Section 354 — Unexplained investments/expenditure/cash credits
Old Act equivalent: 69A-D of IT Act 1961 Sub-part: Unexplained Income
Statutory Text
- (1) A registered non-profit organisation or a person referred to in Schedule
VII (Table: Sl. No. 1) may, for the purpose of section 133(1)( b)(ii), make an application for approval in such form and manner, as may be prescribed, to the Principal Commissioner or Commissioner, subject to the following conditions:— ( a) it is not expressed to be for the benefit of any particular religious
community or caste; ( b) it is established in India for a charitable purpose and does not incur any expenditure of an amount exceeding 5% of its total income during a tax year which is of a religious nature; ( c) the instrument under which it is constituted does not, or the rules
governing it do not, contain any provision for the transfer at any time of the whole or any part of its assets for any purpose other than a
charitable purpose; ( d) it maintains regular accounts of its receipts and expenditure; ( e) it prepares such statement for such period, as may be prescribed, and deliver or cause to be delivered to the prescribed income-tax authority or the person authorised by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time, as may be prescribed; ( f) it delivers to the said prescribed authority, a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under clause ( e) in such form and verified in such manner, as may be prescribed; and ( g) it furnishes a certificate to the donor specifying the amount of donation within such period from the date of receipt of the donation containing the requisite particulars in manner, as may be prescribed. (2) The application under sub-section (1) shall be made in respect of the cases
referred to in column B of the Table below within the time limit provided in column C of the said Table and the Principal Commissioner or Commissioner, on receipt of such application, shall follow the procedure provided in sub-sections (3) and (4), and shall pass an order in writing within the time limit provided in column D and approval, if granted, shall be valid for a period provided in column E of the said Table: TABLE Sl. No.Case Time limit for furnishing appli - cationTime limit for passing the orderValidity of
approval A B C D E - Where the activities of the applicant have not commenced.At any time during the tax year from which approval is sought.One month from the end of the month in which appli - cation is made.Three tax years commencing from the tax year in which such applica - tion is made.
- Where the activi - ties of the applicant have commenced.At any time during the tax year from which approval is sought.Six months from the end of the quarter in which appli - cation is made.Five tax years commencing from the tax year in which such applica - tion is made.
- Where the applicant has provisional ap - proval and activities have commenced.Within six months of the commence - ment of activities.Six months from the end of the quarter in which appli - cation is made.Five tax years commencing from the tax year in which such applica - tion is made.
- Where the provi - sional approval of the applicant is due to expire and activ - ities have not com - menced.At least six months prior to the expiry of the provisional approval.Six months from the end of the quarter in which appli - cation is made.Five tax years following the tax year in which such application is made.
- Where the period
for approval of a reg -
istered non-profit
organisation is due
to expire.At least six months
prior to the expiry
of the said approv - al.Six months from the end of the quarter in which appli - cation is made.Five tax years following the tax year in which such application is made. (3) Where an application has been made in any of the cases specified under
sub-section (2) (Table: Sl. Nos. 2 to 5), the Principal Commissioner or Commissioner shall call for such documents or information or make such inquiries as he thinks necessary in order to satisfy himself about the genuineness of the activities, and compliance of such requirements of any other law in force, as are material for the purposes of achieving its objects, and— ( a) if he is so satisfied about the objects and the genuineness of the activities and compliance of such requirements of any other law in force, he shall pass an order in writing approving it; or ( b) if he is not so satisfied, after affording a reasonable opportunity of
being heard,— ( i) shall pass an order in writing rejecting the application, where the application was made in any of the cases specified in sub-section (2) (Table: Sl. No. 2); and ( ii) in any other case, shall pass an order in writing rejecting the
application and also cancelling the approval, and send a copy of the order to the applicant and the Assessing Officer. (4) Where an application has been made in any of the cases specified in sub-section (2) (Table: Sl. No. 1), the Principal Commissioner or Commissioner shall pass an order granting provisional approval. 69[Merger of registered non-profit organisation in certain cases. 354A. Where any registered non-profit organisation merges with any other registered
non-profit organisation, the provisions of section 352 shall not apply if, — ( a) the other registered non-profit organisation has same or similar objects; and ( b) the said merger fulfils such conditions as may be prescribed. ] - —Interpretation Interpretation.
Provisos
None.
Explanations
None.
Tables
See statutory text above.
Cross-References
To be updated.
Notes
- Verification status: pending
- Auto-generated from IT Act 2025 PDF on 2026-04-13