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Facts
The assessee's appeal was filed against the order of the CIT(A) which confirmed the addition made by the AO. The AO had selected the case for cancellation of registration u/s 12A/12AB, as the registration u/s 80G(5) was rejected. The assessment order showed total receipts of Rs.46,270/- and expenditure of Rs.80,128/-, with the total expenditure exceeding total receipts.
Held
The Tribunal held that the assessment order nowhere mentioned that the registration u/s 12AB was cancelled. The CIT(A) proceeded under the wrong presumption that the registration was cancelled, which was incorrect as no such cancellation order was available. The argument of the appellant's AR was found to be correct.
Key Issues
Whether the cancellation of registration u/s 12AB was validly done by the authorities and if voluntary contributions should be treated as donations and expenditure reduced from income.
Sections Cited
12AB, 12A, 80G(5), 11
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Visakhapatnam “SMC” Bench, Visakhapatnam
करदाता का प्रतततितित्व/ : Sri Vamsi Krishna, AR Assessee Represented by राजस्व का प्रतततितित्व/ : Dr.Aparna Villuri, Sr. A.R. Department Represented by सुिवाई समाप्त होिे की ततति/ : 19.01.2026 Date of Conclusion of Hearing घोर्णध की तधरीख/ : 30.01.2026 Date of Pronouncement O R D E R PER OMKARESHWAR CHIDARA, A.M : This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in DIN & Order No.ITBA/NFAC/S/250/2025-26/1081351778(1) dated 30.09.2025, pertaining to the assessment year 2023-24.
In the above cited assessee’s appeal, the appellant Trust is aggrieved for the following reasons :
a) Both the Ld.AO & Ld.CIT(A) have proceeded and adjudicated the issue based on the wrong assumption that the registration granted u/s 12AB was withdrawn/cancelled by CIT Exemptions, whereas, there is no such order of cancelling or withdrawing the provisional registration already granted to the appellant Trust. b) The Ld.CIT(A) has erred in treating the voluntary contributions as corpus and disregarded the application of income presuming that the appellant lacked a valid 12AB registration.
From the assessment order, it is observed that the case was selected for cancellation of registration u/s 12A/12AB, as the registration u/s 80G(5) was rejected. The Ld.AO has stated that the total receipts during the year under consideration are Rs.46,270/- and the expenditure is Rs.80,128/-, i.e., the total expenditure incurred is more than total receipts. It was also mentioned at para 4.1, page 5 of assessment order, that no variation is proposed to the returned income, and hence the total income was assessed at Nil. But, in the computation sheet, the total receipts were taken as “taxable income” and the expenditure incurred was not reduced. In other words, all gross receipts/donations were taken as income and taxed.
Aggrieved by the addition, the appellant Trust has filed an appeal before Ld.CIT(A) and this First Appellate Authority confirmed the addition by stating that the Trust doesn’t have Registration u/s 12AB and hence all the donations were taxable as corpus donations. For coming to this conclusion, the Ld.CIT(A) quoted several decisions in his appeal order including a Supreme Court decision of UP Forest Corporation Vs. CIT, 297 ITR 1 (SC).
The appellant Trust filed an appeal before ITAT with the grounds of appeal mentioned in para 2 of this order. Apart from arguing the case, the Ld.AR of appellant Trust has filed “written submissions” before ITAT. The main thrust of his argument is 2 fold – the first one being the Registration u/s 12AB was never cancelled by the Department and the appellant has still got the status of a valid Trust and the second being the voluntary contributions are to be treated as “Donations” and expenditure related to the objects of Trust should be reduced from “income” of this year. The prayer of appellant Trust is that the Orders of lower authorities be set aside and the matter may be restored to the file of A.O. for fresh consideration, restricted only to the limited issue of verification of section 12AB registration since the case was taken up for scrutiny for this purpose only. It was also submitted that, if the Registration u/s 12AB is found to be valid, for the relevant A.Y., then the assessment order be set aside and exemption u/s 11 be allowed as per law.
6. As mentioned in page 2 of assessment order, the Ld.AR has admitted that the case was selected for examining the aspect of cancellation of registration u/s 12AB, as the Trust’s application for 80G was rejected. Then, the Ld.DR relied on the orders of Ld.AO/Ld.CIT(A).
7. The Bench heard both sides and perused the “written submissions” of Ld.AR of appellant. The Bench perused the Orders of Ld.AO /Ld.CIT(A) and found that there is sufficient force in the arguments of Ld.AR of appellant. The assessment order nowhere mentions that the order u/s 12AB was cancelled nor any defects were narrated in that context. In fact, the Ld.AO has mentioned at para 4.1, page 5 of assessment order that ‘no variation is proposed to the returned income’. Secondly, even though the Ld.AO did not adjudicate anything adverse to the appellant, still the “computation sheet” enclosed to the assessment order shows that entire “voluntary donations” were treated as “net income” and the same was taxed without reducing the expenditure incurred during the relevant year and no reason also was mentioned in the assessment order. Thirdly, the Ld.CIT(A) proceeded and adjudicated the issue under wrong presumption that the registration u/s 12AB was cancelled which is prima facie incorrect because there is no such cancellation order available on record. Hence, the cases-law relied on by Ld.CIT(A) are not relevant to the issue. In view of the above, the Bench is of the opinion that the argument of Ld.AR of appellant Trust is correct and accordingly the matter is remitted to the file of A.O. for fresh consideration, restricting to the limited issue of verification of section 12AB as the case was selected for scrutiny for this specific purpose as mentioned in page 1 of assessment order. If the registration u/s 12AB is found to be valid, then the exemption u/s 11 may be allowed as per law.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the Open Court on 30th January, 2026.
Sd/- Sd/- (विजय पाल राि) (ओम्कारेश्िर चिदारा) (VIJAY PAL RAO) (OMKARESHWAR CHIDARA) उपधध्यक्ष /VICE PRESIDENT लेखा सदस्य/ACCOUNTANT MEMBER Hyderabad, dated 30.01.2026. L.Rama/sps आदेशकी प्रनतनलनप अग्रेनर्त/ Copy of the order forwarded to:- 1. निर्धाररती/The : Team Colours Foundation, Door No.2-102, Mahalakshmi Temple Street, Vadlamuru, Assessee Kapileswarapuram, Andhra Pradesh 2. रधजस्व/ : Income Tax Officer, Exemption Ward, The Area Code DLC, A.O. Type WX, A.O. Revenue Number 3, Range 250, Aayakar Bhawan, Veerabhadrapuram, Rajahmundry, Andhra Pradesh 3. The Principal Commissioner of Income Tax, Visakhapatnam 4. नवभधगीय प्रनतनिनर्, आयकर अपीलीय अनर्करण, नवशधखधपट्िम / The DR, ITAT, Visakhapatnam 5. गधर्ाफ़धईल / Guard file आदेशधिुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam