Assessment Issues Cannot Alone Justify 12AB Registration Cancellation: ITAT Chandigarh

Om Prakash Bansal Educational & Social Welfare Trust Vs CIT (Exemptions) (ITAT Chandigarh)

ITAT Chandigarh Restores 12AB Registration Where Alleged Violations Did Not Meet Statutory Threshold; 12AB Registration Cancellation Set Aside as Irregularities Did Not Establish Specified Violations; Educational Trust Registration Restored as Surplus and Incidental Receipts Did Not Prove Specified Violations; ITAT Chandigarh Restores Trust Registration and Reverses Consequential Form 10AB Rejection

Summary: The appeals arise from separate orders of the Commissioner of Income Tax (Exemptions), Chandigarh concerning the assessee-trust’s registration and a consequential application. In ITA No.117/Chandi/2026, the CIT(E) had cancelled the registration granted on 24.09.2021 for AYs 2022-23 to 2026-27 by invoking section 12AB(4), after proceedings were initiated following information that the trust had deposited cash aggregating to Rs.14.82 Crores in its bank accounts. The Tribunal recorded that the assessee explained the deposits as duly recorded donations and receipts/fees from its educational activities and that the impugned order contained no adverse finding that the deposits represented undisclosed income, fictitious receipts or diversion of funds. The CIT(E) had relied on several alleged violations, including an unregistered lease of two flats taken from the Vice Chairman, letting out educational premises for competitive examinations and mobile towers, inadequately supported payments to Omaxe Heights RWA and SPS Hospital, agricultural expenditure, investment in Bayer Crop Science Ltd., an initially disputed donation to Lalita Ashram Trust, surplus/profit margins and family control of the Society.