SHREE VIDHYABHARTI,NA vs. ARIVS.CIT(EXEMPTION), AHMEDABAD

PER NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER:

These two appeals are filed by the assessee against the separate orders of Commissioner of Income Tax (Exemption), Ahmedabad, [in short “CIT(E)”], both dated 08.03.2026 in the proceeding u/s 12A(1)(ac)(ii) and u/s. 80G(5) of the Income Tax Act

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application of the assessee vide the impugned order and the provisional registration granted earlier was also cancelled. Further in the absence of any valid registration u/s. 12A/12AB of the Act, the application for approval u/s. 80G(5) of the Act, was also rejected.

ITA No. 494/SRT/2026 3. Aggrieved with the order of the Ld. CIT(E), the assessee is in appeal before us. The following grounds have been taken in this appeal:

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without valid service of notice and without affording reasonable opportunity of hearing, is bad in law, violative of principles of natural justice, and liable to be quashed 2. Non-consideration of Evidence and Mechanical Conclusion on Genuineness of Activities

The Learned Commissioner of Income-tax (Exemption), Ahmedabad has erred both in law and on facts in rejecting the application for registration under section 12(A)(1)(ac)(11) of the Act by mechanically concluding that the appellant failed to establish the genuineness of its activities, without properly examining the material available on record and without making any independent enquiry. The appellant had duly furnished along with Form 10AB all relevant documents including the Trust deed, Trust Registration Certificate, audited financial statements for last 3 years, bank Details submitted during the application filed, statements and details of its charitable activities and undertaking. However, the Ld. CIT (E) has proceeded on an incorrect and unfounded presumption that no documents were filed and that the appellant failed to furnish necessary details, without pointing out any specific deficiency or discrepancy in the documents submitted. It is submitted that the Ld. CIT (E) has failed to apply his mind to the material already on record and has not undertaken any enquiry to verify the objects or activities of the trust, thereby rendering the impugned order arbitrary and unsustainable. The rejection has been made solely on alleged non-compliance, which itself arose due to lack of proper service of notice, and not on the basis of any adverse finding regarding the charitable nature or genuineness of activities. It is a settled position of law that at the stage of granting registration under section 12A/12AB, the authority is required only to examine the objects of the trust and the prima facie genuineness of its activities, and not to carry out a detailed assessment of income or insist upon exhaustive evidence of actual activities. In this regard, reliance is placed on the judgment of the Hon'ble Supreme Court in Ananda Social and Educational Trust vs. CIT (2020), wherein it was held that even proposed activities are sufficient for granting registration and that the Commissioner must be satisfied only about the charitable objects and genuineness in a prima facie manner. Reliance is also placed on the decision of the Hon'ble Punjab & Haryana High Court in CIT vs. Surya Educational & Charitable Trust, wherein it was held that once the objects of the trust are charitable, registration cannot be denied on mere suspicion or without proper examination of material on record. Further, the Hon'ble ITAT in various decisions including Shree Saisewa Charitable Sanstha vs. CIT(E) has held that rejection of registration without considering documents already filed and without giving opportunity to rectify deficiencies is unjustified and liable to be set aside. In view of the above settled legal position, it is submitted that the Ld. CIT (E) has acted in a purely mechanical manner without considering the evidence on record and without conducting any enquiry as mandated under section 12AB. The impugned order, having been passed without

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due application of mind and without affording opportunity to explain or rectify any alleged deficiency, is arbitrary. contrary to law, and liable to be quashed. 3. Illegal and Without Jurisdiction Cancellation of Provisional Registration

The Learned Commissioner of Income-tax (Exemption), Ahmedabad has erred in law and on facts in not only rejecting the application filed by the appellant under section 12(A)(1)(ac)(ii) of the Act but also in directing that the provisional registration granted earlier "stands cancelled," which action is wholly without jurisdiction, beyond the scope of statutory powers, and contrary to the provisions of the Act. It is submitted that the impugned order proceeds to cancel the provisional registration solely on account of alleged non-compliance and non-furnishing of documents, without recording any specific finding that the activities of the trust are non-genuine or not being carried out in accordance with its objects. As per the scheme of section 12AB(1)(b)(ii) of the Act, cancellation of an existing or provisional registration is permissible only in cases falling under sub-clauses (11), (iii), or (v) of section 12A(1)(ac). In cases where the application is made under sub-clause (iv) or item (B) of sub-clause (vi), as applicable to the present appellant, the powers of the Commissioner are restricted only to either granting or rejecting the registration, and do not extend to cancellation of the provisional registration already granted. The Ld. CIT (E), by cancelling the provisional registration while rejecting the application, has thus acted in excess of jurisdiction and in violation of the statutory framework. It is a settled position of law that registration once granted cannot be cancelled unless specific statutory conditions are satisfied and proper satisfaction is recorded regarding non-genuineness of activities or deviation from objects. In this regard, reliance is placed on the judgment of the Hon'ble Supreme Court in Ananda Social and Educational Trust vs. CIT (2020), wherein it was held that the scope of enquiry at the stage of registration is limited and rejection or cancellation must be based on objective satisfaction regarding genuineness of activities. Further, reliance is placed on the decision of the Hon ble ITAT Mumbai in Shree Saisewa Charitable Sanstha vs. CIT(E), wherein it was held that while considering an application under section 12AB, the Commissioner cannot cancel provisional registration merely on technical grounds or alleged procedural defects, and at best may reject the application or allow rectification The Tribunal categorically observed that cancellation without granting opportunity or without jurisdiction is unsustainable in law. It is further submitted that cancellation of registration has serious civil consequences and therefore must strictly comply with statutory requirements. In the absence of any adverse finding regarding the charitable nature of the appellant's objects or activities, and in the absence of jurisdiction under the relevant clause, the action of cancellation is arbitrary and illegal. In view of the above, the impugned order passed by the Ld. CIT(E) cancelling the provisional registration is

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ultra vires the provisions of section 12AB, contrary to settled judicial principles, and liable to be quashed. 4. Erroneous Presumption Regarding Non-Compliance with Other Laws

The Learned Commissioner of Income-tax (Exemption), Ahmedabad has erred in law and on facts in rejecting the application for registration under section 12(A)(1)(ac)(ii) by alleging that the appellant failed to demonstrate compliance with "other laws" without identifying or specifying any particular law which is material for achieving the objects of the trust. As per section 12AB(1)(b)(i)(B) of the Act, the scope of examination by the Ld. CIT(E) is limited to verifying compliance only with such laws that are directly material to the attainment of the charitable objects of the trust. In the present case, the Ld. CIT(E) has made a vague and general observation regarding non-compliance, without pointing out any specific violation, deficiency, or adverse finding against the appellant. It is submitted that the appellant trust is engaged in genuine charitable activities and there is no finding that such activities are in violation of any law. The conclusion drawn by the Ld. CIT(E) is thus based on mere presumption and not on any concrete material or evidence. It is a settled position of law that absence of registration under any other statute or procedural non-compliance, unless shown to be material and affecting the charitable objects, cannot be a ground for rejection of registration under section 12AB. The Ld. CIT(E) has failed to establish how any alleged non-compliance, even if assumed, has any bearing on the charitable nature or functioning of the trust. Accordingly, the impugned finding is arbitrary, without jurisdiction, and contrary to the provisions of the Act, and therefore liable to be set aside 5. Premature and Unwarranted Direction under Section 115TD

The Learned Commissioner of Income-tax (Exemption), Ahmedabad has erred in law and on facts in directing the appellant to compute and pay tax on accreted income under section 115TD of the Income-tax Act, 1961, which is wholly misconceived, premature, and beyond jurisdiction. It is submitted that section 115TD is a deeming provision applicable only in specific circumstances such as where a trust or institution converts into a non-charitable entity, merges with a non-charitable entity, or fails to transfer its assets upon dissolution in accordance with the prescribed conditions. In the present case, none of the conditions stipulated under section 115TD are satisfied, as the appellant continues to exist as a charitable trust and is actively engaged in carrying out its charitable objects. The rejection of an application for registration under section 12A/12AB does not automatically trigger the applicability of section 115TD, nor does it result in conversion of the trust into a non-charitable entity. The Ld. CIT(E), without any legal basis or satisfaction of statutory conditions, has mechanically directed the appellant to compute tax liability under section 115TD which is outside the scope of proceedings

ITA Nos. 494 & 495/Srt/2026 Shree Vidhyabharti Vs. CIT(E) 6 under section 12AB Such direction is therefore arbitrary, without authority of law, and liable to be quashed. 6. General Ground The appellant respectfully submits that the above grounds of appeal are without prejudice to one another and that the appellant craves leave to add, amend, alter, modify, substitute or withdraw any of the grounds of appeal, either wholly or in part, at or before the time of hearing of the appeal, as may be considered necessary or expedient in the interest of justice. The appellant further submits that any omission or inadvertent error in the present grounds may kindly be permitted to be rectified at the time of hearing, and the Hon’ble Tribunal may be pleased to consider such additional or modified grounds in accordance with law.

ITA Nos. 494 & 495/Srt/2026 Shree Vidhyabharti Vs. CIT(E) 7 to the assessee. The interest of natural justice cannot be served by rejecting the application of the assessee by allowing only one opportunity. Though the Ld. CIT(E) has mentioned in the order that notices were issued from time of time, we don’t find reference of any notice other than the notice dated 13.02.2026. Considering that the assessee is a charitable trust seeking registration under the provisions of the Act and that the issue relates to the examination of its objects and activities, we are of the considered view that one more opportunity deserves to be afforded to the assessee to place the requisite material before the Ld. CIT(E). The principles of natural justice require that a reasonable and effective opportunity of being heard be granted before an adverse decision is taken. In the facts and circumstances of the present case, and without expressing any opinion on the merits of the application, we deem it appropriate, in the interest of justice, to set aside the impugned order and restore the matter to the file of the Ld. CIT(E) for fresh adjudication. The assessee shall furnish all the documents, explanations and evidences as may be called for by the Ld. CIT(E) and shall fully cooperate in the proceedings. The Ld. CIT(E) shall afford adequate opportunity of being heard to the assessee and thereafter pass a speaking order in accordance with law. Accordingly, the impugned order is set aside and the matter is restored to the file of the Ld. CIT(E) for de novo consideration. The grounds raised by the assessee are allowed for statistical purposes.

ITA No. 495/Srt/2026

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registration u/s. 12A/12AB of the Act. Since the matter regarding registration u/s. 12A of the Act has been set aside to the Ld. CIT(E), the present appeal in respect of approval u/s. 80G(5) of the Act is also set aside to the file of Ld.CIT(E), who should re-adjudicate the issue of grant of approval u/s. 80G(5) of the Act, after first deciding the issue of registration u/s. 12A/12AB of the Act.

Order pronounced in the Court on 15/07/2026 at Ahmedabad.

Sd/- Sd/- (T R SETHIL KUMAR) (NARENDRA PRASAD SINHA) Judicial Member Accountant Member Dated – 15th July, 2026 Neelesh, Sr. P.S (True Copy) आदेश आदेश क� आदेश आदेश क� क� �ितिलिप क� �ितिलिप �ितिलिप अ�ेिषत �ितिलिप अ�ेिषत अ�ेिषत/Copy of the Order forwarded to : अ�ेिषत 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A) 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाड� फाईल /Guard file. आदेशानुसार/BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार पंजीकार (Dy./Asstt.Registrar) उप उप/सहायक उप उप सहायक सहायक पंजीकार सहायक पंजीकार पंजीकार आयकर अपीलीय आयकर अपीलीय अिधकरण अिधकरण, अहमदाबाद अहमदाबाद / ITAT, Ahmedabad आयकर आयकर अपीलीय अपीलीय अिधकरण अिधकरण अहमदाबाद अहमदाबाद