PARISARA ABHIVRUDHI FOUNDATION,BANGALORE V. COMMISSIONER OF INCOME TAX (EXEMPTIONS), BANGALORE

ITA 913/BANG/2025

AI Insights

The case involves Parisara Abhivrudhi Foundation, a trust, appealing against the rejection of their applications for registration under section 12AB and approval under section 80G of the Income Tax Act by the Commissioner of Income Tax (Exemptions), Bangalore. The CIT(E) had rejected these applications based on findings that the trust did not spend a substantial amount on charitable activities and engaged in questionable financial transactions. The Tribunal found that the CIT(E) did not provide adequate opportunity for the assessee to explain these transactions and thus restored the matter for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 712357 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Assessee Lawyers: N. SURESH
• Keywords: Charitable institution
• Section: 12; 80G

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH: BANGALORE BEFORE SHRI PRASHANT MAHARISHI, VICE PRESIDENT AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA Nos.912 & 913/Bang/2025 Assessment year: N.A. Parisara Abhivrudhi Foundation, No.45/46/47, 3rd Floor, Prabha Arcade, Kathriguppe Main Road, Khadi Commission Layout, Bangalore – 560 085. PAN: AACTP 9871G Vs. The Commissioner of Income Tax (Exemptions), Bangalore. APPELLANT RESPONDENT Appellant by : Dr. N. Suresh, CA Respondent by : Shri Sridhar E., CIT(DR)(ITAT), Bengaluru. Date of hearing : 30.06.2025 Date of Pronouncement : 28.07.2025 O R D E R Per Prashant Maharishi, Vice President 1. ITA No.912/Bang/2025 is filed by Parisara Abhivrudhi Foundation (the assessee/appellant) against the ld. CIT(Exemptions), Bangalore [ld. CIT] order in Form 10AD dated 31.3.2025 wherein the application filed by the assessee in Form 10AB dated 28.9.2024 for registration u/s. 12AB of the Income Tax Act, 1961 [the Act] is rejected. Therefore, the assessee is in appeal before us. Printed from counselvise.com ITA Nos.912 & 913/Bang/2025 Page 2 of 7 2. In ITA No.913/Bang/2025, assessee is in appeal before us where the application made by assessee on 28.9.2024 for approval u/s. 80G of the Act is rejected and approval cancelled. 3. The brief facts show that assessee is a trust created by the Trustee dated 26.2.2016. Originally the assessee was registered u/s. 12AB of the Act and also obtained recognition u/s. 80G of the Act. By the present application in Form 10AB filed on 28.9.2024 assessee is seeking renewal of registration. On receipt of the application, the ld. CIT(E) granted hearing to the assessee on 22.1.2025, but assessee responded on 20.3.2025 and submitted the details. According to the details verified by the ld. CIT(E), she held that assessee has not spent substantial amount towards charitable objects of the Trust. She extracted the details of expenditure for AY 2021-22 & 2023-24. According to those details, the assessee has incurred minor expenditure on supply of stationery, printing, furniture & track pants and T-shirts. She further examined the bank statement of the assessee wherein it was found that majority of the payments are monthly cash withdrawal of 50,000 each on several occasions and further a payment of Rs.4 lakhs and Rs.5,50,000 were made to one K.C. Enterprises & VIBINI Media. He held that cash withdrawals are made merely to keep cash on hand and are not utilised for charitable purposes. She also fund that a sum of Rs.5,50,000 paid to VIBINI Media as per Invoice dated 23.12.2022 is for paper advertisement only and does not appear to be charitable objects of the trust. She further held that a sum of Rs.20 lakhs is made to Fortis Hospital on 19.10.2023 which does not find place in Income Printed from counselvise.com ITA Nos.912 & 913/Bang/2025 Page 3 of 7 & Expenditure A/c for the AY 2024-25. She further noted that Trust has taken over possession of the land parcel during FY 2023-24 at Nil consideration from National Education Foundation. The Trust has not furnished any evidence to establish the credential of the transaction. It was further found that as per provisional statement given on 30.12.2024, assessee has given an advance of Rs.2.60 crores to M/s. Captela Ventures P. Ltd., where one of the trustees is a Director. According to her, this is in violation of provisions of section 13(3) of the Act. She held that the above fact indicate that donations received are not utilised for charitable purposes of the assessee trust and therefore vide order dated 31.3.2025, she rejected the registration application u/s. 12AB of the Act. 4. Similarly by order dated 31.3.2025, she also rejected the approval u/s. 80G of the Act. 5. Assessee is aggrieved by both these orders and is in appeals before us. The ld AR submitted aa paper book containing 272 pages and a case law compilation containing not less than 43 decisions. We have heard him at length. 6. The ld. DR vehemently supported the orders of the ld. CIT (E) and stated that he has given ample reasons for not granting registration to the assessee trust u/s 12 AB of the Act and Further as registration under that section is not granted, naturally, recognitions u/s 80 G cannot be granted. Printed from counselvise.com ITA Nos.912 & 913/Bang/2025 Page 4 of 7 7. We have carefully considered the rival contentions and perused the order of the ld CIT (E) reusing to grant registration u/s 12AB and consequent recognition u/s 80G (5) of the Act. 8. Main reason for not granting registration to the assessee is that on verification of the details for assessment year 2021 – 22 and 2023 – 24 indicate that nothing substantial expenses has been incurred towards charitable objects of the trust. Further the monthly withdrawal in cash of ₹ 50,000 and further payment of Rs 4 lakhs and 5.50 lakhs given to two entities, reasons for such advances could not be explained by the assessee. Further the assessee has made payment of ₹ 20 lakhs to the Fortis Hospital on 19/10/2023 which was not found recorded in the income and expenditure account. Further there is a transaction of possession of land taken over by the assessee trust from another trust and assessee has not furnished any evidence to establish credentials of that trust which transferred the land parcel to the assessee. There is an advance payment of Rs. 2.60 crores to one private limited company where the trustee is the director. 9. Ld AR submitted that assessee was never asked about the payment made to VIBIN media private limited of ₹ 5.50 lakhs and Rs 4 lakhs to KC Enterprises. The necessary details were furnished at page number 236 – 247 of the paper book. Further it was the amount of ₹ 20 lakhs to The Fortis Hospital is the repayment of loan to one of the person, who earlier gave loan to the assessee , which is placed at page number 240-249 of the paper book. As the same was repayment of loan, same Printed from counselvise.com ITA Nos.912 & 913/Bang/2025 Page 5 of 7 naturally would not have been recorded in the income and expenditure account. Assessee further stated that supporting land registration documents are available at page number 217 – 270 of the paper book which were mentioned in the note on future projects to the CIT -E. It was further stated that Ledger account for the payment made of Rs. 2.60 crores are also mentioned at page number 271 – 272 of the paper books. Therefore all the expenses and accounting entries that has been referred for rejection by the learned CIT – E are supported by the documents and are for the charitable objects of the trust. 10. It was the claim of the assessee that the learned CIT did not grant proper opportunity of hearing, and the view was formed without confronting the assessee about the observation without issuing a show cause notice. Had these details been asked for and questioned to the assessee, same would have been explained, such is the claim of the assessee. On reading of the order of the ld CIT (E) we do not find that such queries based on which an opinion is formed that assessee trust has not conducted substantial activities, are put to the assessee. 11. The nature of the transaction and volumes which are mentioned in the order of the ld CIT E, it is apparent that assessee has conducted some activities. Now it is for the LD CIT E to satisfy herself about the genuineness of the same in relation to objects of the trust. Further it is claimed that assessee has received an income of Rs 3.59 Crores and has incurred expenditure of Rs. 2.04 Cr in Ay 2024-25. Printed from counselvise.com ITA Nos.912 & 913/Bang/2025 Page 6 of 7 12. In of the above facts, we restore the appeal for registration under section 12 AB of the act in ITA number 912/Bangalore/2025 back to the file of the learned CIT – E with a direction to the assessee to submit explanation regarding the observation of the learned CIT – E. The learned CIT – E thereafter may examine the details, carry out examination of the genuineness of the activities of the trust, and thereafter decide the issue that whether the assessee trust is eligible for registration under section 12 AB of the act or not. That ld CIT E may issue show cause notice to the assessee, if she does not agree with the submission of the assessee and then pass the reasoned order. Accordingly this appeal is allowed for statistical purposes. 13. The second ITA number 913/B/2025 is against the rejection of application for registration under section 80 G (5) of the act which may be examined consequent to the status of the registration under section 12 AB of the act. Therefore, this appeal is also restored the file of the learned CIT – E to decide the issue afresh. Accordingly this appeal is also allowed for statistical purposes. 14. In the result the appeals of the assessee are allowed for statistical purposes. Pronounced in the open court on this 28th day of July, 2025. Sd/- Sd/- (KESHAV DUBEY) (PRASHANT MAHARISHI) JUDICIAL MEMBER VICE PRESIDENT Bangalore, Dated, the 28th July 2025. /Desai S Murthy / Printed from counselvise.com ITA Nos.912 & 913/Bang/2025 Page 7 of 7 Copy to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. Printed from counselvise.com "