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Facts
The assessee, Swanand Social Federation, a Section-8 Company, applied for registration under sections 12A and 80G(5) of the Income Tax Act, 1961. The CIT(E) rejected these applications, citing alleged violations of Section 13(1) of the Income Tax Act and Section 185 of the Companies Act, 2013, due to transactions with a director, and also noted some objects of the company were commercial in nature.
Held
The Tribunal found that the CIT(E) had not provided the assessee with sufficient opportunity to explain the alleged violations. Therefore, the Tribunal set aside the CIT(E)'s orders for both 12A and 80G(5) registration and remanded the matter back for de novo adjudication, directing the CIT(E) to grant the assessee a proper opportunity to be heard.
Key Issues
Whether the CIT(E) was justified in rejecting the applications for registration under sections 12A and 80G(5) without providing adequate opportunity to the assessee to explain the alleged violations.
Sections Cited
12A, 80G(5), 13(1), 12AB, 12A(1)(ac)(vi), 185 of Companies Act, 2013
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Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
ORDER PER DR. DIPAK P. RIPOTE, AM: These two appeals filed by the assessee are directed against the separate orders ld.Commissioner of Income Tax(Exemption), Pune rejecting assessee‟s application for grant of registration u/s.12A r.w.s 12A and 80G(5) of the Income Tax Act, 1961(hereinafter referred to as „the Act‟) both dated 18.09.2025. For the sake of convenience, these two appeals were heard together and are being & 2678/PUN/2025 [A] disposed of by this common order. We treat the appeal in as lead case.
– 12A Findings & Analysis : 2. We have heard both the parties and perused the records. In this case, Assessee has filed application for registration u/s.12A on 07.03.2025. Ld.CIT(E) rejected the application. The relevant paragraphs of the order of ld.CIT(E) is reproduced here as under : “The assessee responded to the said notice and furnished the compliance on 02/08/2025. The assessee responded to the notice on 02/08/2025. Upon verification of the bank statements of the assessee trust is found that the assessee has borrowed loans / withdrawn amount vide its transactions dated 01/10/2024 and 02/10/2024 respectively in the name of namely Shri Sanjeev Sumatilal Shah as such the trust has violated the provisions of section 185 of the Companies Act 2013 and section 13(1) of the Income Tax Act. Also, the trust has not furnished any credible evidences and its reasons as to why the said withdrawal was made. Thus, the assessee trust trust has failed to comply with requirements of any other law for time being in force.
Considering the above facts discussed in the show notice and discrepancies noticed, the undersigned is not satisfied about the requirements of any other law for the time being in force by the assessee as are material for the purpose of achieving its objects..
In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 07/09/2024 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.” 2 & 2678/PUN/2025 [A] 2.1 ld.AR submitted that Assessee is a Section-8 Company duly incorporated on 15.07.2024. Ld.AR submitted copy of the Incorporation Certificate at page no.40 of the paper book. It is observed that Mr.Sanjeev Sumatilal Shah and Sahil Sanjeev Shah having address at R4, Kohinoor Estate, Mula Road, Khadki, Pune – 411003 are the share subscribers of the company. It is also observed that Mr.Sanjeev Sumatilal Shah is the Director of the Assessee Company i.e.Swanand Social Federation. Ld.CIT(E) has rejected the application on the ground that Assessee has violated any other law applicable and also violated Section 13(1) of the Income Tax Act.
1. 2.2 It is an admitted fact that the Assessee Company i.e. Swanand Social Federation had given Rs.50,000/- to Mr.Sanjeev Sumatilal Shah on 01.10.2024 and Rs.2 lakhs on 02.10.2024 to Mr.Sanjeev Sumatilal Shah. Ld.AR for the Assessee has accepted this fact. However, ld.AR submitted that Mr.Sanjeev Sumatilal Shah had given Rs.2 lakhs to Swanand Social Federation on 02.08.2024, and Rs.50,000/- on 05.08.2024 which was returned by Swanand Social Federation. We specifically asked ld.AR whether Swanand Social Federation had given any receipt to Mr.Sanjeev Sumatilal Shah for 3 the amount of Rs.2,50,000/- claimed to have been given by him.
& 2678/PUN/2025 [A] However, ld.AR submitted that there must be a receipt and he will submit it.
1. 2.3 Ld.AR further submitted that ld.CIT(E) has not given opportunity to explain the impugned transaction of Rs.2,50,000/-. Ld.AR submitted that had ld.CIT(E) provided the opportunity, Assessee could have explained all the facts. Ld.AR submitted that Assessee may be given opportunity to explain the facts before ld.CIT(E).
2.4 Ld.Departmental Representative(ld.DR) for the Revenue relied on the order of ld.CIT(E).
2.5 We also noted from the paper book that Assessee has filed copy of Profit and Loss Account at page no.44 of the paper book. The Net Profit shown is Rs.9,08,025/- and Total Receipts were Rs.24,11,196/-. Accordingly, the profit comes to 37%.
2.6 We have also noted from the Objects of the company which are at page no.15 to 21 of the paper book that some of the objects are as under: Run Healthcare Centre Run Gymnasium 4 Run Yoga centre & 2678/PUN/2025 [A] Run Laboratories To conduct Fitness Camp, Yoga Camp. To promote and protect intellectual properties through apply, purchase of otherwise acquire and protect and renew in any part of the world any patents, rights, brevets of invention, trademarks, licenses, copyrights, concessions and the like conferring any exclusive or non-exclusive or limited right their use or any secret or other information as to any invention which may seem capable of being used for any of the purposes of the Company or the acquisition of which may seem calculated, directly or indirectly, to benefit the company and to use, exercise, develop or grant licenses in respect thereof or otherwise, turn to account the property rights or information so acquired and to expend funds in experimenting upon, testing or improving any such patents, inventions or rights.
2.7 It is a fact that ld.CIT(E) has not commented on objects and activities of the Assessee Company in his order.
2.8 However, it is a fact Assessee had not got sufficient opportunity to explain the issue of violation of any other Act, alleged by ld.CIT(E). In these facts and circumstances of the case, in the interest of justice, we set-aside the order of ld.CIT(E) to ld.CIT(E) for denovo adjudication. Ld.CIT(E) shall provide opportunity to the Assessee. Assessee shall file all the necessary details before the ld.CIT(E). Accordingly, grounds of appeal raised by the Assessee are allowed for statistical purpose. 5 & 2678/PUN/2025 [A]
In the result, appeal of the assessee is allowed for statistical purpose. – 80G
Ld.CIT(E) rejected Assessee‟s application for registration u/s.80G on account of non-availability of registration u/s.12A of the Act. Since we have set-aside the order u/s.12A for denovo adjudication in above, accordingly, we set- aside the order u/s.80G to ld.CIT(Exemption) for denovo adjudication. Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the assessee in is allowed for statistical purpose.
To sum up, both appeals of the assessee are allowed for statistical purpose. Order pronounced in the open Court on 03 February, 2026. ASTHA CHANDRA Dr.DIPAK P. RIPOTE JUDICIAL MEMBER ACCOUNTANT MEMBER पपणे / Pune; ददिधंक / Dated : 03 Feb, 2026/ SGR 6 & 2678/PUN/2025 [A]