The court emphasized that welfare provisions under the Income Tax Act should be interpreted to facilitate socio-economic objectives rather than impose penalties.

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER ITA No. 2090 & 2091/DEL/2025, A.Y. 2025-26

Appellant by Sh. Jitender Wadhwa, CA Respondent by Shri Om Prakash, Sr. DR Date of Hearing 06/06/2025 Date of Pronouncement 11/06/2025 ORDER PER AVDHESH KUMAR MISHRA, AM These appeals are inter-connected as these contain common facts.

Therefore, these appeals were heard together and are being disposed off by this common order.

2. These appeals for Assessment Year (AY) 2025-26 filed by the assessee are directed against orders dated 14.12.2024 of the Commissioner of Income Tax (Exemption), Chandigarh [CIT(E)] under sections 12AB and 80G of the Income Tax Act, 1961 (Act).

3. Vide these appeals, the assessee has challenged the rejection of registration under section 12AB of the Act and the denial of approval under section 80G of the Act.

4. The relevant facts giving rise to these appeals are that the assessee filed an application for registration under section 12A(1)(ac)(iii) of the Act on 12.06.2024. Thereafter, the Ld. CIT(E) issued a show-cause notice to the assessee to file various details regarding its activities carried out in pursuance of the object of the assessee. After repeated opportunities of being heard provided by the Ld. CIT(E), the assessee filed certain details, such as the Income & Expenditure Account for the year ending on 31.03.2022, which also contained data for FY 2020-21. On perusal of the Income & Expenditure Account for years ending on 31.03.2021 and 31.03.2022, the Ld. CIT(E) inferred that the assessee was carrying out its activities in FY 2020-21 also. Therefore, the Ld. CIT(E) held that the provisional registration sought by the assessee was not genuine because the assessee was not required to seek provisional registration after amendment in section 12A of the Act, with effect from 01.10.2023 as this amendment provides that the Trust or Institution which has not commenced its activities can only seek the provisional registration and regular registration separately. Accordingly, the Ld. CIT(E) held that the assessee was not eligible to seek provisional registration first and thereafter regular registration. Hence, he held the application filed under section 12A(1)(ac)(iii) of the Act for regularization of the registration as invalid and rejected the registration sought under section 12AB of the Act vide said application filed under section 12A(1)(ac)(iii) of the Act. Consequentially, the approval under section 80G of the Act was also not granted to the assessee. Aggrieved, the assessee filed these appeals.

5. Before us, the Ld. AR contended that the assessee had carried out minimal activities in the FY 2020-21, as evident from the Income & Expenditure Account for the year ending on 31.03.2021 and 31.03.2022. The quantum of such expenditure was miniscule. Receipts were mainly from donations & interest from FDRs, whereas expenditure were for bare survival. Further, it was contended that amendments in section 12A of the Act since 2018 onwards were so frequent that these resulted difficulties and hardships to small Trusts & Institutions mandating provisional registration, regular registration, etc. Existence of such hardships got also noticed by the CBDT as evident from Circulars Nos. 06/2023 and 07/2024. The Circular No.

07/2024 reads as under:

On consideration of difficulties reported by the taxpayers and other stakeholders in the electronic filing of Form No. 10A/10