SMT. MANGLAWATI & DR. PREM NARAIN CHARITABLE TRUST ,NEW DELHI vs. CIT (E) , DELHI

PDF · subscribers
ITA 5868/DEL/2026Status: DisposedITAT Delhi29 June 20263 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the absence of an explicit irrevocability clause in the trust deed cannot be the sole ground for rejecting registration under Section 12A. The Tribunal relied on the Bombay High Court's decision in The Chamber of Tax Consultants Vs. CIT(Exemption) & Ors., which stated that a public charitable trust is deemed irrevocable by operation of law unless expressly provided otherwise. The Tribunal also noted that the CIT(Exemption) had not examined other crucial aspects such as the genuineness of the trust's activities, its charitable objects, and the commencement of its activities. Therefore, the order of the CIT(Exemption) was set aside. The CIT(Exemption) was directed not to deny registration based on the irrevocability clause but was permitted to examine other aspects. The matter was restored to the CIT(Exemption) for de-novo decision after providing the assessee an adequate opportunity of being heard.

What were the facts?

The assessee, Smt. Manglawati & Dr. Prem Narain Charitable Trust, appealed an order dated March 22, 2026, passed by the learned CIT(Exemptions), Delhi. The CIT(Exemptions) rejected the assessee's application in Form 10AB for registration under Section 12A of the Income-tax Act, 1961. The rejection was based on the absence of a provision in the trust deed specifying whether the trust was revocable or irrevocable, and how assets would be transferred upon dissolution. The appeal was heard on June 22, 2026, with no appearance for the assessee and Shri Raghunath, CIT-DR, appearing for the respondent.

What were the issues?

1. Whether the absence of an explicit irrevocability clause in the trust deed, or a provision for asset transfer upon dissolution, is a valid ground for rejecting an application for registration under Section 12A of the Income-tax Act, 1961 (mixed question of law and fact). Assessee's contentions: Not recorded as none appeared. Revenue's contentions: Not recorded as the CIT-DR could not controvert the facts presented by the Tribunal, which relied on a High Court judgment.

Which sections of the Income-tax Act were involved?

Section 12A

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 Respondent: Shri Raghunath, CIT-DR
Hearing: 22.06.2026Pronounced: 22.06.2026

Per Bench:

This appeal by the assessee is directed against the order of learned CIT(Exemptions), Delhi dated 22" March, 2026 whereby the application of the assessee in Form 10AB for registration under Section 12A of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) was rejected.

2.

None appeared on behalf of the assessee at the time of hearing. It is observed that the assessee’s application in Form No.10AB seeking registration under Section 12A was rejected by the learned CIT(Exemption) for the reason that in the trust deed, there is no provision that the trust is revocable or irrevocable and how the assets of the trust are to be transferred in case of dissolution of the trust. Hon'ble Bombay High Court in the case of The Chamber of Tax Consultants Vs. CIT(Exemption) & Ors. in Writ Petition (L) No.7587 of 2026, judgement dated 9 March, 2026, has held that a public charitable trust is deemed irrevocable by operation of law unless the trust deed expressly provides otherwise, and that absence of an explicit irrevocability clause cannot be ground for rejection of registration or renewal under Section 12AB. It was further directed by the Hon’ble High Court that applications for registration under Section 12AB shall not be rejected solely on the ground of absence of an irrevocability clause and that answering “Yes” in Form 10AB in such circumstances cannot be treated as furnishing false or incorrect information.

3.

When these facts were confronted to the learned CIT-DR, he could not controvert the above fact situation.

4.

After going through the arguments of the learned CIT-DR as well as the case law of Hon'ble Bombay High Court in the case of The Chamber of Tax Consultants (supra) and also the order of learned CIT(Exemption), we noted that apart from irrevocability clause, learned CIT(Exemption) has not examined and has not carried out necessary verification in support of the genuineness of the activities, charitable objects and commencement of its activities. Hence, we set aside the order of learned CIT(Exemption) with a direction that he will not deny registration on the issue of irrevocability clause but, he can examine other aspects like genuineness of the activities, charitable objects and commencement of the activities, etc. In terms of the above, the order of learned CIT(Exemption) is set aside and the matter is restored back to the file of learned CIT(Exemption) for deciding the same de-novo after providing sufficient opportunity of being heard to the assessee.

5.

In the result, the appeal of the assessee is allowed for statistical purposes.

Decision pronounced in the open Court on conclusion of hearing on 22™ June, 2026. (MANISH AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT

Date : 29.06.2026

VK.

More judgments on Section 12A

All 6,064 judgments and leading authorities on Section 12A →

Latest GST High Court judgments

Search GST case law →