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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M JOSHI
आदेश / O R D E R
Per Paresh M Joshi, J.M:
This is an appeal filed by the assessee Under Section 253 of the Income Tax Act, 1961 (hereinafter referred to as the “Act” for sake of brevity) before this Tribunal. The assessee is aggrieved by the order bearing Number ITBA/EXM/F/EXM45/2024- 25/1066565769(1) dated 10.07.2024 passed by the Ld.
Page 1 of 15 CIT(Exemption) whereby the application of the assessee filed in the Form 10AB for the grant of final registration u/s 80G(5) of the Act is rejected, which is hereinafter referred to as the “Impugned order”.
2. FACTUAL MATRIX 2.1 That the assessee is a duly registered society vide registration No.03/27/03/16648/14 dated 17.01.2014 which is issued by the Society’s Registrar (Firms & Society’s, Indore Division, Indore). The said registration certificate is at page 21 of paper book dated 17.09.2025 filed by the assessee society.
2.2 The aims and object of the assessee society are at page-22 of the paper book dated 17.09.2025 which is reproduced by us below:
Page 2 of 15 2.3 The details of office bearers of the assessee society are at page 23 of the paper book dated 17.09.2025 which is reproduced by us as below:
Page 3 of 15 2.4 The assessee society’s rules are from pages 25 to 30 of paper book dated 17.09.2025 and the names of promoters with Page 4 of 15 their address are at page 24 of the paper book dated 17.09.2025.
The audit reports of the assessee society are from pages 33 to 72 of paper book dated 17.09.2025 for the Financial Years 01.4.2020 to 31.03.2021, 01.4.2021 to 31.03.2022 and 01.4.2022 to 31.03.2023. The list of donors for Financial Years 2021-22, 2022-23 & 2023-24 are at paper book dated 17.09.2025 pages 73 to 76.
2.5 That the assessee society was granted an order for provisional approval under 12 clause (iv) of first proviso to sub-section (5) of Section 80G from 01.10.2021 to Assessment Year 2024-2025 vide order dated 01.10.2021 in Form No.10AC vide unique registration No.AABAJ7364CF20210, the copy of which is at pages 238 to 239 of the paper book dated 17.09.2025.
2.6 That thereafter the assessee society has claimed that it has filed the income tax returns and have followed the due process of law. The assessee society applied for final registration u/s 80G [14-clause(iii) of first proviso to Sub Section(5) of Section 80G] of the Act in Form No.10AB dated 05.01.2024 vide Ack.
Page 5 of 15 No. 750800000050124, the copy of which is at pages 240 to 248 of the paper book dated 17.09.2025.
2.7 Thereafter the assessee society made a detailed submission in support along with the requisite documentary evidences at page 1 to 122 of paper book dated 17.09.2025 before the Ld. CIT(E).
2.8 That however the Ld. CIT(E) by the “impugned order” has rejected the application made for final approval u/s 80G as well as cancelled the provisional registration so granted earlier on the grounds and reasons specified therein.
2.9 That the assessee society being aggrieved by the “impugned order” has preferred the instant appeal before this Tribunal and has raised following grounds of appeal in Form No.36 against the “impugned order” which as follows:-
“1.The learned CIT (Exemption), Bhopal erred in law and on facts in rejecting the application filed in Form 10AB for registration under section 80G(5) of the Income Tax Act, 1961. The rejection order is contrary to the provisions of the Act and overlooks the documentary evidence submitted during the proceedings.
2. The learned CIT (Exemption) has wrongly invoked the proviso to Section 2(15) of the Act, holding that the appellant is engaged in business activity merely on the basis of sale of bags and 2 related items. The conclusion that such activities are commercial in nature is misconceived and fails to consider that the said activities are incidental to the attainment of charitable objectives and that income is applied solely for such purposes.
Page 6 of 15 3. The CIT (Exemption) erred in cancelling the validly granted provisional registration under section 80G(5) (URN: AABAJ7364CF20210, dated 01.10.2021) without recording 3 specific violations of conditions prescribed under Rule 11AA OR providing sufficient reasoning as mandated under law. The cancellation is in breach of the second proviso to section 80G(5), which requires detailed justification based on objective material.
4. The rejection and cancellation orders suffer from violation of principles of natural justice, as the appellant was neither granted a reasonable opportunity to respond to the show cause notice dated 02.07.2024 nor was the non-response factually accurate.
The learned CIT (Exemption) failed to appreciate that mere generation of revenue through incidental activities such as vocational training OR sale of self-help products does not 5 amount to carrying on business, and cannot disentitle the appellant from registration under section 80G(5) if the dominant purpose remains charitable, as clarified by CBDT Circular No. 11/2008 dated 19.12.2008.
That, the impugned order is non-speaking, lacks reasoned findings, and does not reflect proper application of mind. It mechanically relies on percentages of revenue from sales without examining the nature and purpose of such receipts OR their application, rendering the order arbitrary and unsustainable in law.
That, The appellant craves leave to add, alter, amend OR withdraw any of the above grounds at the time of hearing”.
3. Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 10.11.2025 when the Ld. AR for and on behalf of the assessee society appeared before us and interalia contended that the “impugned order” is illegal, bad in law and not proper. It thus deserves to be set aside. The Ld. AR then brought to our notice that the registry has pointed out delay of 279 days in filing the Page 7 of 15 present appeal. In this regard the assessee society has placed on record of this Tribunal a condonation of delay application dated 01.07.2025 wherein it is prayed that this tribunal may be pleased to condone the delay in filing the appeal and admit the same. The assessee society has placed on record of this tribunal an affidavit dated 01.10.2025 in support which is affirmed by the President of the assessee society. In the said affidavit it is affirmed and declared that the “impugned order” of Ld. CIT (E) was received by her on 06.06.2025. It was also submitted by the Ld. AR that the “impugned order” of Ld. CIT(E) could not be accessed by the assessee society and so also by their earlier counsel. That the assessee society came to know on 06.06.2025 that the “impugned order” of Ld. CIT(E) has been passed against them when they appointed a new counsel to deal with their matters. Consequently there was a delay of 279/280 days which may be condoned as the said delay was not deliberate.
The delay is unintentional too. It was submitted that if the would be deprived of their legitimate right of even the first appeal.
Per contra the Ld. DR appearing for and on behalf of the revenue
Page 8 of 15 has contended that the revenue opposes the application of condonation of delay and has contended that no sufficient cause is shown and hence the application for condonation be rejected.
We have gone through the contents of condonation of delay application and so also affidavit placed on record in support thereof. The contents of the affidavit are self-explanatory. Under these circumstances we deem it fit and proper that the delay of 279/280 days should be condoned and that the same is condoned by us in order to meet ends of justice otherwise the assessee would lose its right of at least the first appeal against the “impugned order”. Delay is accordingly condoned which is not deliberate and the appeal is admitted for hearing.
3.2 The Ld. AR then submitted that the assessee society is an organization led by Woman’s. The assessee society does not have much resources at their command. The Ld. AR took us through the paper books which were filed on 22.09.2025 & 17.09.2025 and highlighted to us the important events and documents annexed, in the paper books. It was highlighted that after NIRBHAYA this organization has come in to the existence and that they are doing commendable work for woman at Indore,
Page 9 of 15 M.P. The assessee society is regularly organizing self defense programmes for woman’s. In order to augment their resources they collect old news papers from several households who generally donates news papers to them free of cost. Many woman from different part of city comes to them and that they organize workshops for them as to how to make “paper bags”. The “paper bags” so manufactured and made by them are sold to shops, hotels, malls which are ecofriendly in nature for “carry home purposes”. It was brought to our notice that such activity of “making paper bags” is not a business activity. It is some sort of a vocational training programme for woman’s. Many woman’s remains with them and many leaves too after learning the process of manufacturing and making of “paper bags” and generally such woman’s later on becomes “self reliant” too.
Woman volunteers go door to door to collect news papers and public at large donate news papers to such woman’s volunteers of the assessee society. It was also submitted that whatever profit is made by the assessee society the same is distributed to the needy woman daily wage earner in order to financially sustain them. It was also submitted that woman are not members of Page 10 of 15 the assessee society though the object of the society is to provide for their security and make them self-reliant. The Ld. AR even stated that quality of work done by such woman daily wage earner’s are so good in making and producing the news paper bags that some leading hotel brands are patronizing the assessee society bag as measures to help the needy woman daily wage earner’s. Thereafter extensive debate and discussions took place on merits including the profit element of assessee society.
Rival contentions were patiently heard by the bench. The Bench also queried about the nature of profit of the assessee society, the charitable purposes, the registration u/s 12AB, the donations etc. The legality, validity and proprietary of the “impugned order” etc. were too debated by both Ld. AR & Ld. DR by canvasing their respective contentions. The violation of principles of natural justice in passing the “impugned order” was too discussed and debated upon by both the Ld. AR (paper book dated 22.09.2025 page-7) & Ld. DR.
Page 11 of 15 4. Observations,findings & conclusions.
4.1 We now have to decide the legality, validity and the proprietery of the “impugned order” basis records of the case and rival contentions canvassed before us.
4.2 We have carefully perused the records of the case as presented to this Tribunal by both the Ld. AR & the Ld. DR to determine the legality, validity of the “impugned order” basis law and by following the due process.
4.3 We basis records of the case and after hearing and upon examining the contentions are of the considered view that before passing the “impugned order” of Ld. CIT(E) had given two opportunities of hearing on 16.05.2024 & 02.07.2024 (notice not received page-223 of paper book dated 17.09.2025). After considering the reply of the assessee dated 11.06.2024 page 5 to 7 of the paper book dated 17.09.2025 (Reply to show cause notice dated 16.05.2024 paper book page1&2 dated 17.09.2025) along with accompaniments a show cause notice dated 02.07.2024 was issued to the assessee which we reproduce as below as recorded in the “impugned order” :-
"Please refer to your application in Form 10AB filed for registration/approval u/s 80G(5) under the new provisions of the Page 12 of 15 Income Tax Act, 1961. In response to this office opportunity letter(s), you have submitted reply along with various documents.
On perusal of documents and audit reports for last 3 FY, it is observed that the society has shown the Income from sales of goods and purchase the Cotton and paper raw materials and bag labor charge in the Income & Expenditure Accounts. It shows that the society is running the "Business Activity" of manufacturing the bags and sales of bags as mentioned in the audit Report. The details of total revenue and revenue from sales are as under:-
F.Y. Total Revenue from % of Income from Revenue operations sales 2020-21 30,15,263/- 30,13,835/- 99% 2021-22 53,13,919/- 34,84,298/- 65% 2022-23 57,37,762/- 38,62,954/- 67%
Thus, it is evident that these commercial activities carried out by the assessee is not for charitable purposes as define in Section 2(15) of the Act and the receipt from commercial activities exceeds 20% of total receipts in violation to proviso to section 2(15) of the Act.
Further on perusal of ITR, it is observed that the society has not shown these Business income in ITR as business receipts.
You are hereby given an opportunity to show-cause why the application in Form 10AB for registration/approval u/s 80G(5) of the Act should not be rejected. You are also required to show cause why the provisional registration u/s 80G(5) in Form 10AC vide URN No. AABAJ7364CF20210 dated 01.10.2021 granted by the CPC should not be cancelled on the ibid grounds as per the provisions of second proviso to section 80G(5) of the Act."
It is recorded in the “impugned order” that “In response to the show cause notice the reply of the assessee has not been received till date”.
Page 13 of 15 4.4 In view of the aforesaid fact as stated in para 4.3 (supra) the Ld. CIT(E) held as under:-
“3. Considering the facts of the case and reasons mentioned above and compulsory provisions of the Act, the application of the assessee filed in Form 10AB for grant of registration u/s 80G(5) of the Act is hereby rejected. Further provisional registration u/s 80G(5) In Form 10AC vide URN No. AABAJ7364CF20210 dated 01.10.2021 granted by the CPC is also cancelled on the ibid grounds as per the provisions of second proviso to section 80G(5) of the Act”. 4.5 Basis above, we are of the considered opinion that there is no meritorious disposal of the case/matter by the Ld. CIT(E ) on Section 80G(5) application (supra) of the Act, whether the application of the assessee society for final registration u/s 80G(5) of the Act is to be allowed or not. This tribunal desires meritorious disposal of the application for final registration u/s 80G(5) of the Act and not summarily rejection/dismissal. This tribunal desires speaking and well reasoned order from Ld. CIT (E) and simultaneously expects the assessee society to reply all queries/show cause notice of the department which unfortunately has not happened. Hence we set aside the “impugned order” as and by way of remand on denovo basis.
Assessee society to cooperate with the revenue.
Page 14 of 15 5. Order 5.1 The “impugned order” is set aside and the matter is remanded back to the file of the Ld. CIT(E) to pass a fresh order which should be a reasoned and speaking one on merits of the case.
5.2 In the result appeal of the assessee is allowed for statistical purpose.
Order pronounced in open court on 14.11.2025.