Section 80G Approval Remanded for Fresh Examination After

Section 80G Approval Remanded for Fresh Examination After Tribunal Restored Assessee’s Section 12AB Charitable Registration

Issue

Whether a competent authority’s rejection of an application for approval under Section 80G is sustainable when the sole ground for rejection—the denial of registration under Section 12AB—has been overturned and restored in favor of the assessee by the Income Tax Appellate Tribunal.

Facts

Assessment Year: 2026-27.
The Application: The assessee, a charitable or religious trust, submitted an application before the competent tax authority seeking approval under Section 80G to enable donors to claim tax deductions on contributions.
Initial Rejection: The competent authority summarily rejected the Section 80G application on the ground that the trust did not hold a valid registration under Section 12AB, as its registration application had been rejected via an order dated December 26, 2025.
Tribunal’s Intervention: Subsequently, on April 21, 2026, the Income Tax Appellate Tribunal (ITAT) passed an order reversing the registration denial and explicitly directed the revenue authorities to grant the Section 12AB registration to the assessee.
The Dispute: With the foundational Section 12AB registration restored, the basis of the Section 80G rejection collapsed, prompting a judicial review of the rejection order.

Decision

Rejection Unsustainable: The Court/Tribunal held that because the lack of Section 12AB registration was considered the fatal flaw by the competent authority, the rejection order could no longer be legally sustained once the Tribunal directed that the registration be granted.
Matter Remanded: The impugned rejection order was set aside, and the matter was restored to the file of the competent authority for a fresh evaluation of the Section 80G approval.
Boundaries of Re-examination: The competent authority was directed to examine whether the assessee fulfills the remaining statutory requirements for Section 80G. Crucially, the issue regarding the validity of the Section 12AB registration and the genuinely charitable nature of the assessee’s activities must be treated as final and concluded.

Key Takeaways

Interdependence of Registrations: Registration under Section 12AB (or its equivalent) acts as a foundational prerequisite for obtaining Section 80G approval. If the primary charitable status is restored by a higher appellate forum, any consequential rejection of ancillary benefits like Section 80G automatically loses its legal footing.
Doctrine of Finality on Character: When a higher judicial body like the Tribunal affirms the charitable nature and registration of a trust under Section 12AB, lower competent authorities cannot reopen or re-litigate those specific aspects while evaluating secondary certificates.
Independent Examination of Remaining Clauses: A remand ensures that while the core charitable identity is locked in by judicial precedent, the factual check for Section 80G (such as spending limits on religious purposes, maintaining proper accounts, and rules against internal benefits) is still independently verified by the field officers.

IN THE ITAT CHANDIGARH BENCH ‘A’

Chandigarh Educational Society

DCIT/ACIT^*

Laliet Kumar, Judicial Member
and Manoj Kumar Aggarwal, Accountant Member

ITA Nos. 406 and 407 (CHD) OF 2026
[Assessment Years 2026-27]

JUNE 3, 2026

Rohit Kapoor, Adv. for the Appellant. Smt. Jaishree Sharma, CIT DR for the Respondent.

ORDER

Laliet Kumar, Judicial Member. – The present two appeals have been filed by the assessee feeling aggrieved by the separate orders dated 26.12.2025 passed by the ld. Pr. Commissioner of Income Tax (Central) Gurgaon) [in short ‘the PCIT’] on the grounds mentioned herein below :

ITA No. 406/CHD/2026 :

On the facts and circumstances of the case, the order passed by PCIT(C),Gurgaon is bad both in the eye of law and against the circumstances of the case.

That the observations recorded by the CIT(C) in the order rejecting registration under section 12AB have already been challenged before the Hon’ble ITAT, and the findings so recorded are erroneous and disputed; consequently, the rejection of approval under section 80G(5), being solely based on such impugned observations, is also bad in law and unsustainable.

That the PCIT (Central),Gurgaon erred in law in rejecting the application filed under clause(ii) of first proviso to Section 80G(5), without specifying the exact clause of Section 80G(5) under which the application has been rejected, thereby rendering the impugned order vague, non-speaking, and unsustainable in law.

That the Ld. CIT(E) has erred in rejecting the approval under section 80G(5) by observing that registration under section 12AB had already been rejected, whereas as a matter of record, the order rejecting approval under section 80G(5) was passed earlier at 5:38 p.m., and the order under section 12AB was passed subsequently at 6:16 p.m.; therefore, the finding of the Ld. CIT(E)/pCIT is factually Incorrect and based on an erroneous assumption of chronology, rendering the impugned order unsustainable in law.

ITA No. 406/CHD/2026 :

On the facts and circumstances of the case, the order passed byPCIT(C), Gurgaon is bad both in the eye of law and against the circumstances of the case.

That the PCIT (Central), Gurgaon erred in law in rejecting the application filed under clause(ii) of first proviso to Section 80G(5), without specifying the exact clause of Section 80G(5) under which the application has been rejected, thereby rendering the impugned order vague, non-speaking, and unsustainable in law.

That the order passed u/s 80G(5) is solely premised on the alleged cancellation of registration u/s 12AB; however, the said order under section 12AB is unsigned and invalid in the eyes of law and therefore cannot be relied upon. Consequently, the rejection under section 80G(5), being founded on an invalid and non-est order, is itself bad in law and liable to be quashed.

The appellant craves leave to add, amend or alter any of the grounds of appeal.

2. Briefly stated, the facts of the case are that the assessee is a charitable institution engaged in carrying out activities stated to be charitable in nature. The assessee had filed an application before the competent authority seeking approval under section 80G of the Act. During the course of proceedings, the ld. noticed. PCIT that the assessee’s application for registration under section 12AB of the Act had already been rejected by the Revenue authorities vide order dated 26.12.2025. Taking note of the said fact, the ld. PCIT held that one of the essential conditions for the grant of approval under Section 80G stood unfulfilled and, accordingly, rejected the application of the assessee.

3. Aggrieved by the aforesaid order, the assessee has preferred the present appeal before the Tribunal.

4. During the course of hearing, the ld. Authorised Representative submitted that the sole and substantive basis on which the application under section 80G had been rejected was the rejection of registration under section 12AB of the Act. Inviting our attention to the order of the Coordinate Bench of the Tribunal dated 21.04.2026, passed in ITA Nos. 225 & 226/CHD/2026/Chandigarh Educational Society v. DCIT/ACIT (Chandigarh – Trib.), the ld. AR submitted that the Tribunal has already adjudicated the controversy relating to registration under section 12AB and has directed the Revenue authorities to grant registration to the assessee under section 12AB of the Act. It was contended that once the registration under section 12AB has been directed to be granted by the Tribunal, the very foundation of the impugned order ceases to exist and, therefore, the approval under section 80G deserves to be granted. It was further submitted that the charitable nature of the institution and its objects already stand accepted by the Tribunal and no impediment survives for the grant of approval under section 80G.

5. Per contra, the ld. Departmental Representative fairly admitted that the application under section 80G was rejected primarily on account of the rejection of registration under section 12AB of the Act. However, she submitted that the competent authority had not examined the assessee’s case on merits vis-avis the other statutory requirements prescribed under section 80G of the Act. It was argued that, since the authority had proceeded on the premise that the assessee did not possess a valid registration under section 12AB, there was no occasion to examine the remaining conditions necessary for the grant of approval. It was, therefore, submitted that in the event the Tribunal finds merit in the contention of the assessee, the matter may be restored to the file of the competent authority for examining the fulfilment of the remaining statutory requirements.

6. We have heard the rival submissions and perused the material available on record. We have also carefully gone through the impugned order as well as the order passed by the Coordinate Bench of the Tribunal in the assessee’s own case concerning registration under section 12AB of the Act.

7. The controversy involved in the present appeal lies in a narrow compass. The record reveals that the application seeking approval under section 80G was rejected principally on the ground that the assessee was not holding registration under section 12AB of the Act, the application for such registration having been rejected by the competent authority vide order dated 26.12.2025. It is not in dispute before us that the aforesaid rejection order has subsequently been examined by the Coordinate Bench of the Tribunal in ITA Nos. 225 & 226/CHD/2026 and vide order dated 21.04.2026 the Tribunal has directed the Revenue authorities to grant registration to the assessee under section 12AB of the Act.

8. Thus, the primary objection which formed the basis of the impugned order no longer survives. The requirement regarding registration under section 12AB, which was considered fatal by the competent authority while rejecting the application under section 80G, now stands satisfied in view of the directions issued by the Tribunal. To that extent, the impugned order cannot be sustained.

9. At the same time, we find substance in the contention advanced by the ld. DR that the application of the assessee under section 80G was not independently examined on the touchstone of the remaining statutory conditions prescribed under the Act. Section 80G contemplates fulfilment of various conditions relating to the nature and objects of the institution, maintenance of regular books of account, application of income and assets for charitable purposes, and other statutory requirements. Since the application itself was rejected at the threshold for the absence of registration under section 12AB, the competent authority had no occasion to verify whether the remaining requirements were fulfilled.

10. We further note that while directing the grant of registration under section 12AB, the Tribunal has already accepted the charitable character of the assessee and has recognised that the institution exists for charitable purposes. The issue regarding the charitable nature of the assessee and its eligibility for registration under section 12AB, therefore, stands concluded and need not be re-examined by the competent authority while considering the application under section 80G.

11. In these circumstances, and in the interest of substantial justice, we deem it appropriate to set aside the impugned order and restore the matter to the file of the competent authority, under the Act, for the grant of approval for Section 80G.

12. The competent authority shall reconsider the assessee’s application for approval under section 80G afresh in accordance with law and shall examine whether the assessee fulfils the remaining statutory requirements prescribed for the grant of such approval. However, the issue relating to registration under section 12AB and the charitable nature of the assessee’s activities shall be treated as concluded in view of the directions contained in the Tribunal’s order dated 21.04.2026. The competent authority shall afford an adequate opportunity of hearing to the assessee and thereafter pass a speaking order in accordance with law, expeditiously.

13. In the result, the appeal of the assessee is allowed for statistical purposes.

14. Since the facts and issues involved in the connected appeal are identical, our findings and conclusions recorded herein shall apply mutatis mutandis to the said appeal as well.

15. In the result, both the appeals filed by the assessee are allowed for statistical purposes.