Section 12A Renewal Can’t Be Denied on Past Search Issues | ITAT

Section 12A renewal

Case Details: Shri Guru Ram Dass Educational Society vs. Deputy Commissioner of Income-tax/ACIT, Central-2 - [2026] 185 taxmann.com 989 (Chandigarh-Trib.)

Judiciary and Counsel Details

  • Rajpal Yadav, Vice President & Manoj Kumar Aggarwal, Accountant Member
  • Rohit Kapoor, Adv. & Virsain Aggarwal, ITP for the Appellant.
  • Smt. Kusum Bansal, CIT DR for the Respondent.

Facts of the Case

The assessee was an educational society engaged in imparting education and was originally registered under section 12AA. A search under section 132 was conducted on the assessee group, and section 12AA registration was cancelled. However, the Tribunal set aside the cancellation and remanded the matter while the department’s appeals remained pending before the High Court. The Settlement Commission passed an order under section 245D(4) for earlier years and did not accept allegations of siphoning of funds. It was observed that the assessee was carrying on genuine educational activities, and exemption could be denied only to the extent of any specific violation.

Under the new regime (post Finance Act, 2020), the assessee was granted fresh registration for the assessment year 2022-23 to 2026-27 and subsequently applied for renewal under section 12A(1)(ac)(ii). The case was transferred to the Principal Commissioner Central, who obtained a report from the Assessing Officer confirming that the assessee was imparting education and that its activities were genuine, with no violation of other laws found. However, the Principal Commissioner Central issued a notice under section 12AB(4) and rejected the renewal application, relying on search material relating to assessment years 2014-15 to 2019-20 and on income disclosed before the Settlement Commission.

The aggrieved assessee filed the instant appeal before the Tribunal.

AAR Held

The Tribunal held that the assessee was engaged in imparting education and that its activities fell within the first limb of the definition of ‘Charitable Purpose’ under Section 2(15). Hence, its activities were, per se, charitable. A perusal of the provisions of section 12AB(4) indicates that it empowers the Pr. Commissioner or Commissioner to call for such document or information from the Trust or Institution or make such enquiry as he thinks necessary to satisfy himself about the occurrence or otherwise of any specified violation. If there is any specified violation, then he would pass an order in writing, cancelling the registration of such Trust, granted under sub-clause (a), clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of Section 12AA. The issue before the Tribunal was whether the assessee deserved to be granted registration under section 12A(ac)(ii) or not.

In other words, it was merely the renewal of the registration already granted to the assessee by the Department for the assessment years 2022-23 to 2026-27. As observed, while construing Section 12A(1)(ac) for the grant of registration, it has been contemplated in the Act that PCIT or the Commissioner would pass an order in writing registering the Trust or Institution for a period of 5 years on conducting an enquiry as he thinks necessary to satisfy himself about:

(a) The genuineness of activities of the Trust or Institution;

(b) The compliance of such requirements of any other law for the time being in force by the Trust or Institution as are material for the purpose of achieving its objectives.

It is further observed that, to conduct an enquiry into these aspects, PCIT has called for a report from the AO, and a copy of the report is available in the record. There is no dispute that the assessee exists for the purpose of imparting education. This fact is discernible from the record of the AO as well as the observations made by the Settlement Commission.

The PCIT has committed an error by interlinking two aspects which are independent of each other, namely: “For grant of registration/renewal of registration under section 12A(ac)(ii) vis-a-vis cancellation of such registration as contemplated in clause 12AB subclause (4).”At the cost of repetition, it is observed that PCIT has mixed up two proceedings, namely, cancellation of registration vis-à-vis renewal of registration, wherein the scope of enquiry is separate in each proceeding. The Commissioner has taken up issues that were considered earlier when the registration was cancelled, but denied the renewal. Such issues did not meet with the concurrence of the ITAT in the earlier proceedings, and the issue of cancellation is sub-judice before the High Court.

The Department itself approved the registration for the assessment year 2022-23 to 2026-27. Therefore, PCIT is not justified in rejecting the renewal application while considering the very materials considered in the first round of litigation. PCIT has not made out a case that the assessee has violated any law. The PCIT referred to the unauthorised use of land. It has been apprised that CLU has been granted by the Competent Authority for its Campus. Thus, the impugned order of the Principal Commissioner was unsustainable and was set aside. The Revenue was directed to renew the registration of the assessees under section 12A(1)(ac)(ii) and issue necessary certificates as per the procedure.

List of Cases Reviewed

  • Dera Sacha Sauda v. Pr. CIT (Central) (IT Appeal No. 21 (CHD) of 2024, dated 25-04-2025) (para 19) followed

List of Cases Referred to

The post Section 12A Renewal Can’t Be Denied on Past Search Issues | ITAT appeared first on Taxmann Blog.

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