Guru Nanak Trust of Education Vs CIT (ITAT Amritsar)
Running a School Is Undisputedly a Charitable Activity: Amritsar ITAT Restores Trust’s Section 12AB Registration Application for Fresh Consideration
The Amritsar ITAT restored the application of Guru Nanak Trust of Education for registration under Section 12AB to the CIT(E) for fresh consideration. The CIT(E) had rejected the application after noticing substantial cash deposits and expressing doubts about the source of donations, genuineness of activities and financial integrity of the trust.
The Tribunal observed that the trust was actually running a school, which constituted education and qualified as a charitable activity under Section 2(15). In the interest of justice, it directed the CIT(E) to reconsider the application afresh, keeping in view the charitable activities genuinely carried on by the trust. The assessee was directed to furnish all supporting documents concerning the donations and cash deposits and cooperate with the proceedings. The CIT(E) was also directed to provide a reasonable opportunity of hearing.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
This appeal is filed by the assessee against the order of the Ld CIT (E),
Chandigarh, dated 20/03/2025, rejecting the application for registration dated 04/09/2024, filed by the assessee in Form 10AB, u/s 12(1)(ac)(vi)(B) of the Income Tax Act 1961(henceforth the Act).
2. The grounds of appeal taken in Form No. 36 are as follows:
“1. That the order of Ld. Commissioner of Income-tax (Exemptions) is illegal, arbitrary and contrary to facts and on this illegality pervades over all grounds of appeal.
2. That the Ld. Commissioner of Income-tax (Exemptions) has erred in law and not judicially applied her mind to the facts and circumstances of the case and as such the rejection of registration u/s 12(1)(ac) (vi)-ITEM(B) is illegal and needs to be set aside.
3. That the Ld. Commissioner of Income-tax (Exemptions) has acted post hasto in rejecting the application without affording reasonable, opportunity of being heard to the appellant and accordingly the appellant was prevented by sufficient cause in not being able to represent this case.
4. That the Ld. Commissioner of Income-tax (Exemptions) has erred in law and not doubted on explanation and conclusive evidences related to the activities and other documents produced before her during the proceedings but she brushed aside all explanations and evidences without any specific reason which is blatant disregard to the spint of principle of natural justice and procedure of law.
5. That the findings of the Ld. Commissioner of Income-tax (Exemptions) are not justified in law as well as facts of the case and the rejection of registration totally based on only two technical grounds without going through all the circumstances and affairs, which was beyond the human control that proof of affiliation of school and donation received from near & dear, who are residing abroad. Due to these reasons, the rejection order is arbitrary, illegal and bad in law and required to be set aside in the interest of equity and justice.
6. That the Ld. Commissioner of Income-tax (Exemptions) has recorded her reasons in view of rejection of registration u/s 12(1)(ac) (vi)-ITEM(B) of Income-tax Act, 1961 in legal vacuum in absence of written submissions as well as concrete evidences produced before her, in which all the points were elaborated exhaustively.
7. That the Ld. Commissioner of Income-tax (Exemptions) has completely failed to understand the facts and in law on account of filed an application for registration u/s 12(1)(ac)(vi)-ITEM(B) and reject the registration application in poste-haste and very casual manner without application of judicial mind, which is against the due process of law.
8. That the appellant craves leave to add, amend or withdraw any new ground or grounds of appeal before or at the time of hearing of appeal.”
3. The brief facts emerging from records are that the application for registration u/s 12(1)(ac)(vi) of the Act in form 10AB dated 04.09.2024 has been rejected by the ld. CIT(E) raising doubts about the genuineness of the activities and financial integrity of the trust.
3.1 The assessee trust is running a school in the name of Guru Nanak Public Schools at Gurdaspur, Punjab. Though the applicant has furnished details of the students and teachers of the same institutions, clarification regarding source of receipts of funds to meet the expenses of a schools where shortfall in response to which the assessee has submitted its bank statements from where substantial cash deposits were found. The assessee explained the source of such bank deposits to have come out of various donations received from trust members who reside out of India and have sent financial support through their close relatives and acquaintances and family members, who are all resident of Punjab. Not being satisfied with the submissions and explanations furnished by the assessee along with supporting documents, the ld. CIT(E) raised doubt regarding the genuineness of the activities and its’ financial integrity and rejected the application for registration.
4. The ld. AR, in course of hearing submitted that because of difficulties faced by the donors to transfer funds directly through banking channels funds are transferred through family members who are resident of Punjab, who transferred and deposits the said amount in the cash maintained with Punjab & Sindh Bank (wrongly written as Punjab Gramin Bank).
4.1 The ld. AR further submitted that activities of the trust are absolutely genuine where the assessee is engaged in running a school (educational institution) which itself is a charitable activity u/s 2(15) of the Act and as such, the genuineness of the said activity is beyond dispute because the school is still running.
4.2 He further submitted that it was not proper on the part of the ld. CIT(E) to refuse and to reject the existing registration without any show cause notice being issued and non issue of SCN before rejection of registration is violative of principles of natural justice and he prayed for opportunity of hearing before the ld. CIT(E) to explain with submissions and documentary evidences the genuineness of the charitable activities that has been carried out.
5. The ld. DR relied on the order of the ld. CIT(E).
6. We have heard the rival submissions and considered the material on record and we find that the trust is engaged in running of school which is educational activity (not for profit) and the same qualifies as charitable activity u/s 2(15) of the Act. In the interest of justice, we remand the matter back to the file of the ld. CIT(E) to consider the application for registration afresh keeping in mind the charitable activities that is carried out by the trust and we also direct the assessee to furnish all documentary evidences and submissions in support of his contention and to fully cooperate in fresh registration proceedings.
6.1 The assessee shall be allowed reasonable opportunity being heard.
7. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 10.08.2026 under Rule 34(4) of the Income Tax Appellate Tribunal Rules 1963.
