Thakur Ram Singh Smriti Nyas Vs ITO (ITAT Chandigarh)
Incomplete Trust Deed Cannot Close the Registration Chapter: ITAT Restores Section 12AB Applications for Examination of Complete Record
Applications for Registration u/s 12AB
Four connected appeals were filed by two assessee-Trusts against the orders passed by the CIT(E), rejecting their applications in Form No.10AB for registration u/s 12AB.
Since the issues involved in all four appeals were identical, the Tribunal considered the facts in ITA No.697/CHD/2026, relating to Thakur Ram Singh Smriti Nyas, & applied its conclusions to the remaining appeals.
The assessee had filed Form No.10AB on 24.09.2025, seeking registration u/s 12AB. While processing the application, the CIT(E) examined the Trust Deed, financial statements & replies furnished by the assessee.
The CIT(E) observed that, in the case of an existing charitable institution, he was required to examine not only its stated objects but also the genuineness of its activities, application of income & compliance with statutory requirements.
Incomplete Trust Deed Invites Show-Cause Notice
On examining the documents, the CIT(E) found that the copy of the Trust Deed furnished by the assessee was incomplete. He also noticed that the expenditure claimed towards charitable activities was comparatively low in relation to the gross receipts.
A show-cause notice dated 04.02.2026 was therefore issued, requiring the assessee to furnish a complete certified copy of the Trust Deed registered with the appropriate authority & explain the low expenditure incurred on charitable activities.
According to the CIT(E), the assessee once again furnished only an incomplete copy of the Trust Deed. The requirement of producing the complete governing instrument thus remained unfulfilled despite a specific opportunity.
Low Charitable Expenditure & High Surplus
The CIT(E) also examined the Trust’s financial statements.
For FY 2023-24, the Income & Expenditure Account disclosed total income of approximately ₹36.32 lakh, whereas only about ₹1.35 lakh had been spent on seminar activities. The remaining expenditure largely represented administrative or running expenses.
The CIT(E) further noticed that the Trust’s activities were mainly confined to seminars & awareness programmes. According to him, no significant amount had been spent on charitable activities during the relevant period.
The financial statements allegedly disclosed surplus margins before depreciation of 96.43% in AY 2023-24 & approximately 86.12% in AYs 2024-25 and 2025-26. Such high surplus margins were viewed as indicating that only a negligible portion of the income had been applied towards charitable purposes.
Considering the incomplete Trust Deed, low charitable expenditure & substantial accumulated surplus, the CIT(E) recorded his dissatisfaction regarding the genuineness of the Trust’s activities & rejected the Form No.10AB application.
Complete Documents Produced Before ITAT
Before the Tribunal, the assessee acknowledged that the CIT(E) had called for a complete certified copy of the Trust Deed. However, it submitted that the complete Trust Deed & other relevant documents had now been placed in the paper book filed before the ITAT.
The assessee argued that the deficiency noticed by the CIT(E) was capable of verification from the complete documents presently available. It therefore requested that the rejection order be set aside & the matter restored to the CIT(E) for reconsideration.
The Revenue opposed the appeal. It contended that the assessee had been specifically confronted with the deficiency through the show-cause notice but failed to furnish the complete Trust Deed within the original proceedings.
The Revenue further relied upon the CIT(E)’s findings regarding negligible expenditure on charitable activities & retention of a substantial surplus. According to it, the rejection was justified on the material available before the CIT(E).
Registration Must Be Examined on Complete Material
The Tribunal observed that the CIT(E) had specifically required the assessee to furnish the complete certified Trust Deed & had recorded that the assessee failed to comply despite being granted an opportunity.
At the same time, the assessee had now placed the complete governing document, together with other relevant material, before the Tribunal.
The ITAT held that once the complete Trust Deed & relevant documents were stated to be available, they deserved examination by the statutory authority entrusted with determining the assessee’s eligibility for registration u/s 12AB.
The questions relating to the genuineness of the activities, nature of the objects & compliance with statutory requirements could be properly decided only after considering the complete and relevant record.
The Tribunal further observed that the CIT(E)’s conclusion regarding genuineness was materially influenced by the absence of the complete Trust Deed, financial statements, extent of application of income & high surplus margins.
Since the complete Trust Deed could have a bearing on the examination of the Trust’s objects, governing provisions & activities, the Tribunal considered it inappropriate to record any final conclusion without allowing the CIT(E) to examine the entire material.
Fresh Adjudication Directed
In the interest of substantial justice, the ITAT restored the matter to the CIT(E) for fresh adjudication.
The CIT(E) was directed to examine the complete Trust Deed, documents placed in the Tribunal’s paper book & any further material produced by the assessee. He was also required to reconsider the genuineness of the Trust’s activities & application of income towards its stated charitable objects after granting an adequate opportunity of hearing.
The Tribunal expressly clarified that it had not expressed any opinion on the merits of the registration claim. All questions were left open for fresh consideration.
The findings were applied to all four connected appeals, which were allowed for statistical purposes.
Author’s Comments
The ruling does not hold that an incomplete Trust Deed must be ignored or that a high surplus is irrelevant while examining genuineness. It merely ensures that registration is decided after considering the complete governing instrument & supporting evidence.
A high surplus or comparatively low expenditure may call for enquiry, but the authority must examine the nature of receipts, permissible accumulation, actual activities & governing objects before reaching a conclusion.
The remand gives the Trusts another opportunity, not automatic registration. They must now explain both the incomplete earlier compliance & their pattern of income application—because when pages of the Trust Deed are missing, the final page of registration cannot be written fairly.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT, CHANDIGARH
These are four connected appeals file by the assessee against the order passed by the learned Commissioner of Income-tax (Exemption) [“CIT(E)”], whereby the application filed by the assessee-trust, Thakur Ram Singh Smriti Nyas, Himachal Pradesh (PAN: AADTT8080A), in Form No. 10AB under section 12A(1)(ac)(ii) of the Income-tax Act, 1961 (“the Act”), seeking registration under section 12AB of the Act, was rejected. In these appeals identical issues are raised by the assessee and for the purpose of convenience, we are taking the first appeal i.e. ITA No.697/CHD/2026.
2. The assessee filed an application in Form No. 10AB on 24.09.2025 seeking registration under section 12AB of the Act. The learned CIT(E) examined the application, the trust deed, financial statements and the replies furnished by the assessee. The learned CIT(E) observed that, for the purposes of registration under section 12AB, the competent authority was required to examine, inter alia, the objects of the trust and the genuineness of its activities and compliance with the statutory requirements. Since the assessee was an existing entity, the genuineness of its activities and the manner in which its income was being applied towards its charitable objects were considered relevant for examination.
3. On examination of the record, the learned CIT(E) noticed that the Trust Deed furnished by the assessee was incomplete. It was further observed that the expenditure claimed towards charitable activities was very low in comparison with the gross receipts. Accordingly, a show-cause notice dated 04.02.2026 was issued to the assessee requiring it, inter alia, to furnish a complete certified copy of the Trust Deed registered with the appropriate authority and to explain the reasons for the low expenditure incurred on charitable activities.
4. In response, according to the learned CIT(E), the assessee again furnished an incomplete copy of the Trust Deed. The learned CIT(E), therefore, held that the requirement of furnishing a complete certified copy of the governing document had not been complied with. The learned CIT(E) also examined the financial statements. It was observed that, for FY 2023-24, the Income & Expenditure Account reflected total income of approximately ₹36.32 lakh, whereas only approximately ₹1.35 lakh had been spent on seminar activities. The remaining expenditure was stated to be largely towards administrative or running expenses.
5. The learned CIT(E) further observed that no significant amount had been spent on charitable activities during AY 2023-24 and that the activities of the assessee were mainly confined to seminars and awareness programmes. It was also noted that the assessee had shown high surplus margins before depreciation, stated to be 96.43% in AY 2023-24 and approximately 86.12% in AYs 2024-25 and 2025-26. According to the learned CIT(E), such high surplus margins indicated that only a negligible portion of the income was being applied towards charitable purposes.
6. On the aforesaid basis, the learned CIT(E) recorded that the assessee had failed to furnish a complete certified copy of the Trust Deed despite being afforded an opportunity and that the financial statements showed very little expenditure towards charitable activities while substantial income remained unutilised. He, therefore, recorded that he was not satisfied about the genuineness of the activities of the applicant trust as required under section 12AB of the Act and rejected the application filed in Form No. 10AB under section 12A(1)(ac)(ii) of the Act.
7. Aggrieved by the aforesaid order, the assessee is in appeal before the Tribunal and has challenged, inter alia, the rejection of its application for registration under section 12AB of the Act and the findings recorded by the learned CIT(E) regarding non-furnishing of the complete Trust Deed and the genuineness of the activities of the assessee.
8. During the course of hearing, the learned Authorised Representative (“AR”) submitted that the impugned order proceeded on the premise that the assessee had failed to furnish a complete copy of the Trust Deed. It was submitted that, although the learned CIT(E) had specifically called upon the assessee to furnish the complete Trust Deed, the assessee had, during the appellate proceedings before the Tribunal, placed on record the complete copy of the Trust Deed and other relevant documents in the paper book.
9. The learned AR drew our attention to the relevant documents placed in the paper book and submitted that the deficiency noticed by the learned CIT(E) was capable of being verified from the complete documents now available on record. It was, therefore, contended that the matter deserved to be reconsidered by the learned CIT(E) after taking into account the complete Trust Deed and other material now produced. The learned AR accordingly prayed that the impugned order be set aside and the matter be restored to the file of the learned CIT(E) for fresh examination in accordance with law.
10. The learned Departmental Representative (“DR”), on the other hand, supported the order of the learned CIT(E). It was submitted that the assessee had been specifically confronted with the deficiency by way of the show-cause notice dated 04.02.2026, requiring it to furnish the complete certified copy of the Trust Deed. Despite being afforded an opportunity, the assessee failed to furnish the requisite complete document before the learned CIT(E).
11. The learned DR further submitted that the learned CIT(E) had also examined the financial statements and had recorded specific findings regarding the negligible expenditure incurred towards charitable activities and the substantial surplus retained by the assessee. It was, therefore, contended that the rejection of the application was justified on the basis of the material available before the learned CIT(E).
12. We have heard the rival submissions and perused the material available on record. The primary issue before us is whether the rejection of the assessee’s application under section 12AB can be sustained without consideration of the complete Trust Deed and other documents which, according to the learned AR, have now been placed on record in the paper book. It is not in dispute that the learned CIT(E), during the course of proceedings, had specifically required the assessee to furnish a complete certified copy of the Trust Deed. The learned CIT(E) recorded a categorical finding that the assessee had failed to comply with the said requirement even after being afforded an opportunity. The learned CIT(E) also considered the financial statements and recorded his observations regarding the extent of application of income towards charitable activities and the high surplus margins.
13. At the same time, during the course of hearing before us, the learned AR has drawn our attention to the paper book and submitted that the complete copy of the Trust Deed, along with other relevant documents, is now available on record. In our considered view, once the complete governing document and other relevant material are stated to have been placed before the Tribunal, the same deserves to be examined by the statutory authority having jurisdiction to determine the assessee’s entitlement to registration under section 12AB. The question of the genuineness of the activities and compliance with the statutory requirements has to be examined on the basis of the complete and relevant material.
14. We also note that the learned CIT(E)’s conclusion regarding the genuineness of activities was materially influenced by the absence of the complete Trust Deed and by his examination of the financial statements and application of income. The complete document now produced before us may have a bearing upon the examination of the objects, governing provisions and activities of the assessee. It would, therefore, not be appropriate for us to record a final finding on the merits without first affording the competent authority an opportunity to examine the complete record.
15. Considering the totality of the facts and circumstances, and in the interest of substantial justice, we deem it appropriate to restore the matter to the file of the learned CIT(E) for fresh adjudication. The learned CIT(E) shall examine the complete Trust Deed and all other documents now placed on record before the Tribunal, as well as any other material furnished by the assessee, and shall thereafter reconsider the application for registration under section 12AB in accordance with law. The learned CIT(E) shall also examine afresh the genuineness of the activities of the assessee and the application of its income towards its stated charitable objects, after affording adequate opportunity of being heard to the assessee.
16. It is clarified that we have not expressed any opinion on the merits of the assessee’s claim for registration under section 12AB. All issues are left open for fresh consideration by the learned CIT(E). Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
17. In the result, the appeal of the assessee is allowed for statistical purposes.
18. Since identical issues are involved in all the appeals, therefore, our findings given in ITA No.697/CHD/2026 would apply mutatis-mutandis to the other three appeals also.
19. In the result, all the appeals are allowed for statistical purposes.
Order pronounced on 2nd September,2026.
