Shiv Kumar Hissaria Charitable Trust Vs Commissioner of Income Tax (Exemption), Jaipur (ITAT, Jodhpur Bench)
Jodhpur ITAT Restores Section 12AB Application: CIT(E) Must Examine Evidence Issue-Wise and Communicate Precise Deficiencies Before Rejecting Registration
Summary: The Jodhpur Bench of the Income Tax Appellate Tribunal considered the appeal of Shiv Kumar Hissaria Charitable Trust against the order of the Commissioner of Income-tax (Exemption), Jaipur, dated 26.06.2025, whereby the assessee’s application in Form No. 10AB filed under section 12A(1)(ac)(iii) of the Income-tax Act, 1961 was rejected and the provisional registration granted on 27.05.2021 under section 12A(1)(ac)(vi) was also cancelled by invoking section 12AB(1)(b)(ii)(B). The assessee had received provisional registration on 27.05.2021 and filed Form No. 10AB on 27.11.2024 seeking regular registration. During examination of the application, the CIT(E) called for extensive material relating to the trust deed, trustees, charitable objects, annual accounts, CSR receipts and utilisation, bills and vouchers, beneficiaries, bank statements and donations to other trusts. The assessee furnished several documents, including bank statements for 01.04.2021 to 31.03.2024, income and expenditure accounts for financial years 2021-22 to 2023-24, provisional accounts for financial year 2024-25 and Form No. 10AC relating to section 80G, but the CIT(E) considered the material insufficient for verification of the charitable activities.
The CIT(E)’s adverse observations related principally to CSR receipts aggregating Rs.1,65,45,000/- during financial years 2022-23 to 2024-25; expenditure of Rs.20,52,719/- on food distribution during financial year 2024-25; education expenditure of Rs.11,80,019/-; purchase of gold jewellery valued at Rs.2,57,500/- allegedly donated to Ms. Monalisha Lohiya at a Samuhik Vivah Sammelan; and donations made to other trusts. According to the CIT(E), complete supporting material, beneficiary particulars, utilisation evidence, agreements, bills, vouchers and registration documents had not been furnished in a manner enabling independent verification. The CIT(E), therefore, concluded that the genuineness of the assessee’s activities could not be established and rejected the application under section 12AB while cancelling the provisional registration.
Before the Tribunal, the assessee contended that substantial documentary evidence had already been furnished but had not been properly considered. Regarding CSR funds, it relied upon ledger accounts, utilisation certificates, expense-wise and party-wise details, vendor particulars, invoices, photographs and Form CSR-1. For food distribution, the assessee stated that photographs and expenditure lists had been furnished and that daily distribution to unidentified poor and needy persons made beneficiary-wise KYC impracticable. Regarding education expenditure, the assessee relied on beneficiary details, ledger accounts and school fee receipts. It also defended the gold jewellery donation and submitted that registration certificates and documents of several donee trusts had been provided. The assessee argued that if any further documents were required, an effective opportunity ought to have been granted. The Revenue supported the CIT(E)’s order and maintained that complete independently verifiable documentary evidence had not been produced.
The Tribunal held that it could not be said that the assessee had received no opportunity at all, since the CIT(E) had issued a detailed questionnaire and two show-cause notices. At the same time, the assessee specifically asserted that utilisation certificates, ledger accounts, invoices, photographs, fee receipts, vendor particulars and registration certificates of certain donee trusts had already been furnished, while the impugned order did not examine or reconcile those documents issue-wise. The Tribunal observed that the adverse findings recorded by the CIT(E) were material and could not be disregarded, because registration under section 12AB requires satisfaction, on verifiable material, regarding the objects of the trust and genuineness of its activities. However, the rival assertions could not be conclusively decided without verification of the primary documents and, wherever necessary, independent or external evidence.
Accordingly, the Tribunal set aside the impugned order and restored the application to the file of the CIT(E) for fresh adjudication. It expressly clarified that restoration was not an acceptance of the assessee’s explanation or a finding that its activities were genuine. The assessee was directed to furnish complete verifiable evidence concerning receipt and utilisation of CSR funds, food distribution, education expenditure, purchase and donation of gold jewellery and donations to other trusts, and also to explain the validity of its provisional registration, delay in seeking regular registration, relevant assessment years and compliance with other applicable laws. The CIT(E) was directed to consider documents already furnished as well as further evidence, communicate precise deficiencies, confront the assessee with adverse material, and was permitted to undertake independent inquiries and confirmations. As the rejection of the application and cancellation of provisional registration formed part of the same impugned order, the consequential cancellation was also set aside for fresh consideration. The Tribunal left all issues regarding the assessee’s ultimate eligibility open and allowed Ground Nos. 1 to 5 and the appeal for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT JODHPUR
This appeal by the assessee is directed against the order dated 26.06.2025 passed by the learned Commissioner of Income-tax (Exemption), Jaipur [“CIT(E)”], in Form No. 10AD. By the impugned order, the CIT(E), invoking section 12AB(1)(b)(ii)(B) of the Income-tax Act, 1961 [“the Act”], rejected the assessee’s application in Form No. 10AB filed under section 12A(1)(ac)(iii) of the Act and also cancelled the provisional registration earlier granted to the assessee on 27.05.2021 under section 12A(1)(ac)(vi) of the Act.
2. The assessee has raised the following grounds of appeal:
1. The Ld. CIT(E) erred in law and in facts in rejecting the application without granting the Appellant an opportunity to furnish the required documentary evidence in support of its activities, thereby violating the principles of natural justice. It be so held now.
2. The Ld. CIT(E) has erred in facts and in law in passing order in Form 10AD for rejecting application made for regularization of provisional approval for AY 21-22 to AY 23-24 under provisions of section 12A read with 12AB of the Act as the same has been passed without considering the facts of the case and documentary evidence. It be so held now.
3. The Ld. CIT(E) has erred in facts and in law in passing order in Form 10AD for rejection of application made for regularisation of provisional approval for AY 21-22 to AY 23-24 under provisions of section 12A read with 12AB of the Act by considering the activities of financial year 2024-25 instead of year relevant to Assessment year 2021-22 to 2023-24. The Appellant should have been granted regularisation of registration as sought in absence of any observations in order for non-genuineness of activities for period under consideration. It be so held now.
4. The Ld. CIT(E) has erred in facts and in law in passing order in Form 10AD for rejecting application made seeking extension of approval u/s 12A read with section 12AB of Act for AY 24-25 to AY 28-29 by alleging that genuineness of the activities was not established in absence of documentary evidence despite the fact that the genuineness of the activities of the Appellant are sufficiently evident from documents submitted before CIT(E). It be so held now.
5. The Ld. CIT(E) failed to appreciate that the Appellant trust has been carrying out genuine charitable activities in accordance with its objectives and has been regularly engaged in activities for the benefit of the public at large and therefore registration so sought should have been granted. It be so held now.
3. Facts of the case
3.1. The assessee was granted provisional registration under section 12A(1)(ac)(vi) of the Act by an order dated 27.05.2021. The assessee filed an online application in Form No. 10AB on 27.11.2024 seeking registration under section 12A(1)(ac)(iii) of the Act. For the purpose of examining the objects of the assessee and the genuineness of its activities, the CIT(E) issued a questionnaire dated 03.12.2024. The assessee was, inter alia, required to furnish particulars of its settlors and trustees, a certified copy of the trust deed, details of its charitable objects, registration under the Rajasthan Public Trust Act, 1959, annual accounts, ledger accounts of major receipts and expenditure, details of CSR receipts and their utilisation, bills and vouchers, particulars of charitable activities, lists of beneficiaries, bank statements and details of donations made to other trusts. The assessee furnished details of the trustees, the trust deed, registration certificate under the Rajasthan Public Trust Act, 1959, bank statements from 01.04.2021 to 31.03.2024, income and expenditure accounts for financial years 2021-22, 2022-23 and 2023-24, provisional accounts for financial year 2024-25 up to November 2024 and Form No. 10AC relating to approval under section 80G of the Act. The CIT(E), however, found that complete bills and vouchers, supporting documents relating to the charitable activities and details of bank transactions exceeding Rs.20,000/- had not been furnished.
3.2. The CIT(E), therefore, issued a show-cause notice dated 05.05.2025. The assessee was required to explain the maintainability of its application, furnish details of its bank transactions and produce supporting evidence concerning expenditure on CSR activities, education, food distribution and relief to poor persons. The assessee was also called upon to furnish the bank book, cash book, particulars of beneficiaries and documentary evidence concerning the premises from which its activities were carried out. Upon examination of the subsequent reply, the CIT(E) issued another show-cause notice dated 06.06.2025. The assessee was required to furnish complete details of the CSR funds received from financial year 2022-23 onwards, together with ledger accounts, memoranda of understanding or agreements, correspondence, TDS particulars and utilisation certificates. The assessee was also required to furnish complete bills and vouchers, particulars of the donee trusts, copies of their trust deeds and registration certificates, details of beneficiaries and photographs or newspaper reports relating to the charitable activities.
3.3. The CIT(E) examined the replies furnished by the assessee and recorded adverse findings under the heads of CSR funds, expenditure on distribution of food to poor persons, education expenditure, purchase and donation of gold jewellery and donations made to various trusts. In respect of CSR funds, the assessee furnished details showing aggregate receipts of Rs.1,65,45,000/- from different parties during financial years 2022-23 to 2024-25. The CIT(E) observed that the assessee had furnished only the resolutions passed by the Boards of Directors of the contributing companies and had not furnished verifiable memoranda of understanding, agreements, proof of implementation, utilisation certificates, complete details of activities or the relevant bills and vouchers to justify the application of the CSR funds.
3.4. In relation to food distribution, the assessee claimed expenditure of Rs.20,52,719/- during financial year 2024-25 and stated that approximately 300 to 400 food packets were distributed daily to poor persons in Jodhpur. The CIT(E) observed that the assessee had not furnished photographic or video evidence, newspaper reports, particulars of the places of distribution, details of beneficiaries or a consolidated daily expenditure statement. The CIT(E) also doubted the bills and vouchers furnished in support of the expenditure because, according to him, the underlying activity was not independently verifiable.
3.5. The assessee had also claimed education expenditure of Rs.11,80,019/- during financial year 2024-25. The CIT(E) observed that the assessee had not furnished complete details of the beneficiaries, the criteria adopted for their selection, the purpose of the expenditure, all the supporting bills and vouchers, advertisements issued for identifying needy persons or copies of the minutes and resolutions authorising the activity. The CIT(E) further observed that the mere production of certain fee receipts was insufficient to establish the genuineness of the educational activity.
3.6. The CIT(E) further noticed that gold jewellery valued at Rs.2,57,500/- was purchased in the name of the assessee under Bill No. 7113 dated 03.06.2024 from M/s Shri Dhanlakshmi Jewellers. The assessee stated that the jewellery was donated to Ms. Monalisha Lohiya at her marriage in a Samuhik Vivah Sammelan arranged by Shri Maheshwari Samaj. The CIT(E) observed that the assessee had not furnished permission from the concerned local authority, the address of the premises where the Samuhik Vivah was held, sufficient photographs, the basis for selecting the beneficiary or other independent supporting evidence. On examining the photograph furnished, the CIT(E) formed the view that it appeared to be a private wedding rather than a Samuhik Vivah.
3.7. Regarding donations made to other trusts, the CIT(E) observed that the assessee had furnished the trust deeds of only three donee organisations, namely, Shri Agrasen Sansthan, Seva Bharti Samiti and Ananda Hi Ananda. According to the CIT(E), the assessee had furnished documents relating to registration under section 12A and approval under section 80G only in respect of a few donees. The assessee had not established the purpose of the donations, similarity of the objects of the assessee and the donee organisations, or the genuineness of the donations through memoranda of understanding, agreements or other supporting material.
3.8. On the basis of the aforesaid observations, the CIT(E) concluded that the activities of the assessee were not verifiable and that it could not be ascertained whether the assessee was genuinely carrying out charitable activities in accordance with its objects. The CIT(E), therefore, rejected the application for registration under section 12AB of the Act. Invoking section 12AB(1)(b)(ii)(B), the CIT(E) also cancelled the provisional registration granted to the assessee on 27.05.2021.
4. Aggrieved by the order, the assessee is in appeal before us.
5. During the course of hearing before us, the learned Authorised Representative [“AR”] submitted that the CIT(E) rejected the application on the erroneous premise that the assessee had failed to furnish verifiable documentary evidence. It was contended that substantial material had been furnished in response to the notices issued during the registration proceedings, but the same was not properly considered while passing the impugned order.
6. Regarding the CSR funds, the learned AR submitted that the assessee furnished complete particulars of the funds received during the relevant period, copies of the ledger accounts of the parties and donors, utilisation certificates, expense-head-wise and party-wise break-up of expenditure, particulars of vendors, invoices, photographs relating to free food distribution and a copy of Form CSR-1. The utilisation certificate was stated to have been furnished as Annexure 4 to the reply dated 17.06.2025. The learned AR clarified that no specific memorandum of understanding or agreement had been executed with the entities contributing the CSR funds and, therefore, such documents could not have been produced. It was contended that the CIT(E) had overlooked the documents already available on record.
7. In relation to the expenditure incurred on food distribution, the learned AR submitted that the assessee had furnished photographs showing members of its team distributing food packets to poor and needy persons on the streets of Jodhpur. The lists of expenditure were stated to have been furnished as Annexures 13A to 13C, while invoices relating to the purchase of grocery and other items were furnished as Annexures 5A to 5C to the reply dated 17.06.2025.
8. The learned AR submitted that the assessee distributed food packets daily to a large number of unidentified poor and needy persons and it was practically impossible to obtain and maintain their names, addresses, contact particulars and KYC documents. The assessee did not advertise or seek publicity for its charitable activities and, therefore, no newspaper reports were available. It was contended that the absence of beneficiary-wise KYC particulars or newspaper reports could not be treated as sufficient to hold that the food distribution activity was not genuine.
9. Regarding education expenditure, the learned AR submitted that the assessee had furnished a detailed list containing the description of activities, the amounts incurred, the parties to whom payments were made, their contact particulars and their relationship, if any, with the assessee. Copies of the ledger accounts and school fee receipts were also stated to have been furnished. The learned AR explained that educational assistance was provided to academically meritorious students who did not possess sufficient financial resources to pursue their studies. The students were identified through the contacts of the assessee trust and financial assistance was provided after considering their financial position and educational background. It was submitted that none of the beneficiaries was related to or connected with any trustee. The CIT(E), according to the learned AR, had presumed, without supporting material, that the beneficiaries were known to the trustees or belonged to a particular religious community or caste.
10. In relation to the gold jewellery, the learned AR submitted that the assessee had furnished the ledger account and the invoice issued by M/s Shri Dhanlakshmi Jewellers. The jewellery was stated to have been donated to Ms. Monalisha Lohiya at her marriage in a Samuhik Vivah Sammelan arranged by Shri Maheshwari Samaj. The learned AR contended that the assessee had not specifically been asked during the proceedings to furnish particulars concerning the person who approached the assessee or the criteria adopted for selecting the beneficiary. It was further contended that the CIT(E), merely on the basis of a single photograph, presumed that the event was a private wedding.
11. The learned AR submitted that the beneficiary had been identified after carrying out the necessary due diligence and had also received similar articles from other persons and trusts. It was contended that the value of the jewellery was insignificant when compared with the overall charitable activities of the assessee and that this single transaction could not justify the conclusion that all the activities of the assessee were non-genuine.
12. In relation to donations made to other trusts, the learned AR submitted that the assessee had furnished a list of the donee trusts together with their PAN particulars. Copies of the trust deeds and registration certificates under sections 12A and 80G were furnished on a sample basis. It was further submitted that, apart from the documents relating to Shri Agrasen Sansthan, Seva Bharti Samiti and Ananda Hi Ananda, the assessee had also furnished the registration certificates of Hare Krishna Movement, Gyanyogi Shree Nandkishore Sharda Aadhyatma Kendra and Rotary Charitable Trust.
13. The learned AR contended that the CIT(E) did not issue any further notice requiring the assessee to furnish the registration certificates of the remaining donee trusts. Had such an opportunity been granted, the assessee could have furnished the requisite documents. It was accordingly submitted that the rejection of the application, without considering the documents already submitted and without granting an effective opportunity to furnish the remaining evidence, was contrary to the material on record and the principles of natural justice. The learned AR prayed that the impugned order be set aside.
14. The learned Departmental Representative [“DR”] relied upon the impugned order passed by the CIT(E). The learned DR particularly referred to the findings recorded at pages 13 and 14 of the impugned order concerning the expenditure claimed on distribution of food to poor persons, education expenditure and purchase and donation of gold jewellery. The learned DR submitted that the assessee had failed to furnish complete and independently verifiable documentary evidence, including details of beneficiaries, the criteria adopted for their selection, photographs or video evidence, newspaper reports, bills, vouchers and other corroborative material necessary to establish the genuineness of the activities. The learned DR also relied upon the other findings of the CIT(E) concerning the utilisation of CSR funds and donations made to various trusts. It was submitted that the assessee had failed to furnish complete agreements, utilisation documents, trust deeds and registration certificates of all the donee trusts. The learned DR, therefore, supported the conclusion of the CIT(E) that the activities claimed by the assessee were not fully verifiable and prayed that the impugned order be upheld.
15. We have considered the rival submissions and perused the material available on record. The principal controversy is whether the CIT(E) was justified in rejecting the assessee’s application under section 12AB and cancelling its provisional registration on the ground that the genuineness of the activities had not been established.
16. The record shows that the CIT(E) issued a detailed questionnaire dated 03.12.2024 and thereafter issued two show-cause notices dated 05.05.2025 and 06.06.2025. Therefore, it cannot be said that no opportunity whatsoever was afforded to the assessee. However, the grievance of the assessee is that the documentary evidence furnished in response to those notices was not properly considered and that certain adverse conclusions were drawn on matters in respect of which a further specific opportunity was not granted.
17. The adverse observations recorded by the CIT(E) are material and cannot be disregarded. The grant of registration under section 12AB requires the prescribed authority to be satisfied, on the basis of verifiable material, about the objects of the trust and the genuineness of its activities. At the same time, the assessee has specifically asserted before us that utilisation certificates, ledger accounts, invoices, photographs, fee receipts, vendor particulars and registration certificates of certain donee trusts had already been furnished. The underlying documents said to have been furnished have not been examined or reconciled issue-wise in the impugned order.
18. The rival assertions cannot be conclusively adjudicated without verification of the primary documents and, wherever necessary, independent or external evidence. The CIT(E) is the appropriate authority to undertake such verification. In these circumstances, we consider it just and proper to set aside the impugned order and restore the application to the file of the CIT(E) for fresh adjudication.
19. The restoration shall not be construed as acceptance of the assessee’s explanation or as a finding that the activities are genuine. The assessee shall satisfactorily explain each observation recorded by the CIT(E) and furnish complete documentary and external evidence capable of independent verification. The assessee shall furnish complete and verifiable evidence concerning the receipt and utilisation of CSR funds, including reconciliation of the amounts referred to in the show-cause notice; documentary and independent evidence supporting the distribution of food to poor persons; beneficiary-wise details and payment evidence relating to education expenditure; evidence concerning the purchase, selection of the beneficiary and donation of gold jewellery at the Samuhik Vivah Sammelan; and complete particulars, registration documents, payment evidence and purpose of donations made to other trusts. The assessee shall also explain the validity of its provisional registration, the delay in seeking regular registration, the relevant assessment years and its compliance with other applicable laws. Where any specified document was not maintained or no agreement was executed, the assessee shall furnish a proper explanation supported by such evidence as is reasonably available.
20. The CIT(E) shall consider all the documents already furnished by the assessee as well as such further evidence as may be filed in the restored proceedings. If any document or explanation is considered deficient, the precise deficiency shall be communicated to the assessee. Any adverse material proposed to be relied upon shall also be confronted to the assessee. The CIT(E) shall be at liberty to make independent inquiries and seek confirmations from the CSR contributors, vendors, educational institutions, organisers of the Samuhik Vivah and the donee trusts.
21. The assessee shall be afforded a reasonable and effective opportunity of being heard. The assessee, in turn, shall cooperate in the proceedings, furnish the required material within the time granted and shall not seek unwarranted adjournments. Thereafter, the CIT(E) shall pass a speaking order in accordance with law, dealing separately with every material explanation and document furnished by the assessee.
22. Since the rejection of the application and cancellation of the provisional registration form part of the same impugned order, the consequential cancellation of the provisional registration is also set aside for fresh consideration. The CIT(E) shall decide the application for registration and the issue concerning the provisional registration together in accordance with law.
23. We clarify that we have not expressed any opinion on the ultimate eligibility of the assessee for registration under section 12AB. All issues are left open for examination by the CIT(E) on their own merits. Accordingly, Ground Nos. 1 to 5 are allowed for statistical purposes.
24. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 25.08.2026.
