Case Law Details
Shree Vishnu Bhagwan Mandir Trust Vs ITO (ITAT Delhi)
Delhi ITAT: CIT(E) Cannot Reject U/s 12AB Registration Merely by Questioning Source of Donations or Cash Deposits – Scope Limited to Objects & Genuineness of Activities
The Delhi Bench of the Income Tax Appellate Tribunal restored the registration application of Shree Vishnu Bhagwan Mandir Trust and held that while examining an application under Section 12AB, the CIT(E) must confine himself to examining the charitable/religious objects and genuineness of activities of the trust, and cannot reject registration merely by questioning the source of donations or cash deposits.
The trust, running a historical temple at Hansi, Haryana, had applied for registration in Form 10AB. The CIT(E) rejected the application on the ground that the assessee had failed to furnish complete information regarding financial transactions and source of cash deposits, and therefore the genuineness of activities could not be verified.
Before the Tribunal, the assessee contended that only limited notices were issued and that the CIT(E) exceeded the permissible scope of enquiry under Section 12AB by examining the identity and source of donations – matters which properly fall within assessment proceedings. The Tribunal accepted the contention and observed that under Section 12AB(1)(b), the relevant enquiry at the registration stage is confined to verifying the objects of the trust, genuineness of activities, and compliance with other applicable laws.
The ITAT specifically noted that the activity reports and trust deed placed on record sufficiently demonstrated the charitable nature and objects of the trust. It further held that the genuineness of donations or possible violation of Section 115BBC could be examined during assessment proceedings and are not independent grounds for rejection of registration under Section 12AB.
Considering that the application had been rejected largely for alleged non-compliance, the Tribunal restored the matter to the file of the CIT(E) with a direction to grant one final opportunity to the assessee and decide the application afresh in accordance with law.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is directed against the orders of the Commissioner of Income Tax (Exemption), Chandigarh [hereinafter referred to as “Ld. CIT(E)”] vide order dated 23.09.2025.
2. The assessee has raised the following ground in appeal:
1. The Ld. CIT Exemption has erred in rejecting the application of the appellant trust running a historical temple in the Hansi Town in Haryana filed in Form 10 AB u/s 12(1) (ac)(vi) of the IT Act in item (B) of the Act treating the same as deficient without providing reasonable opportunity to may good the deficiency.
2. The appellant craves leave to add, delete modify/ amend the above grounds of appeal with the permission of the Hon’ble appellate authority.
3. The brief facts of the case are that the assessee moved an application for registration u/s 12(1)(ac) (vi) -Item(B) of the Act. This application was dismissed by the Ld. CIT( E ) holding that the assessee has failed to file the requisite information and in absence of the financial transactions, it is difficult to verify both the nature of objects & genuineness of the activities of the applicant.
4. Aggrieved the order of the Ld. CIT(E) the assessee preferred this appeal before the Tribunal.
5. The Ld. AR submitted that the Ld. CIT(E) rejected the application of the applicant for registration without giving the opportunity of being heard. He also submitted that the assessee filed the submissions in the compliance of the notices. He further submitted that only three notices were issued to the assessee, but in the order repeated date of the notice was mentioned. It is also submitted that there was no adverse comment on the activities of the trust. He further submitted that Ld. CIT(A) has exceeded the well, defined limits contained in sec 12AB(1)(b) of the Act extending enquiry to the identity and source of donation. Which could have been examined in the course of assessment. Reliance is placed on the following decisions:
(i) Seth Panna Lal Charitable Trust v. Commissioner of Income Tax (Exemption) Chandigarh ITA no. 3097/Del/2025
(ii) Ideal Relief Trust Vs. CIT Exemption Delhi ITA No. 1956/Del/2024
6. The Ld. DR has submitted that the Ld. AR has failed to provide the relevant documents before the Ld. CIT(E), the application was rightly rejected.
7. We have heard both the parties and perused the material available on record. The assessee has filed the part details regarding the trust and did not comply the notice dated 22-09-2025. We find that the Ld. CIT(E) rejected the registration application u/s 12AB(1)(b)(ii) (B) of the Act on the ground that the assessee has not provided the sources of cash deposits and has also not proved the object & genuineness of activities of the trust. In this context reading of the said clause(b) of section 12AB(1) of the Act establishes at this stage what is material is to be examine genuineness of the activities and compliance of the other laws and objective assessment of the objects of the trust. At page PB 51-66 is the activity report showing the charitable activities and PB 10-22 is the trust deed which established the object of the trust is charitable. Thus, for the purpose of clause (b) of section 12AB (1) of the Act this all material was supposed to be examined by the Ld. CIT(E) u/s 12AB(1)(b) of the Act and give a finding if the conditions as prescribed u/s 12AB(1)(b) of the Act complied with regard to genuineness of the claimed religious and charitable activity. The genuineness of donations has to be seen at the time of assessment and not at the time for registration of the Trust as section 12AB(1)(b) does not make any specific reference to such requirement and violation of section 115BBC of the Act is not mentioned as one of the ground, for rejection of registration application.
8. Since in the instant case the Ld. CIT(E) has dismissed the appeal in non-compliance therefore, considering the totality of the facts and circumstances of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(E) with a direction to grant one final opportunity to the assessee to substantiate , its claim and decide the issue as per fact and law. The assessee is also directed to appear before the Ld. CIT(E) and co-operate in the proceedings. The grounds raised by the assessee are accordingly allowed for statistical purposes.
9. In the result, the appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 22.05.2026.
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