MALLI RAM CHARITABLE TRUST ,AMRITSAR vs. COMMISSIONER OF INCOME TAX ( EXEMPTIONS ), CHANDIGARH

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ITA 538/ASR/2026Status: DisposedITAT Amritsar30 July 2026AY 2026-20276 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the CIT (Exemption) erred in rejecting the application without a proper show cause notice and without considering the trust's objects and compliance with Section 11(5). The matter was remanded for fresh consideration.

What were the facts?

The assessee, Malli Ram Charitable Trust, applied for renewal of registration under Section 12AB of the Income Tax Act, 1961. The CIT (Exemption) rejected the application, alleging failure to show meaningful charitable activities and accumulation of interest income without application.

What were the issues?

Whether the CIT (Exemption) was justified in rejecting the renewal of registration for a charitable trust based on alleged lack of charitable activities, and whether principles of natural justice were followed.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 11(5),Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.

Before: SH. M. BALAGANESH & SH. UDAYAN DAS GUPTA

Hearing: 29.07.2026Pronounced: 30.07.2026

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR. BEFORE SH. M. BALAGANESH, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER I.T.A. No.513 and 538/Asr/2026 Assessment Year: 2026-27

Malli Ram Charitable Trust, Vs. CIT,(Exemption), Gupta Market, Guru Bazar, Chandigarh. Distt. Amritsar. [PAN:-AAATM7532M] (Appellant) (Respondent)

Appellant by Sh. P.N. Arora, CA Respondent by Sh. Farhat Khan, CIT. DR.

Date of Hearing 29.07.2026 Date of Pronouncement 30.07.2026 ORDER Per: Udayan Dasgupta, JM: This appeal is filed by the assessee against the order of the Ld CIT (E), Chandigarh, dated 28/02/2026, rejecting the application for renewal for registration dated 02/01/2026 filed by the assessee in Form 10AB, of the Income Tax Act 1961 (henceforth the Act). 2. The grounds of appeal taken by the assessee in the memorandum of appeal in form 36 are as follows: “1. That the order passed by the Learned CIT(Exemptions) Chandigarh dated 28/02/2026 thereby refusing to grant registration to the Appellant is against the facts of this case and is untenable under the law.

I.T.A. No.513 and 538/Asr/2026 2 Assessment Year: 2026-27

2.

That no reasonable and proper opportunity of being heard was allowed by the worthy CIT(E) before passing the said order. As such the order passed is bad in the eyes of law and the same is liable to be cancelled. 3. That the Ld. CIT(E) Chandigarh has not applied her mind and has summarily rejected the application in Form No.10AB. The worthy CIT(E) did not appreciate that this trust was very old and was a genuine trust and was carrying on the activities in accordance with the objects of the trust. As such the order passed by Ld. CIT(E) is bad in the eyes of law and the same is liable to be cancelled. 4. That the Ld. CIT(E) failed to appreciate that the trust was accumulating the funds in accordance with the law and was trying to find a good place for school building. The funds were set apart and were invested in fixed deposits in bank as per the modes specified in section 11(5) of the IT Act, 1961. We had been duly filing the Form No.10 in compliance with the Rule 17(2). The CIT(E) did not appreciate that the trust was created for education purposes to the poor and for other charitable activities and the CIT(E) has not been able to place any material on record for not accepting the same. 5. That the Ld. CIT(E) did not appreciate that we have not utilized the funds for any other purpose other than the objects of the trust. As such the CIT(E) was not justified in refusing the renewal of registration. The CIT(E) did not appreciate that the trust was genuine trust and was created for benefit of public at large. Moreover, there was no violation of any section. As such the registration as claimed should have been granted.

I.T.A. No.513 and 538/Asr/2026 3 Assessment Year: 2026-27

6.

That any other ground of appeal which may be argued at the time of hearing of the appeal.” 3. The facts emerging from records are that the trust is registered u/s 12A dated 28/05/2021 and enjoys exemption u/s 80G vide order dated 11/02/2022 application for renewal of registration u/s 12AB filed by the assessee, has been rejected on the allegation that the assessee has failed to show any real or meaningful charitable activities. It has been observed that income of the trust is out of interest from banks on fixed deposits and the said interest income is being accumulated over many number of years , without any application of the same for charitable purpose and in absence of any evidence of application of income for the relief of poor, education, medical relief, or for advancement of any other objects of general public utility, the requisite conditions for availing exemptions are not satisfied.

4.

Before the tribunal the Ld. AR of the assessee submits that all queries raised by the Ld CIT (E) in course of registration process has been replied along with copies of financial statements over the years and has referred to the same to submit that the interest income earned over the years from existing bank deposits are being accumulated for the purpose of acquiring an immovable property for construction of school building and the funds set apart has duly been invested in specified modes as per provisions of section 11(5) of the Act and has also complied with the provisions

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of Rule 17(2) by filing of necessary statement in Form 10, with the requisite time frame.

4.1 The Ld. AR further submitted that, no further show cause notices has been issued by the Ld. CIT ( E ) and the application for renewal has been rejected on the ground of absence of actual performance of charitable activity being actually carried out.

4.2 Before concluding the Ld. AR submitted that in the instant case the prima facie conditions of registration are fully satisfied, because the objects of the trusts are charitable in nature, and there are no findings of any ingenuine activities carried out, and he relied on the decision of the Hon’ble Supreme Court in the case of “ International Health care Education and Research Institute” 171 taxmann.com579(SC ) [2025] to submit that the Ld CIT ( E ) should have restricted herself to the objects of the trust – deed while granting registration and the exemption claimed u/s 10 and 11 can always be enquired into in course of assessment proceedings.

5.

The Ld. DR relied on the order of the Ld. CIT (E).

6.

We have heard the rival submission and the materials on record and we find that the Ld. CIT (E) has arrived at an incorrect conclusion taking into cognizance the financials on record and has rejected the application for registration in absence

I.T.A. No.513 and 538/Asr/2026 5 Assessment Year: 2026-27

of actual charitable activity being carried out even though there is no adverse finding regarding the OBJECTS of the trust deed and no finding of any ingenuine activity carried on by the trust. Moreover, the same has been rejected without any show cause notice which is against the principles of natural justice.

6.1 As such in the interest of justice we remand the matter back to the Ld. CIT (E) to consider the application for registration afresh and to proceed with the same as per provisions of law in light of the decision of the Hon’ble Supreme court in the case of “International Health Care Education and Research Institute” (supra) and to allow an opportunity to the assessee to make his submission to the satisfaction of the Ld. CIT (E).

7.

In the result the appeal of the assessee is allowed for statistical purpose.

ITA 538 / ASR / 2026

8.

This appeal is filed by the assessee against the rejection of the application of approval u/s 80G, which is consequential to rejection of registration u/s 12AB of the Act 61.

9.

Our observation in ITA 513/ ASR/ 2026 applies mutatis mutandis

9.1 Since we have remanded the matter back relating to registration u/s 12A, we also remand this matter back to the Ld. CIT (E) for consideration afresh in tandem with the application u/s 12AB

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10.

In the result both the appeals are allowed for statistical purpose.

Order pronounced on 30.07.2026 in the Open Court. Sd/- Sd/- (M. BALAGANESH) (UDAYAN DAS GUPTA) Accountant Member Judicial Member AKV Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR I.T.A.T.

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