vital lead to examine the genuineness of the activity and the case of repetition we observe the genuineness of activity is not merely actual performance and benefit but genuineness has to be examined with larger interest of society and the state.

The principle of consistency is not applicable to cases like that of assesse where assesse seeks renewal of registration and ld. prescribed authority is valuating financials of the immediately past three financial years and questions the genuineness of the activity on the basis of source of the funds for conducting activities than each applicable have an independent one on the basis of any principle of consistency an assesse cannot claim a benefit as such.

We are of the considered view that ld. CIT(E) has though referred to presumptive determination of tax liability u/s 115BBE of the Act and the provision specified violation Explanation 2 Section 12AB(4) which in ordinary circumstances would be beyond the scope of inquiry for the purpose of renewal of registration or to grant of approval u/s 12AB and 80G respectively, yet when the evidence is so eminent to show that the events being infused are not very genuine individuals but more likely tainted name is being infused. Thus, certainly this provision of the act indicate the scope of enquiry is ultimately if something is found to be not justified grant of registration and to become the difficult ground for cancellation of registration or approval, thus, certainly grant of approval or registration at the first instance has to be factual satisfied and the burden is on the assesse while seeking renewal of application to dispel all the circumstances which have a bearing on the mind of ld. CIT(E) questioning the genuineness of activity. At page No. 22-56 assessee has provided audited financial statement for FY: 2022-23 to 24-25 and at page No. 63- 193 assessee has provided copies of annual activity reports for the preceding financial years and when we go across them we find that certainly there are evidence of some activities being conducted as per the objectives of the society. The same indicate that activities like contributions in the disasters including Asam floods, eastern Uttar Pradesh floods, Kerala floods or earthquake awareness program, road safety information for road users, blanket distribution program in winter season, distribution of cooked food engaging in disaster management activities are reflected through volunteers and at page No. 80 it is demonstrated that in 2019-20 there were 447 volunteers which had increased to 1408 in 2022- 23. These activities reports do not indicate specifically as to who were the beneficiaries and most of the activities appear to be of creating awareness