ITAT Hyderabad Clarifies Interplay of Section 80G Rejection, Delay Condonation & Cancellation u/s 12AB(4)

1. Background of the Trust and Its Registrations

1.1 Charitable Objects and Initial Recognition

The assessee, Pyramid Spiritual Trust (Hyderabad), is a charitable trust set up with the stated aim of spreading awareness about Spiritual Science and Anapanasati Meditation, and for promoting physical, mental and intellectual well-being.

The Department had formally recognised its charitable character as follows:

  • Registration granted under Section 12AA on 21.11.2007
  • Approval granted under Section 80G(5)(vi) on 04.08.2009

On the strength of this recognition, the assessee claimed exemption under Section 11. These claims were accepted in regular processing and scrutiny:

  • Returns processed under Section 143(1)
  • Assessments completed under Section 143(3) allowing the exemption

Thus, prior to the dispute, there was no departmental allegation that the objects or activities of the Trust were non-charitable or non-genuine.

1.2 Application in Form 10G and Rejection in 2019

On 09.08.2018, the assessee filed Form 10G seeking approval under Section 80G under the then-prevailing regime.

The Commissioner of Income Tax (Exemptions) [CIT(E)] passed an order dated 12.02.2019 under Section 80G(5)(vi) rejecting the application. The rejection was:

  • Solely for non-compliance/non-prosecution
  • Based on notices allegedly sent twice, which were returned by the postal authorities with the endorsement “refused”
  • Not based on any finding that:
    • The objects of the Trust were non-charitable, or
    • The activities were not genuine, or
    • Any specific condition of Section 80G(5) was violated

In other words, the 2019 rejection was entirely procedural and ex parte.

2. New Registration Regime and Provisional Approval

2.1 Form 10A and Provisional Registration u/s 12A / 80G

After the Finance Act, 2020 introduced the new registration regime for charitable entities, the assessee applied afresh:

  • Form 10A filed on 31.08.2021, seeking:
    • Registration under Section 12A, and
    • Approval under Section 80G

The Department, acting on this application, issued:

  • Form 10AC dated 24.09.2021 granting:
    • Registration under Section 12A
    • Approval under Section 80G

The provisional approval/registration under the new regime covered:

  • Assessment Years (AYs) 2022-23 to 2026-27

2.2 Subsequent Form 10AB Application

Later, on 29.09.2025, the assessee filed:

  • Form 10AB for renewal/regularisation of:
    • Registration under Section 12A/12AB, and
    • Approval under Section 80G(5)(vi)

It is at this stage that the CIT(E) traced back the earlier order dated 12.02.2019 rejecting the Form 10G application.

3. Alleged False Information and Cancellation u/s 12AB(4)

3.1 The “No” in Form 10A and the “Specified Violation” Theory

In Form 10A, there is a specific field requiring disclosure of:

  • Any earlier cancellation or rejection of registration/approval

The assessee had answered “No” in this column. The CIT(E) took the view that:

  • Since the Form 10G application stood rejected by order dated 12.02.2019, the answer “No” amounted to:
    • Incorrect or false information
    • A “specified violation” as referred to in the Explanation to Section 12AB(4)

On this premise, the CIT(E) passed:

  • Order dated 18.02.2026 under Section 12AB(4) cancelling:
    • The registration for AY 2019-20 and subsequent years
    • The provisional registration and approval already granted via Form 10AC for AYs 2022-23 to 2026-27

3.2 Consequential Rejection of Form 10AB

Following the above cancellation, the CIT(E) also:

  • Rejected the assessee’s Form 10AB applications for:
    • Renewal of registration under Section 12A/12AB, and
    • Renewal of approval under Section 80G(5)(vi)

These rejections were passed via orders dated 27.02.2026.