ITAT Jodhpur Validates Distribution of Halwa and Tea as Genuine Charity; Directs Grant of Section 12AB and 80G Approvals

The judicial landscape governing the registration and approval of charitable institutions under the Income-tax Act, 1961 requires a delicate balance between ensuring statutory compliance and acknowledging the practical realities of philanthropic work. In a highly significant ruling, the Jodhpur Bench of the Income Tax Appellate Tribunal (ITAT) has clarified the parameters of what constitutes a genuine charitable activity.

In the case of Inani Charitable Foundation Vs Commissioner of Income Tax (Exemption), Jaipur, the Tribunal decisively ruled that the distribution of items such as halwa, herbal kadha, and tea qualifies as a valid charitable pursuit. The judgment underscores that philanthropic relief to the poor does not strictly mandate the provision of a conventional full-course meal. Furthermore, the Tribunal drew a firm line between minor documentation deficiencies and the outright non-genuineness of charitable activities, offering substantial relief to the assessee.

Statutory Framework and Background of the Dispute

To comprehend the gravity of this ruling, it is essential to understand the procedural pathway for charitable trusts seeking tax exemptions. Under the current regime of the Income-tax Act, 1961, institutions must first obtain provisional registration, followed by an application for regular registration.

The Assessee's Registration Timeline

The assessee, a charitable foundation dedicated to community welfare, was initially granted provisional registration under Section 12A(1)(ac)(vi) and provisional approval under Section 80G(5) on 12.08.2024. Transitioning to the next statutory phase, the assessee filed applications in Form No. 10AB to secure regular registration. The application for Section 12AB registration was submitted on 29.01.2025, while the application for Section 80G approval was filed on 30.01.2025. These applications pertained to the Assessment Year (AY) 2025-26.

Scrutiny by the Exemption Directorate

During the processing of these applications, the Commissioner of Income Tax (Exemption) [CIT(E)], Jaipur, initiated a detailed inquiry. Notices were issued to the assessee on 15.04.2025, 14.05.2025, and 25.07.2025, seeking evidence of the genuineness of the charitable activities.

Upon reviewing the submissions, the CIT(E) developed several reservations regarding the operational mechanics of the trust. Consequently, on 15.09.2025, the CIT(E) passed adverse orders in Form No. 10AD. The authority not only rejected the applications for regular registration and approval but also retroactively cancelled the provisional registration and approval that had been granted on 12.08.2024.

Grounds for Rejection by the CIT(E)

The primary basis for the CIT(E)'s rejection was a profound skepticism regarding the genuineness of the assessee's core activities, specifically its food and clothing distribution drives. The objections raised by the revenue department were multifaceted: