Case Law Details
Atomic Power Evolution Awareness Foundation Vs CIT(E) (ITAT Jaipur)
ITAT Restores Section 12A Registration Matter Because CIT(E) Must Reconsider Compliance and Charitable Activities; Section 12A Renewal Sent Back Because Registration Under State Trust Law Required Fresh Examination; ITAT Sets Aside Section 12A Registration Rejection as Amended Trust Objects Were Not Shown to Be Non-Charitable; ITAT Remands Section 80G Approval Because Section 12A Registration Requires Fresh Decision.
The assessee trust filed two appeals before the Income Tax Appellate Tribunal (ITAT), Jaipur, challenging separate orders of the Commissioner of Income Tax (Exemption) [CIT(E)] rejecting (i) its application for renewal of registration under Section 12A(1)(ac)(ii) of the Income-tax Act and (ii) its application for renewal of approval under Section 80G(5). The trust had been registered under Section 12A prior to 1 April 2021, had obtained fresh registration under Section 12A(1)(ac)(i) in May 2021 valid up to AY 2026-27, and thereafter applied for renewal, which was rejected.
The CIT(E) rejected the application for renewal of registration under Section 12A on three grounds. First, it held that the trust was not registered under the Rajasthan Public Trust Act, 1959. According to the CIT(E), Section 12AB(1)(b)(i) required compliance with other applicable laws, and since registration under the Rajasthan Public Trust Act was mandatory for public charitable trusts, the assessee was not eligible for renewal. The CIT(E) further observed that even the registration earlier granted under Section 12A(1)(ac)(i) was invalid on this basis.
Secondly, the CIT(E) observed that the trust had amended its objects in August 2018 by increasing the number of objects from 25 to 43. Relying on Section 12A(1)(ab), the CIT(E) held that the trust ought to have applied for fresh registration within 30 days of modifying its objects. Since no such application had been made, the CIT(E) concluded that the trust had ceased to hold a valid registration and that its subsequent registration under Section 12A(1)(ac)(i) was also invalid, making the renewal application not maintainable.
Thirdly, the CIT(E) observed that the trust had shown substantial loans and advances in its balance sheet but had failed to establish their genuineness. On that basis, the CIT(E) concluded that the trust had failed to prove the genuineness of its activities and rejected the application. As the application under Section 12A was rejected, the application for renewal of approval under Section 80G(5) was also rejected.
Before the Tribunal, the assessee submitted that it had already applied for registration under the Rajasthan Public Trust Act and expected registration shortly. It contended that the amendments made to its objects in 2018 were merely clarificatory and supplementary and remained consistent with its original charitable objects. It further argued that the provisional registration granted in 2021 had been issued after considering the amended trust deed. The assessee also submitted that it had provided complete details of loans, including names, PANs and loan amounts, and explained that the borrowings had been utilised for acquiring fixed assets. It further produced documents, newspaper reports and other material to demonstrate the genuineness of its charitable activities.
The Tribunal examined Section 12AB and observed that the compliance requirements relied upon by the CIT(E) applied to renewal applications but could not be used to retrospectively invalidate the registration earlier granted under Section 12A(1)(ac)(i), which had been mandatorily granted to trusts already registered before 1 April 2021. It further noted that when the trust was originally registered in 2014, there was no requirement for mandatory registration under the Rajasthan Public Trust Act. The Tribunal also observed that the assessee had already applied for registration under the State Act and that the CIT(E) had neither questioned the charitable nature of the trust’s objects nor the genuineness of its charitable activities. It held that where a new compliance requirement had been introduced, the assessee should have been afforded an opportunity to comply.
On the issue of amended objects, the Tribunal held that Section 12A(1)(ab), relied upon by the CIT(E), did not apply to the assessee, which had first obtained registration in 2014 and subsequently obtained re-registration in 2021. It observed that the amended trust deed containing the additional objects had already been on record when registration was granted in 2021. The Tribunal also noted that the impugned order did not identify any object that was non-charitable or any activity that lacked genuineness.
Regarding the loans and advances, the Tribunal held that the issue was not relevant for deciding the renewal application. It accepted the assessee’s explanation that the loans had been utilised for acquiring fixed assets and observed that any issues relating to their tax treatment or application of income could be examined during assessment proceedings. Such concerns did not justify rejection of renewal of registration.
Accordingly, the Tribunal set aside the order rejecting renewal of registration under Section 12A and restored the matter to the CIT(E) for fresh consideration. It directed the assessee to furnish the registration certificate under the Rajasthan Public Trust Act, if available, or explain the status of the registration proceedings. The CIT(E) was directed to examine the trust’s existing objects and the genuineness of its activities afresh without treating the amendments made in 2018 as a ground for rejection. Since the rejection of approval under Section 80G(5) was solely based on rejection of the Section 12A application, that matter was also restored to the CIT(E) for fresh adjudication. Both appeals were treated as allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The captioned appeals have been preferred by the Assessee against the separate ordersof the Learned Commissioner of Income Tax (Exemption), Jaipur [hereinafter referred to as “Ld.CIT(E)”].
2. ITA No.1836/JPR/2025 is against the order of the Ld.CIT(E) dated 26.11.2025 rejecting the application of the assessee for renewal of the registration u/s.12A(1)(ac)(ii) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), whereas the ITA No.1837/JPR/2025 is against the order of the Ld.CIT(E) dated 26.11.2025 rejecting the application of the assessee for renewal of approval under clause (ii) of first proviso to sub-section (5) of Section 80G of the Act.
3. The assessee Trust was an existing charitable Trust duly registered u/s 12A of the Act before 01.04.2021 and the assessee had applied for fresh registration u/s 12A(1)(ac)(i) of the Act and fresh registration was granted vide Form no. 10AC issued on 28.05.2021 which was valid up to AY 2026-27. The assessee, thereafter, applied for renewal of registration u/s 12A(1)(ac)(ii) of the Act, and renewal of approval under clause (ii) of first proviso to sub-section (5) of Section 80G of the Act, which have been rejected by the CIT (E).
4. So far as the rejection of renewal of registration u/s 12A of the Act is concerned, the Ld. CIT(E) observed that the assessee trust is not registered under Rajasthan Public Trust. He in this respect observed that as per Section 12AB(1)(b)(i) of the Act, the assessee-trust has to comply with the requirements of any other law that in force at the time of registration, apart from genuineness of its activities. He further observed that Section 17(1) of Rajasthan Public Trust Act, 1959 mandates that every public trust shall register itself under this Act and further that Section 2(11) of Rajasthan Public Trust Act, 1959 includes all public charitable or religious or both, societies, trusts, endowments, institutions, etc., in the definition of public trust. He, therefore, held that the assessee trust was mandatorily required to get itself registered under the Rajasthan Public Trust Act, 1959. He, therefore, held that the assessee-trust could not be granted renewal of registration u/s 12A of the Act. He further held that even the registration earlier granted to the assessee under Clause (i) of Section 12A(1)(ac) of the Act was also invalid. Secondly, the Ld. CIT(E) observed that the assessee – trust was originally granted registration u/s 12A of the Act on 28.01.2014. However, subsequently, the assessee-trust has amended/modified its objects vide trust deed dated 03.08.2018. He, relying upon the provisions of Section 12A(1)(ab) of the Act as inserted by Finance Act, 2017 w.e.f. 01.04.2018, observed that where a trust or institution which has been granted registration u/s 12AA of the Act modifies its subject which do not conform to the conditions of registration, it is required for such trust to apply for trust registration within a period of 30 days from the date of such notification. The CIT(E) observed that the assessee-trust has amended its objects from time to time and included many more objects in its trust deed. The trust deed was lastly amended on 03.08.2018 by increasing the number of objects from 25 to 43. He observed that the newly inserted objects were materially different from the earlier charitable objects of the trust. He, therefore, held that since the assessee had not filed a fresh application for registration as required u/s 12A(1)(ab) of the Act after notification of its objects in the year 2018, the trust ceased to hold a valid registration under the Act from the said date. Further that, consequently, the assessee-trust was not eligible to file an application for re-registration u/s 12A(1)(ac)(i) of the Act. He, therefore, held that as the obtained registration u/s 12A(1)(ac)(i) of the Act was not valid, therefore, the application for renewal of registration was also not maintainable.
Thirdly, the Ld. CIT(E) observed that the assessee trust had shown huge loans and advances in the balance-sheet and further that the assessee-trust could not prove the genuineness of the loans. He, therefore, held that the assessee trust has failed to prove the genuineness of its activities. The Ld. CIT(E), therefore, rejected the application of the assessee for renewal of registration.
5. Before us the Ld. Counsel for the assessee has made the following submissions:
“1. At the outset it is submitted that assessee has filed an application for registration under Rajasthan Public Trust Act, 1959 in form no 6 to DevasthanVibhag on 27.11.2025 (PB 15-16) and it is expected that registration would be granted very soon and therefore, once application has been filed refusal to grant registration u/s 12AB is bad in law.
2. The Ld. CIT(E) observed that Form No. 10AB seeking registration u/s 12A(1)(ac) is invalid in as much as it has modified its objects on 03.08.2018 (PB 11-14). The assessee vide letter dt. 14.11.2025 (PB 96-99) explained that the new objects are in line with and incidental to the original objects. They were merely clarificatory and supplementary in nature. Nothing adverse has been pointed out by Ld. CIT(E) on the explanation furnished by the assessee. Otherwise also, these amendments were made on 03.08.2018 and thereafter, on the basis of the amended objects, the provisional registration was granted to the assessee. The modifications in the objects are not such that they do not confirm to the conditions of registration. Hence, for this reason, holding that application now filed for regular registration is invalid is not correct in the eyes of law as these modifications are not of the nature which changes the objects on the basis of which registration was earlier granted.
3. So far as rejection of application for the reason that assessee failed to furnish complete details of loans and advances taken is concerned, the same is factually incorrect in as much as assessee reply dt. 10.10.2025 (PB 64) has furnished the name and PAN of the lender as well as amount of loan taken. The loan has been utilised in acquisition of the fixed assets. In any case, only for the reason that bank statement of the lender was not provided, it cannot be alleged that motive of the assessee is only siphoning of money. Further, this is to be seen at the time of assessment and not at the time of grant of registration under the Act. Hence, for this reason, the genuineness of activity cannot be doubted.
4. It is submitted that assessee vide reply dt. 06.11.2025 (PB 71-94) provided various details along with newspaper cuttings, articles published, etc. to establish the genuineness of the activities. Infact, even the Ld. CIT(E) has not doubted on the various activities of charitable nature carried out by the assessee. Hence, the rejection of the registration on grounds of non-genuineness of the activities is not correct.”
6. The Ld. DR, however, has relied upon the findings of the Ld. CIT(E).
7. We have considered the rival submissions and gone through the records. So far as the first issue relating to the requirement of registration under Rajasthan Public Trust Act, 1959 is concerned, the Ld. CIT(E) in this respect has relied upon Section 12AB(1)(b)(i)(B) of the Act. Section 12AB which is relating to procedure for registration has been inserted in the Act by the Taxation and other laws (relaxation and amendment of certain provisions) Act, 2020 w.e.f. 01.04.2021. The relevant part of which, for the sake of ready reference, is reproduced as under:
Section 12AB
“ 12AB. (1) The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,-
(a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years;
(b) where the application is made under sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) [or item (B) of sub-clause (vi)] of the said clause,-(1) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about-
a. the genuineness of activities of the trust or institution; and
b the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects;
(ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (1), –
(A) pass an order in writing registering the trust or institution for a period of five years; or
[(B) if he is not so satisfied, pass an order in writing,-
(1) in a case referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (v) of clause (ac) of sub-section (1) of section 12A rejecting such application and also cancelling its registration;…. ”
8. A perusal of the aforesaid provisions would reveal that the aforesaid procedure as prescribed in Section 12AB(1)(b)(i)(B) of the Act is applicable only in respect of applications made sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) [or item (B) of sub-clause (vi) of section 12A(1) (ac). Therefore, the earlier registration granted to the assessee-trust u/s 12A(1)(ac)(i) of the Act cannot be held to be invalid as the same was required to be mandatorily granted by the Ld. CIT(E), the assessee-trust being already registered trust u/s 12A of the Act prior to 01.04.2021. So far as the rejection of present application for registration under Clause (ii) of Section 12A(1)(ac) is concerned, it is to be noted that the assessee-trust admittedly has been registered u/s 12A of the Act since 28.01.2014. At the time of such registration, there was no requirement for its mandatory registration under Rajasthan Public Trust Act, 1959, neither this issue was raised by the Ld. CIT(E) at the time of grant of registration.Admittedly, the assessee-trust has duly applied for registration under the Rajasthan Public Trust Act, which is likely to be granted to the assessee-trust. It is not the case of the Ld. CIT(E) that any of the objects of the assessee – trust are not charitable or its activities for attaining such objects are not genuine. It is also not amenable from the records that the assessee-trust has failed to comply any requirement of law, which is material for the purpose of achieving its objects. If there is any new requirement of compliance has been inserted in the Act, the Ld. CIT(E) should have given opportunity to the assessee-trust for such compliances.
9. So far as the objection of the Ld. CIT(E) that the assessee-trust had amended its objects in the year 2018 and had inserted certain new charitable objects is concerned, it is to be observed that the Ld. CIT(E) in this respect has relied upon Section 12A(1)(ab) of the Act, inserted w.e.f. 01.04.2018, which reads as under:
“(ab) the person in receipt of the income has made an application for registration of the trust or institution, in a case where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification, to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA;”
10. A perusal of the afore-reproduced provision would reveal that such requirement of making a fresh application within 30 days after amendments of the objects is applicable to the trusts or institutions which have obtained registration at any time under section 12A as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996). The assessee-trust admittedly has obtained registration for the first time in the year 2014 and then re-registration in the year 2021. Therefore, the said provisions are not applicable in the case of the assessee. The trust deed containing the objects of the assessee-trust including the newly inserted objects in the year 2018 was very much on the record and the Ld. CIT(E) at the time of its re-registration in the year 2021. The Ld. CIT(E), could have examined the said objects of the assessee-trust. At this stage, the Ld. CIT(E) is not supposed to hold that the earlier registration granted to the assessee-trust was invalid. A perusal of the impugned order of the Ld. CIT(E) does not point out that any of the objects of the assessee-trust are not charitable or any of the activities of the assessee-trust for attaining its objects are not genuine.
11. So far as the observation of the Ld. CIT(E) that the assessee-trust has taken certain loans and advances from the trustees and the assessee-trust could not establish the genuineness of such transaction is concerned, in our view, the said concern of the Ld. CIT(E) at this stage for deciding the application for renewal of registration is not relevant. Moreover, the Ld. Counsel for the assessee has duly explained that the said loans were taken for purchasing fixed assets. Even if the said loans at any stage of assessment are treated as income of the assessee-trust, even then, at the most, the assessee trust may be asked to apply such income for charitable activities. At that stage, if such loans are treated as income of the assessee, it can be verified by the AO as to whether such fixed assets purchased by the assessee have been used for carrying out its charitable activities. Even in adverse scenario, the assessee may be denied deduction u/s 11 to that extent. Therefore, the rejection of the application for renewal of application at this stage cannot be held to be justified on this ground.
12. In view of the above discussions, the impugned order of the Ld. CIT(E) rejecting the application of the assessee for renewal of registration u/s 12A of the Act is hereby set aside and the matter is restored to the file of the Ld. CIT(E) for decision afresh on the application of the assessee, in the light of the observations made above. It is further directed that the assessee-trust will furnish the copy of the certificate, if by that time, it stands registered under Rajasthan Public Trust Act, 1959. If it is not yet registered under the said Act of 1959, the assessee will furnish the reasons and the details of the proceedings in this respect. The Ld. CIT(E) will consider the same and decide whether the assessee has been prevented from achieving its objects because of non-grant of registration or delay in grant of such registration under the Rajasthan Public Trust Act, 1959. The Ld. CIT(E) will also examine the objects, as are there in the trust deed as on today, and genuineness of its activities and thereafter, decide the application afresh irrespective of the fact that certain objects have been amended/inserted in the year 2018. With the above observations, the Appeal of the assessee ITA No.1836/JPR/2025 is treated as allowed for statistical purposes.
13. So far as the rejection of the application of the assessee trust for renewal of approval u/s 80G(5) is concerned, the Ld. CIT(E) has rejected the said application for the reason that the same cannot be granted without registration u/s 12A of the Act. Since we have restored the matter to the file of the CIT(E) relating to registration of the application u/s 12A of the Act, the matter in this appeal bearing ITA No.1837/JPR/2025 is also restored to the file of the Ld. CIT(E) for decision afresh.
14. In the result, both the appeals of the assessee – trust are treated as allowed for statistical purposes.
Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 26/05/2026.
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