VAIDIK SEWA TRUST,HARYANA vs. ITO WARD 2(3),FARIDABAD, HARYANA

PDF · subscribers
ITA 5138/DEL/2026Status: DisposedITAT Delhi15 July 2026AY 2022-235 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found substantial force in the assessee's grievance regarding the breach of natural justice. The adverse inference drawn by the CIT(E) was based on a field inquiry report that was neither supplied to nor confronted to the assessee, making its use impermissible. The Tribunal also noted that the CIT(E) had dismissed the assessee's documentary evidence (trust deed, financial statements, bank statements, photographs, bills, and vouchers) with general and vague reasoning, without a specific examination of any deficiencies. Findings from collateral section 80G proceedings, which were themselves vitiated by a breach of natural justice, could not form the sole basis for denying registration under section 12AB without independent inquiry. Regarding the breadth of objects, the Tribunal observed that the trust deed included assisting schools and students, and a specific object provided for respecting all castes and religions on humanitarian grounds, with no restriction on beneficiaries. No material was presented by the CIT(E) to show that the trust's objects were predominantly religious or confined to a specific community. Consequently, the Tribunal quashed the CIT(E)'s order cancelling registration and directed its restoration. It also held that the conditions for section 80G(5) approval were fulfilled and directed the CIT(E) to grant approval.

What were the facts?

The assessee, M/s Vaidik Sewa Trust, is appealing two orders from the Commissioner of Income Tax (Exemptions) ('CIT(E)'). The first order, dated March 24, 2026, cancelled the trust's registration under section 12AB(4) of the Income Tax Act, 1961. The second order, dated September 1, 2025, rejected the trust's application for approval under section 80G(5) of the Act. The assessee, established on May 16, 2019, claims to provide free education to underprivileged children. The CIT(E) based its decisions on a broad range of trust objects, including religious and social reform, and a field inquiry by an inspector which yielded no information about the trust's activities. The CIT(E) concluded the activities were neither genuine nor in accordance with the objects, and that the assessee failed to dispel doubts.

What were the issues?

1. Whether the initiation of proceedings for cancellation of registration under section 12AB of the Act, based solely on observations made during section 80G proceedings, is legally sustainable? 2. Whether the CIT(E) erred in ignoring the evidence submitted by the assessee, including the trust deed, financial statements, bills, and photographs, without specifying deficiencies? 3. Whether the CIT(E) acted in breach of natural justice by relying on an inspector's field inquiry report without confronting it to the assessee? 4. Whether the assessee's trust objects, which include educational and other charitable purposes, and the genuineness of its activities, meet the conditions for approval under section 80G(5) of the Act? Assessee's contentions: (i) Cancellation proceedings under section 12AB based on unproven 80G observations are unsustainable. (ii) The CIT(E) ignored evidence without pointing out specific defects. (iii) The assessee was denied an opportunity to controvert the inspector's report, which was not shared. The assessee relied on its trust deed, financial statements, photographs, bills, and vouchers. Revenue's contentions: The Learned CIT-DR strongly relied on the orders of the CIT(E).

Which sections of the Income-tax Act were involved?

Section 12AB(4),Section 12A(1)(ac)(iii),Section 80G(5),Section 12AB,Section 12A,Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘E’ : NEW DELHI

Before: SHRI MAHAVIR SINGH & SHRI MANISH AGARWAL

For Appellant: Shri Parikshit Aggarwal, CA
For Respondent: Ms. Runi Pal, CIT-DR
Hearing: 09.07.2026Pronounced: 15.07.2026

2 ITA-5138/Del/2026 & 7651/Del/2025

3 ITA-5138/Del/2026 & 7651/Del/2025

4 ITA-5138/Del/2026 & 7651/Del/2025

5 ITA-5138/Del/2026 & 7651/Del/2025

More judgments on Section 12AB(4)

All 195 judgments and leading authorities on Section 12AB(4) →

Latest GST High Court judgments

Search GST case law →