Case Law Details
KVG Memorial Trust Vs CIT (ITAT Bangalore)
The Bangalore ITAT in the case of KVG Memorial Trust examined rejection of permanent registration u/s 12AB and approval u/s 80G, which was denied mainly on the ground that no charitable activities had yet commenced.
The Tribunal first condoned the delay of 109 days, noting that the assessee had mistakenly filed a fresh application instead of appeal based on wrong advice, and acted promptly thereafter.
On merits, the ITAT found that:
- The trust had already taken concrete steps (e.g., ₹75 lakh spent on leasing land) towards its objects,
- Activities had not commenced due to pending government approvals, which in turn required 12AB registration,
- The CIT(E) mechanically relied on the JAO’s report without independent application of mind,
- No proper opportunity of hearing was granted before rejection.
Importantly, the Tribunal reiterated that non-commencement of activities cannot be the sole ground to reject registration, especially when “proposed activities” are genuine and substantiated, in line with Ananda Social & Educational Trust (SC) principles.
Accordingly, the ITAT set aside both rejection orders and restored the matter to CIT(E) with directions to:
- Re-examine the application independently,
- Consider evidence of preparatory activities,
- Grant proper opportunity of hearing.
The appeals were thus allowed for statistical purposes, reinforcing that genuineness and intent matter more than mere commencement of activities for 12AB/80G registration.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These are the two appeals filed by the assessee challenging the rejection orders of the Ld.CIT(E) in which the permanent registration sought for u/s. 12AB and the approval u/s. 80G were rejected by the Ld.CIT(E) vide his orders dated 19/03/2025 and 01/09/2025 and raised the following grounds with a delay of 109 days.
ITA No. 2032/Bang/2025
“1. The Order U/s 12AB of the income Tax Act, dated 19.03.2025, passed by the Learned Commissioner of Income Tax, Exemptions, Bangalore is bad in law and opposed to the facts of the case.
2. The Learned CIT-(Exemptions), Bangalore, erred in law and facts, rejecting the application in Form 10AB dated 23.09.2024, in violation of provisions of Section 12AB(1)(b)(ii)(B)(I), failing to afford a reasonable opportunity of being heard.
3. The Learned CIT-(Exemptions), Bangalore, erred in law and facts in rejecting the Application U/s.12AB on the sole ground that the income and expenditure account does not reflect any substantial expenditure towards the educational or any other objects of the trust, while noting application of Rs.75 lakhs towards hiring a place on lease for the purposes of the objects of the trust.
4. The Learned CIT(Exemptions), Bangalore has erred in law and facts, failing to consider that the documents or information called for and enquiries made has satisfied the twin test of (a) genuineness of the activity of the trust, and (b) The compliance of such requirements of any other law for the time being in force by the trust, is material for the purpose of achieving the objects of the Trust, that commencement of activities or not is not the sole criteria to reject the Application U/s 12AB.
5. The Learned CIT-(Exemptions), Bangalore has erred in not considering the decision of the Hon’ble Apex Court in Ananda Social & Educational Trust Vs Commissioner of Income Tax reported in (2020) 426 ITR 340, wherein activities the term activities in the provision is held to include “proposed activities”.
6. The Learned CIT-(Exemptions), Bangalore, erred in law and facts in failing to provide an opportunity before passing the rejection order U/s 12AB.
7. The Learned CIT-(Exemptions), Bangalore, erred in law and facts in not considering the receipt of Rs.5,96,01,010/- in earlier years, towards the Corpus of the Trust and kept Invested in specified mode U/s 11(5) of Income Tax Act, 1961.
8. The Appellant craves leave to add, alter, amend and delete any of the grounds at the time of hearing.
9. For the above and other grounds to be urged during the course of the hearing of the appeal, the appellant prays that the appeal be allowed in the interest of equity and justice.”
ITA No. 2033/Bang/2025
“1. The Order U/s 80G of the Income Tax Act, dated 1.09.2025, passed 1w the Learned Commissioner of Income Tax, Exemptions, Bangalore is bad in law and opposed to the facts of the case.
2. The Learned CIT-(Exemptions), Bangalore, erred in law and facts, rejecting the application in Form 10AB dated 03.03.2025, in violation of provisions of Subclause (B) of clause (ii) (b) of Second Proviso to Section, 80G(5), failing to afford a reasonable opportunity of being heard.
3. The Learned CIT-(Exemptions); Bangalore, erred in law and facts in rejecting the Application U/s.12AB on the sole ground that the Trust does not hold a valid 12A registration, to consider the appeal filed in respect of 12A rejection along with this appeal.
4. The Learned CIT(Exemptions), Bangalore has erred in law and facts, failing to consider that the documents or information called for and enquiries made has satisfied the twin test of (a) genuineness of the activity of the trust, and (b) The compliance of such requirements of any other law for the time being in force by the trust, material for the purpose of achieving the objects of the Trust, that commencement of activities or not is not the sole criteria to reject the Application U/s 12AB, the rejection of 12A registration is on erroneous / technical grounds.
5. The Learned CIT-(Exemptions), Bangalore has erred in not considering the decision of the Hon’ble Apex Court in Ananda Social & Educational Trust Vs Commissioner of Income Tax reported in (2020) 426 ITR 340, wherein activities the term activities in the provision is held to include “proposed activities”.
6. The Appellant craves leave to add, alter, amend and delete any of the grounds at the time of hearing.
7. For the above and other grounds to be urged during the course of the hearing of the appeal, the appellant prays that the appeal be allowed in the interest of equity and justice.”
2. The brief facts of the case are that the assessee is a charitable trust and obtained their provisional registration u/s. 12AB of the Act. Subsequently, the assessee had applied for permanent registration on 23/09/2024. The details were called for, for which the assessee had also filed their reply. The Ld.CIT(E) without considering the said documents, had rejected the said application on the ground that the JAO had not recommended for the approval of the registration u/s. 12AB of the Act. The Ld.CIT(E) had extracted the report of the JAO in which the JAO had observed that the assessee had not incurred any substantial expenditure towards education or any other objects of the trust and also no charitable activities were also carried out by the assessee. On that ground, the Ld.CIT(A) had rejected both the applications filed u/s. 12AB as well as u/s. 80G of the Act.
3. The assessee instead of filing the appeal before this Tribunal against the rejection order passed u/s. 12AB of the Act, had mistakenly filed an another application for granting the registration u/s. 12AB of the Act. The Ld.CIT(E) had rejected the said second application on 01/09/2025 by saying that the earlier rejection order was not challenged by the assessee before this Tribunal and therefore the fresh application could not be entertained.
4. The Ld.CIT(E) had originally rejected the application for 80G on 19/03/2025 for the reason that the assessee had mentioned a wrong code. Similar to the application filed for registration, the assessee had also filed an application for approval u/s. 80G of the Act for the second time. The Ld.CIT(E) had rejected the said application also by citing the very same reasons. As against the two rejection orders, the assessee filed these appeals before this Tribunal with a delay of 109 days. The assessee had also enclosed an application to condone the said delay and in the said application, it was averred that the assessee had filed a second application on the wrong advice given by the authorities and therefore there is a delay of 109 days in filing the appeal against the first rejection order and prayed to condone the said delay.
5. We have considered the said facts and also the reasons stated in the delay condonation application and we are satisfied that the assessee had taken steps by filing a second application before the Ld.CIT(E) and only when the second application was rejected by citing the reason that the earlier rejection order was not challenged, the assessee came to know about the correct procedure and filed the present appeal with a delay of 109 days. We, therefore accepted the reasons given by the assessee and condone the delay in filing the appeals before this Tribunal.
6. At the time of hearing, the Ld.AR submitted that the assessee is in the process of commencing the activities as stated in the objects of the trust deed for which purpose the assessee had taken the lands for lease. The Ld.AR further submitted that the educational activities could not be commenced for want of government approvals and the government approval could not be obtained un less the assessee is having a permanent registration u/s. 12AB of the Act. Therefore the Ld.AR submitted that the possession of permanent registration u/s. 12AB is the vital one for doing the various education activities as stated in the objects of the trust and therefore prayed to consider the issue on merits and grant the registration in order to continue the activities without any problem. At the time of hearing, the Ld.AR filed a paper book enclosing the copy of the trust deed as well as the decisions of the Hon’ble Supreme Court as well as the Coordinate Bench of this Tribunal in support of their case.
7. The Ld.DR submitted that the assessee had not yet commenced its activities and also no charitable activities were carried out by them till date and therefore the Ld.CIT(E) had correctly denied the exemption u/s. 12AB as well as approval u/s. 80G of the Act.
8. We have heard the arguments of both sides and perused the materials available on record.
9. It is an admitted fact that the assessee had commenced its activities by taking a lease of the land by paying Rs. 75 Lakhs. Thereafter the assessee has to get the approval from the State Government for conducting the schools as well as their objects mentioned in the trust deed. The Government would grant the permission for conducting the schools etc, but they insisted for the permanent registration and then only, the approvals from the government would be granted. As a first step, the assessee had invested the money into the land and thereafter tried to get the permanent registration so that the necessary approvals from the government agencies could be obtained and the activities as stated in the objects could be carried out without any interruptions.
10. The Ld.CIT(E) without considering the said facts and also without considering the issue on his own, had relied on the report of the JAO in which the JAO had not recommended for registration by saying that the assessee has not commenced its activities and no charitable activities were carried out by them. In our view, the said finding is not correct since the Ld.CIT(E) had not independently applied his mind to the facts of the case and thereafter decided the application. The Ld.CIT(E) had simply relied on the report of the JAO. As seen from the documents filed before us, the assessee has taken lease of a land for establishing the educational institutions, hospitals, etc. but the only difficulty faced by them is that the other government agencies will not grant the approvals if no permanent registration is available with the assessee. Further, the Ld.CIT(E) had also not granted any personal hearing before rejecting the said application.
11. Considering the entire facts, we are of the view that the Ld.CIT(E) is not correct in rejecting both the applications by relying on the report of the JAO. The order of the Ld.CIT(E) is also not correct since the Ld.CIT(E) had not offered any personal hearing before rejecting the applications. We, therefore set aside the orders of the Ld.CIT(E) and direct him to pass fresh order by considering the facts and also considering the fact that the assessee had invested substantial amount in the lands for commencing the activities.
12.In the result, both the appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the open court on 27th April, 2026.
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