RARE FAMILY FOUNDATION,MUMBAI vs. CIT EXEMPTION, MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM I.T.A. No.5763/Mum/2026 (Assessment Year: NA) Bhanji Keshavji Bheda ITO Exem Ward 1(1), Mumbai 3rd and 4th floor, Pratishtha Bhawan, Charitable Trust 2nd Floor Arihant Mension, 29 Maharshi Karve Road, Dhobi Talao, Vs. Keshavji Naik Road, New Marine Lines, Church Gate, Chinchbunder H.O, Mumbai- Mumbai-400020 400009 PAN: AAATB3927F Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

: Shri Bhavya Rangani (Virtually Assessee by present) : Shri Sandeep Lakra, CIT DR. Revenue by

I.T.A. Nos. 4883 & 5577/Mum/2026 (Assessment Year: NA) Rare Family Foundation CIT Exemption 601, 6th floor, Cumballa Hill MTNL TE 151 Nariman Bhavan, Vinay Vs. Shah Marg, Nariman Point SO, Building, Pedder Road, Dr. Gopalrao Mumbai-400021 Deshmukh Marg, Mumbai-400026 PAN: AALCR2299E Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assesseeby : Shri Dharan Gandhi & Sanjay Gandhi Revenueby : Shri Sandeep Lakra, CIT DR.

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 I.T.A. Nos. 5399 & 5400/Mum/2026 (Assessment Year: 2026-27) Upadesh Vatika Foundation CIT (Exemptions), Mumbai Room No.601, 6th floor, Cumballa Hill Opp. Vijay Panjab Hotel, Bungalow No.2, Amar Baug, Vs. MTNL TE Building, Pedder Road, Dr. Panjab Wadi, T.F. Donor, S.O., Gopalrao Deshmukh Marg, Cumballa Mumbai-400088 Hill, Mumbai-400026 PAN: AACCU4661Q Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : Shri Dharan Gandhi & Sanjay Gandhi Revenue by : Shri Sandeep Lakra, CIT DR.

I.T.A. Nos. 5601 & 5602/Mum/2026 (Assessment Year: 2026-27) Sahas (Spreading Aid Health CIT Exemption, Mumbai RN 601, 6th floor, Cumballa Hill and Smile) Foundation B144, 14th Floor, Tower B MTNL Building Pedder Road, Dr. Vs. Kalpataru Sparkle Gandhi Nagar Gopalrao Deshmukh Marg, Cumballa MIG Bandra East, Mumbai- Hill, Mumbai-400026 400051 PAN: ABVAS8438D Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : Shri Nitin Govare Revenue by : Shri Sandeep Lakra, CIT DR.

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 I.T.A. No. 369/Mum/2026 (Assessment Year: 2026-27) Rotary Mulund East Welfare Commissioner of Income Tax Exem. Ward 2(2), Mumbai-400012 Trust Vs. 106, Nimesh Industrial Estate, Mulund East, Mumbai-400081 PAN:AABTR7356K Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

: None Assessee by Revenue by : Shri Sandeep Lakra, CIT DR. Date of Hearing : 16.07.2026 Date of Pronouncement : 27.07.2026 O R D E R Per Bench: The aforesaid appeals by the captioned assessees arise from the respective orders of the Commissioner of Income Tax (Exemption) [in short, “the Ld. CIT(E)”], wherein the applications of the assessees in Form 10AB for grant of registration u/s 12AB of the Income Tax Act, 1961 [in short, “the Act”] or approval u/s 80G are rejected.

ITA No.5763/Mum/2026 (Bhanji Keshavji Bheda Charitable Trust)

“5. In this case, the instrument of trust does not contain any explicit clause affirming that the transfer of property under trust is an irrevocable transfer for all times. Section 3

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 332(2)(b) of the Income Tax Act, 2025 inter-alia lays down that a public trust is eligible for registration, only if the trust properties are held for the benefit of the general public under an irrevocable trust. The date of commencement of Income Tax Act, 2025 is 1st April 2026 i.e the same date from which renewal of registration/approval has been sought by the applicant. Therefore, the eligibility conditions prescribed in the Statute for registration/approval are not satisfied in this case. However, Hon’ble Bombay High Court in the Writ Petition(L) No.7587 of 2026 in the case of The Chamber of Tax Consultants & Ors Vs The CIT(E) has held that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation and directed the Department to refrain from rejecting applications for registration/renewal under section 12AB/80G solely on the ground of the absence of an explicit irrevocability clause in the Trust Deed/instrument. Revenue is preferring to move a Special Leave Petition before the Hon’ble Supreme Court against the said order. In the background of these facts, this renewal of registration/approval is being granted in respectful compliance to the binding judicial directions of Hon’ble Bombay High Court. However, the applicant Trust, doner entities and other stakeholders are hereby informed, by way of abundant caution, that the applicability and consequential tax-benefits of this registration/approval w.e.f. 01.04.2026 onwards, remain subject to outcome of the decision of Hon’ble Supreme Court.” 3.1 Under identical facts and circumstances, the issue has been decided by this Tribunal in the case of National Library vs. Commissioner of Income Tax (Exemptions), Mumbai in ITA No.6421/Mum/2026 & 6429/Mum/2026, taking a view that the matter needs restoration back to the file of Ld. CIT(E) for fresh consideration, in terms of following observations:

“6. We have carefully considered the rival submissions and have perused the orders placed before us. In so far as ITA find that the No.6421/Mum/2026 is concerned, grievance originally raised by the assessee in those appeals no longer survives for adjudication. The rejection orders dated 28.03.2026, which formed the subject matter of challenge before us, have effectively lost their operative significance once the learned CIT (Exemption), pursuant to the judgment of the Hon'ble Bombay High Court, granted registration under section 12AB and approval under section 80G. The substantive relief sought by the assessee in those appeals already stands granted. No consequential prejudice now survives arising from the original rejection orders. Accordingly, without entering into the merits of the rejection orders any further,we hold that ITANo.6421/Mum/2026 has become infructuous on account of subsequent events and are dismissed as such. 7. Coming to ITA No. 6429/Mum/2026, the issue which requires our adjudication is whether the learned CIT (Exemption), while granting registration and approval in compliance with a binding judgment of the jurisdictional High Court, was justified in attaching a caveat that the registration and consequential benefits would remain 4

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 subject to the outcome of a proposed challenge before the Hon'ble Supreme Court. In our considered opinion, such an approach is legally unsustainable and cannot be approved. 8. It is a fundamental principle governing judicial discipline that a judgment rendered by the jurisdictional High Court is binding upon all authorities functioning within its territorial jurisdiction so long as it continues to hold the field. The efficacy and binding character of such a judgment do not depend upon whether one of the parties proposes to challenge it before a superior forum. A contemplated appeal, a proposed special leave petition or even a pending challenge before a higher court does not dilute the binding force of the judgment unless its operation is stayed, modified or reversed by a competent judicial authority. Therefore, once the learned CIT (Exemption) accepted the binding nature of the judgment of the Hon'ble Bombay High Court and proceeded to grant registration and approval on that basis, it was not open to simultaneously dilute the effect of such grant by incorporating observations founded merely upon a possible future contingency. 9. We further find that the observations incorporated by the learned CIT (Exemption) travel beyond the scope of the directions issued by the Hon'ble Bombay High Court. The High Court directed that applications should not be rejected solely on the ground of absence of an express irrevocability clause. The learned CIT (Exemption), while implementing those directions, was required to grant or refuse registration in accordance with law and on the basis of the facts before him. Once registration and approval were granted, the statutory recognition so conferred could not be converted into a tentative or conditional recognition by referring to a possible future challenge. Such observations do not emanate from any provision of the Act and are unsupported by any statutory mechanism permitting a registration order to remain perpetually subject to an anticipated future event. 10. We also find considerable force in the submission of the learned counsel that such caveats have wider practical ramifications. Registration under section 12AB and approval under section 80G are not merely procedural recognitions. They constitute the foundation upon which charitable institutions organise their activities, mobilise resources and secure public participation. Donors, contributors and stakeholders often evaluate the legal status of a charitable institution on the basis of the registration and approvals granted under the Act. An observation by the statutory authority itself suggesting that the approval presently granted may remain subject to an uncertain future outcome is capable of creating avoidable ambiguity and hesitation in the minds of stakeholders. Such uncertainty is neither contemplated by the statutory scheme nor warranted by the judicial directions pursuant to which the approval has been granted. 11. We also note that an identical issue had come up before the Co ordinate Bench in the case of IAA Rajesh Foundation vs. CIT (Exemption), vide order dated 15.05.2026, wherein the Tribunal observed that once registration has been granted pursuant to the binding judgment of the jurisdictional High Court, the authority cannot appendqualifying observations based merely upon a proposed challenge before the Hon'ble Supreme Court. The Tribunal accordingly directed deletion of such caveats. The principle emerging from the said decision fully supports the assessee's grievance before us.

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 12. Having regard to the entirety of the facts and circumstances of the case, we are of the considered view that the observations made by the learned CIT (Exemption) stating that the registration, approval and consequential tax benefits would remain subject to the outcome of proceedings before the Hon'ble Supreme Court cannot be sustained. Such observations neither emanate from the statutory provisions governing registration under section 12AB and approval under section 80G nor can they coexist with a grant made in compliance with a binding judgment of the jurisdictional High Court. The validity and efficacy of the registration granted to the assessee must be examined with reference to the law as it exists on the date of grant and not on the basis of speculative future developments. Needless to state, if at any future point of time any superior judicial forum lays down a different legal position, the consequences, if any, would follow in accordance with law. However, such hypothetical future possibilities cannot furnish a legal basis for qualifying a registration that presently stands validly granted. 13. Accordingly, while ITA No. 6421/Mum/2026 is dismissed as having become infructuous, the impugned observations and caveats contained in the orders granting registration under section 12AB and approval under section 80G, which make such registration and consequential benefits subject to the outcome of a proposed challenge before the Hon'ble Supreme Court, are directed to be deleted. The assessee shall be entitled to registration under section 12AB and approval under section 80G as granted by the learned CIT (Exemption) without any such qualification, restriction or conditional rider. 14. In the result, ITA Nos. 6421/Mum/2026 is dismissed as infructuous, whereas ITA No.6429/Mum/2026 is allowed.” 3.2 Respectfully following the above view, the matter is set aside to the file of Ld. CIT(E) for fresh consideration.

3.3 In result, the Appeal No.5763/Mum/2026 of assessee is allowed for statistical purposes.

ITA Nos.4883/Mum/2026 & 5577/Mum/2026 (Rare Family Foundation)

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 assessee had not furnished a copy of registration u/s 12A granted under the old regime.

4.1 Further the application of assessee for approval u/s 80G has been rejected basis the ground, that once the application of assessee for registration u/s 12AB is rejected, the approval u/s 80G(5)(i) which stipulates the condition that provisions of this section is only available for institution or funds, which are allowed the benefits of section 11 and 12 or clause 23AA or clause 23C of section 10, since the assessee does not have a valid registration u/s 12AB, in view of the rejection of its application, the approval u/s 80G of the Act becomes untenable.

4.2 This Tribunal has taken a view in such cases that mere non-filing of old 12A registration cannot be the sole reason for rejection of application of assessee for grant of registration u/s 12AB. Further, the assessee is directed to furnish the necessary documents requisite before the Ld. CIT(E) in the set aside proceedings. Accordingly, the order of Ld. CIT(E) in aforesaid appeals are set aside and the matter is restored back to his files for fresh consideration.

4.3 In result, both the appeals of assessee in ITA No.4883/Mum/2026 and 5577/Mum/2026 are allowed for statistical purposes.

ITA Nos.5399/Mum/2026 & 5400/Mum/2026 (Upadesh Vatika Foundation)

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 the reason that copy of registration held under old regime was not furnished by the assessee. The issue is identical to the grounds of appeal decided by us in the case of “Rare Family Foundation”, wherein the orders of Ld. CIT(E) are set aside and matters have been restored back to his file for fresh adjudication. Being the facts and circumstances in the present two appeals are at parity with the aforesaid two appeals in the case of Rare Family Foundation in ITA No.4883 & 5577/Mum/2026decided herein above, we set aside this issue with under identical observations, applying our decision mutatis mutandis in the facts of present appeal.

5.1 In result, these two appeals bearing ITA Nos.5399/Mum/2026 and 5400/Mum/2026 are allowed for statistical purposes.

ITA Nos.5601/Mum/2026 & 5602/Mum/2026 [Sahas (Spreading Aid Health and Smile) Foundation]

6.1 In such cases, this Tribunal has taken a view that the applications of the assessee for grant of registration u/s 12AB and 80G not be rejected only on the ground of delay in filing of the application. The observation of the Tribunal in

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 ITA No.2566/Mum/2026 in the case of Dil Se Foundation vs. CIT (Exemption) on the identical facts and circumstances are as under:

“3. We have considered the explanation furnished in the application for condonation of delay as well as the affidavit filed in support thereof. We find that the delay of 60 days has been satisfactorily explained. The reasons assigned appear to be bona fide and there is nothing on record to indicate that the delay was deliberate, intentional or attributable to any mala fide conduct on the part of the assessee. It is well settled that where sufficient cause is shown, a liberal approach deserves to be adopted so that substantial justice prevails over technical considerations. Accordingly, being satisfied with the explanation offered, we condone the delay of 60 days in filing the present appeal and proceed to adjudicate the appeal on merits. 4. On merits, the Ld. Counsel for the assessee submitted that the impugned order has been passed ex parte solely on account of non-compliance with the notices issued by the Ld. CIT(Exemption). It was submitted that such non-compliance was neither deliberate nor intentional but had occurred because the earlier tax consultant failed to communicate the notices as well as the progress of the proceedings to the assessee. It was further submitted that the assessee is a charitable trust and possesses all the requisite documents and evidences necessary for consideration of its application under section 12AB. It was, therefore, pleaded that in the interest of justice, one effective opportunity may be granted and the matter may be restored to the file of the Ld. CIT(Exemption) for fresh adjudication on merits. 5. The Ld. Departmental Representative supported the impugned order. However, he fairly submitted that in the event the matter is restored to the file of the Ld. CIT(Exemption), appropriate directions may be issued to the assessee to extend full cooperation in the proceedings and not to seek unnecessary adjournments. 6. We have carefully considered the rival submissions and perused the material available on record, including the impugned order. It is noticed that upon verification of the application in Form No. 10AB, the Ld. CIT(Exemption) observed that the application was incomplete and certain documents required under Rule 17A(2), including a note on the activities of the trust and other supporting documents, had not been furnished. Accordingly, notices dated 25.09.2025, 13.10.2025 and thereafter a final opportunity dated 24.10.2025 were issued calling upon the assessee to furnish the requisite details. Since there was no compliance, the Ld. CIT(Exemption) recorded that he was unable to satisfy himself regarding the objects of the trust, the genuineness of its activities and the fulfilment of the statutory conditions contemplated under section 12AB and, consequently, rejected the application for registration solely on account of such non-compliance. The explanation now furnished before us is that the notices issued during the proceedings as well as the impugned order were never brought to the knowledge of the assessee by its then tax consultant. This explanation has been duly supported by an affidavit filed by the Trustee. Having regard to the totality of the facts and circumstances, we find that the impugned order has been passed without any examination of the merits of the assessee’s claim and only because of non-compliance with the notices. In these peculiar facts, we are of the considered opinion that one effective opportunity deserves to be granted to the assessee so that its application seeking registration under section 12AB is examined on merits. 7. Accordingly, in the interest of substantial justice and fair play, we set aside the impugned order and restore the matter to the file of the Ld. CIT(Exemption) for 9

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 adjudication afresh. The Ld. CIT(Exemption) shall afford the assessee a proper and effective opportunity of hearing, permit it to furnish all requisite documents, explanations and evidences in support of its application under section 12AB, and thereafter pass a fresh speaking order in accordance with law after examining the application on its own merits, uninfluenced by any observations contained in the impugned order. We also direct the assessee to extend full cooperation in the remand proceedings by promptly complying with all notices and requisitions issued by the Ld. CIT(Exemption) and not to seek unnecessary adjournments. It is made clear that if the assessee fails to avail the opportunity so granted or does not cooperate in the proceedings, the Ld. CIT(Exemption) shall be at liberty to proceed in accordance with law on the basis of the material available on record. 8. In the result, the delay in filing the appeal is condoned and the appeal of the assessee is allowed for statistical purposes.”

6.2 Respectfully following the aforesaid view taken by the Tribunal, we set aside the order of Ld. CIT(E) and restore these matters back to his files for fresh consideration.

6.3 In result, both the appeals in ITA No.5601/Mum/2026 and 5602/Mum/2026 are allowed for statistical purposes.

ITA No.369/Mum/2026 (Rotary Mulund East Welfare Trust)

7.1 Before us, Ld. Counsel of the assessee have submitted a written submission which reads as under: 10

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 “1. We respectfully submit that for Assessment Years 2013-14, 2014-15 and 2015- 16,2018-19, 2020-21, 2023-24. we have not claimed any exemption under the Income- tax Act. During these years, the Trust has incurred losses, and accordingly, no exemption benefit was availed by us.

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026 , 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026 , 5601 & 5602/Mum/2026, 369/Mum/2026 compliances may have occurred due to unawareness and lack of professional compliances may have occurred due to unawareness and lack of professional compliances may have occurred due to unawareness and lack of professional Guidance.

7.2 It is submitted by the Ld. Counsel of the assessee t It is submitted by the Ld. Counsel of the assessee that the assessee hat the assessee-trust has not claimed any exemption for AY 2013 has not claimed any exemption for AY 2013-14 to 2015-16, 2018-19, 2020 19, 2020-21 to 2025-26. Further, the assessee trust has been registered u/s 12A and approved u/s 26. Further, the assessee trust has been registered u/s 12A and approved u/s 26. Further, the assessee trust has been registered u/s 12A and approved u/s 80G of the Act, wherever the exemption was claimed strictly in accordance wherever the exemption was claimed strictly in accordance with wherever the exemption was claimed strictly in accordance law and subject to conditions prescribed. It is submitted that only for AY 2023- law and subject to conditions prescribed. It is submitted that only for AY 2023 law and subject to conditions prescribed. It is submitted that only for AY 2023 24, the assessee has inadvertently 24, the assessee has inadvertently under a bona fide impression committed an impression committed an error and had filed ITR 7. However, since the losses were incurred in that year, ITR 7. However, since the losses were incurred in that year, ITR 7. However, since the losses were incurred in that year, there was no claim of exemption u/s 11 or 12. It is admitted that certain claim of exemption u/s 11 or 12. It is admitted that certain claim of exemption u/s 11 or 12. It is admitted that certain procedural lapses and non-compliances may have occurred due to awareness and compliances may have occurred due to awareness and compliances may have occurred due to awareness and lack of guidance, but it was not an intended default on the part of assessee. It lack of guidance, but it was not an intended default on the part of assessee. It lack of guidance, but it was not an intended default on the part of assessee. It was, therefore the prayer that the ap was, therefore the prayer that the applications for assessee for grant of plications for assessee for grant of registration u/s 12A may not be rejected only on the basis of such inadvertent and registration u/s 12A may not be rejected only on the basis of such inadvertent and registration u/s 12A may not be rejected only on the basis of such inadvertent and without any willful defaults. willful defaults.

ITA No. 5763/Mum/2026, 4883 & 5577/Mum/2026, 5399 & 5400/Mum/2026, 5601 & 5602/Mum/2026, 369/Mum/2026 7.3 On a fair consideration of facts after hearing both the parties, we find that the assessee has bona fide reasons for which the application for assessee needs a revisit by the Ld. CIT(E). Accordingly, we restore this matter back to the file of Ld. CIT(E) for fresh adjudication.

7.4 In result, the appeal of assessee is allowed for statistical purposes, in terms of aforesaid observations.

Order pronounced in the open court on 27-07-2026.

Sd/- Sd/- (AMIT SHUKLA) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 27-07-2026. Ankit K., Sr. PS Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai