Case Law Details
Shri Gurushanthi Dhama Charitable Trust Vs CIT (Exemptions) (ITAT Bangalore)
CIT(E) Cannot Act Merely on AO’s Recommendation – Independent Satisfaction Mandatory for Grant or Rejection of U/s 12AB Registration
The Bangalore ITAT held that the CIT(Exemptions) cannot reject registration under Section 12AB merely because the Jurisdictional Assessing Officer (JAO) or Range Head has not recommended the case. The Tribunal emphasized that the statute requires the CIT(E) to independently examine the objects of the trust, genuineness of activities, and compliance with applicable laws before arriving at his own satisfaction.
In the present case, Shri Gurushanthi Dhama Charitable Trust, which had already obtained provisional registration under Section 12AB and provisional approval under Section 80G, applied for final registration and approval. The CIT(E) rejected the 12AB application primarily on the ground that the JAO and Range Head had not recommended registration.
Before the Tribunal, the assessee contended that it had furnished the information sought by the ITO (Exemptions) and had expressed willingness to provide any further details. However, no further opportunity was granted and the registration was rejected solely based on the adverse recommendation of subordinate authorities.
The ITAT observed that Section 12AB specifically requires the CIT(E) himself to call for information, conduct enquiries, and record satisfaction regarding the objects and genuineness of activities of the trust. The recommendation of the JAO may be an input, but it cannot substitute the statutory satisfaction that must be independently recorded by the CIT(E). The Tribunal found that the impugned order contained no independent satisfaction and was therefore contrary to the legislative scheme.
The Tribunal also noted that the assessee was not granted a final effective opportunity before rejection. Accordingly, the ITAT set aside the rejection of registration under Section 12AB and remanded the matter to the CIT(E) for fresh adjudication. Since the rejection of 80G approval was also intertwined with the registration issue and the assessee had not properly responded during those proceedings, the Tribunal restored the 80G matter as well for fresh consideration after granting adequate opportunity.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These appeals at the instance of the assessee are directed against the separate orders of ld. CIT(Exemptions), Bengaluru dated 22.03.2025 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-25/1074855823(1) rejecting the registration u/s 12AB of the Income Tax Act, 1961 (in short “The Act”) & dated 10/09/2025 vide DIN & Notice No. ITBA/EXM/F/EXM45/2025-26/1080564190(1) rejecting the approval u/s 80G of the Act. Since the issue involved in both these appeals is common in nature, these are clubbed together, heard together and disposed of by this common order for the sake of convenience and brevity.
2. As noted by the Registry, there is a delay of 128 days in filing the appeal in ITA 2207/BANG/2025 before this Tribunal.
2.1 Perused the record as well as the affidavit of the assessee dated 10/10/2025 and having heard the ld. Counsel for the assessee as well as ld. D.R., it is perceived that explanation offered by the assessee in the affidavit dated 10/10/2025 is plausible and sufficient cause been shown by the assessee, which prevented them from filing the appeal within the prescribed period and accordingly, we are inclined to condone the delay of 128 days in filing the appeal before this Tribunal and admit the same for adjudication on merits.
3. Now having condone the delay, first we take the assessee’s appeal in ITA No.2207/Bang/2025, wherein the assessee has raised following grounds of appeal:
4. The assessee has raised following grounds of appeal in ITA No.2206/Bang/2025:
5. Brief facts of the case are that assessee trust is constituted by way of Trust Deed dated 6.11.2021. The objectives of the trust are mainly service to the senior citizens, care for children, contribute to social forest and to increase green cover, service to nation, service to farming, contribute to needy and relief work. The assessee trust was granted provisional registration under sub-clause (vi) to clause (ac) of sub-section (1) of section 12A of the Act on 4.2022 vide Unique Registration No.(URN) : AAETG0168ME20221 effective from AY 2023-24 to AY 2025-26. The assessee trust was also granted provisional approval under clause (iv) of 1stproviso to sub-section (5) of section 80G of the Act on 30.5.2022 vide Unique Registration No.(URN) : AAETG0168MF20221 effective from 30.5.2022 to AY 2025-26. The assessee trust thereafter applied for final registration u/s 12AB of the Act as well as final approval u/s 80G of the Act and accordingly filed Form No.10AB on 21.9.2024 for registration u/s 12AB of the Act and on 4.3.2025 for approval u/s 80G(5) of the Act. On receipt of the application, the case of the assessee was assigned to the jurisdictional AO for verification. The JAO issued letters/notices through official mail/post calling for the details/documents. On perusal of the submissions made by the assessee, both Range Head and Jurisdictional AO did not recommend for registration. In view of the above, the assessee’s application in Form 10AB filed for registration u/s 12AB of the Act was rejected.
6. Before us, the ld. A.R. of the assessee vehemently submitted that ld. CIT(Exemptions) rejected the application filed in Form 10AB for registration u/s 12AB solely on the ground that the lower Authorities had not recommended for the registration and accordingly submitted that the lower authorities have no power to recommend for the registration or for cancelling the registration and accordingly prayed that the case may be remitted back to the file of ld. CIT(Exemptions) to decide himself afresh in accordance with law.
7. Ld. D.R. on the other hand also fairly conceded that the case may be remitted to the file of ld. CIT (Exemptions) to decide afresh in accordance with law.
8. We have heard the rival submissions and perused the materials available on record. On perusal of the order of ld. CIT (Exemptions) dated 22.3.2025, we observed that ld. CIT (Exemptions) rejected the application filed in form no.10AB for registration u/s 12AB of the Act solely on the ground that both Range Head and Jurisdictional Assessing Officer did not recommend for registration. Further, we also take note of the fact that there is no independent satisfaction recorded by the ld. CIT (Exemptions) in rejecting the application for the registration u/s 12AB of the Act.
8.1 Before proceeding further, it is apposite here to take note of relevant section of the Act for the purpose of its case, which reads as under:
Procedure for fresh registration.
12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,—
(a) …………..
(b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) 94[or item (B) of sub-clause (vi)] of the said clause,—
(i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about—
(A) the genuineness of activities of the trust or institution; and
(B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects;
(ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),—
(A) pass an order in writing registering the trust or institution for a period of five years; or
(B) if he is not so satisfied, pass an order in writing,–
(I) in a case referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (v) of clause (ac) of sub-section (1) of section 12A rejecting such application and also cancelling its registration;
(II) in a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of sub-section (1) of section 12A, rejecting such application, after affording a reasonable opportunity of being heard;
Thus, as per the above provisions, the ld. CIT(E) himself has to call for such documents or information from the trust or institution or make such inquiries as he/she thinks necessary in order to satisfy himself/himself about (A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects. We are of the considered opinion that the ld. CIT(E) has to pass an order in writing after satisfying himself/herself about three elements viz.,
(i) the objects of the trust or institution,
(ii) the genuineness of its activities under item (A) and
(iii) Compliance of the requirements under item (B).
Thus, we are of the considered opinion that the ld. CIT (Exemptions) may make such inquiries as he thinks necessary for the purposes of satisfying himself about the three elements as discussed above but the ultimate satisfaction must be of the ld. CIT (Exemptions) in granting/rejecting the registration. In the present case, the ld. CIT (Exemptions) completely relied solely on the satisfaction of the JAO & Range Head in rejecting the application by saying that they did not recommend for registration which in our opinion is against the intent of the Legislature.
8.2 Thus, we are of the considered opinion that it is only the ld. CIT (Exemptions) who has the authority to call for such documents or information from the trust or institution or make such enquiries as he or she thinks necessary in order to satisfy the conditions for granting registration. In the present case, the ld. CIT (Exemptions) grossly erred in rejecting the registration solely based on the recommendation of both Range Head as well as JAO. Before us, ld. A.R. of the assessee also contended that the ld. ITO (Exemptions) Ward-3, Bengaluru vide letter dated 17.12.2024 called for the details/particulars. In response to the same, the assessee vide letter dated 26.12.2024 had furnished all the details as called for. Further, the assessee in its letter also submitted that they will furnish any further additional information or clarification on hearing from the ld. ITO (Exemptions), Ward-3, Bengaluru. However, ld. CIT (Exemptions) without affording further opportunity of being heard passed the impugned order dated 22.3.2025 refusing to grant registration u/s 12AB of the Act holding that JAO did not recommend for grant of registration. In view of the above, considering the fact that before rejecting the registration u/s 12AB of the Act, the ld. CIT (Exemptions) did not grant the final opportunity of being heard & also there is no independent satisfaction of the ld. CIT (Exemptions) in rejecting the application filed for the registration, we in the interest of justice, equity and fair play deem it fit and proper to remit both the issue of registration u/s. 12AB of the Act to the file of ld. CIT(Exemptions) to decide a fresh in accordance with law. Further, considering the fact that during the 80G approval proceedings, the assessee could not responded to any of the notices issued & failed to appear before the ld. CIT(E) and submit the necessary details/documents as called for, we also deemed fit to remit the entire issue of approval u/s. 80G(5) of the Act to the file of the ld. CIT(E) to decided a fresh in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to co-operate with the proceedings and submit the all the necessary documents/ records/ evidences/ certificates/ accounts/report to substantiate the genuineness of the activity of the trust and other conditions as required under the respective sections. It is ordered accordingly.
9. In the result both these appeals filed by the assessee trust are partly allowed for statistical purposes.
Order pronounced in the open court on 29th May, 2026
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