RAMANLAL SHAH ( PRADIPKUMAR & CO.) RELIGIOUS TRUST,MUMBAI vs. CIT (EXMPTIONS), MUMBAI

None appeared on behalf of the assessee when the case was called out repeatedly. From the case records, we note that summons in this case were sent by the Registry through speed post as well as email. More than one month has passed since the summons were issued at the address provided by the assessee in Form 36; therefore, drawing an inference under the General Clauses Act, it is presumed that service of summons/notice has been duly effected.

On the other hand, the Ld. DR present in the court is ready with the argument; therefore, we have decided to proceed with the hearing of the appeal ex-parte.

We have heard the Ld. DR and perused the material placed on record and also the orders passed by Ld. CIT(E). From the records, we noticed that the application for regularization of original registration in form 10AB filed by the assessee was not allowed by Ld. CIT(E) on the ground that the assessee had violated the provisions as prescribed under explanation g to Section 12AB(4) of the Income Tax Act, 1961. In this regard, it was held by Ld. CIT(E) that form 10AB filed by the assessee was not complete and all the documents required to be accompanied with the application, were not furnished. Moreover, the assessee has taken a contrary stand while redrawing to specific question with regard to having irrevocable and dissolution/winding up clause in the trust deed. Thus, Ld. CIT(E) rejected the application filed by the assessee. The operative portion of the order of Ld. CIT(E) is reproduced herein below:-

On verification of the application in Form 10AB filed by the applicant, it was found that the application was not complete, and all the documents required to be accompanying the application were not furnished. Hence, a notice was issued to the applicant vide DIN & Notice No. ITBA/EXM/F/EXM43/2025-26/1080772931(1) dated 16.09.2025 requesting the applicant to furnish the complete set of documents mentioned in Rule 17A(2). In response to the above Notice, the applicant made submission on ITBA/E-filing vide letter dated 09.10.2025 and furnished the relevant details and documents.

1 On perusal of the present Form 10AB, it is noticed that at para no. 6, in reply of the question, "whether the trust deed contains clause that the trust is irrevocable?" The applicant has stated "Yes". However, as per the trust deed/MOA, there is no clause regarding irrevocability or dissolution/winding up of the applicant trust/Institution, which is mandatory as per the provisions of the Income Tax Act. In the absence of an explicit irrevocability and dissolution clause, there exists no statutory safeguard to ensure that the assets of the applicant trust/institution shall be applied solely towards charitable purposes and, upon dissolution, shall be transferred to another trust or institution having similar charitable objects, as mandated under the provisions of the Income-tax Act, 1961. 3.2 In view of the above, the applicant trust/institution was provided an opportunity to show cause as to why its application under consideration for approval u/s 12A should not be rejected on the grounds of above violation, vide DIN & Notice No. ITBA/EXM/F/EXM43/2025-26/1083442726(1) dated 08.12.2025. Some additional information like copy of prior registration u/s 12AA and documentary evidence of expenses, bank statement, details of donors etc also called for vide the above show cause notice dated 08.12.2025. in response applicant filed its submission vide letter dated 17.12.2025. 3.4 As regard to non-inclusion of irrevocability or dissolution/ winding up clause in trust deed/MoA, the applicant has stated that; "without prejudice, we submit that the absence of an express clause in the trust deed is a procedural and curable aspect, and does not alter the religious character, genuineness of activities, or compliance with the provisions of the Act. The intention of the settlors and trustees, as evidenced by long-standing conduct and application on income, clearly establishes irrevocability. In this regard, we shall submit a resolution passed with notarized affidavit duly affirmed by the Managing Trustees shall be submitted shortly, confirming that: The trust is irrevocable, and In the event of dissolution, the asset of the trust shall be transferred only to another trust/institution having similar charitable or religious objects and registered under the Income Tax Act. Further, to comply fully with the provisions of the Income Tax Act, the Trustees have resolved to incorporate the requisite clause relating to irrevocability and dissolution, providing that upon dissolution, the surplus asset shall be transferred to another trust/institution having similar religious objects and registered under section 12AB of the Act. Necessary steps for amendment are being undertaken/have been undertaken as per applicable law.

It is noted that the inclusion of clauses relating to irrevocability and dissolution/winding up in the trust deed/Memorandum of Association is a mandatory for grant or continuation of registration under the Act. The applicant was required to have duly amended its governing document by passing the requisite special resolution and to have furnished the amended trust deed before the undersigned within the prescribed time. Instead of complying with the statutory requirement, the applicant has merely expressed an intention to pass a resolution to," which does not amount to compliance in the eyes of law.

1 In view of the foregoing submissions and upon due consideration thereof, the contentions advanced by the applicant are found to be neither satisfactory nor conclusive. Notably, the inclusion of an irrevocability clause and a dissolution clause in the trust deed/Memorandum of Association is a mandatory and substantive requirement under the statutory framework governing charitable trusts and institutions. The absence of such clauses cannot be construed as a mere procedural or inadvertent lapse, as the same goes to the very root of the charitable character and legal continuity of the trust. In the absence of an explicit irrevocability and dissolution clause, there exists no statutory safeguard to ensure that the assets of the applicant trust/institution shall be applied solely towards charitable purposes and, upon dissolution, shall be transferred to another trust or institution having similar charitable objects, as mandated under the provisions of the Income-tax Act, 1961. Accordingly, the explanation tendered by the applicant is untenable and liable to be rejected. It is also pertinent to mention that no copy of such resolution has been submitted by the applicant till date.

2 Further, it is noted that aforementioned reply of the applicant reflects a lack of seriousness and a casual approach towards the statutory proceedings initiated under the Act. On the one hand, in paragraph 6 of the present application in Form No. 10AB, the applicant had affirmed that "the trust deed contains the clause that the trust is irrevocable." On the other hand, in response to the Show Cause Notice, the applicant has claimed that absence of an express clause in the trust deed is a procedural and curable aspect. This inherent inconsistency clearly establishes that the declaration made by the applicant in Form No. 10AB was factually incorrect and amounts to misrepresentation of material facts. Such furnishing of false or incorrect information squarely falls within the ambit of a "specified violation" as defined under Explanation (g) to section 12AB(4) of the Income-tax Act, 1961, which provides as under: (g) the application referred to in clause (ac) of sub-section (1) of section 12A is not complete or it contains false or incorrect information."

3 In view of the above, it is noted that the applicant has violated the provision as prescribed under Explanation (g) to Section 12AB(4) of the Income-tax Act, 1961. 5. In view of the foregoing discussion, it is noted that registration under section 12AB is to be granted in terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the trust or institution, the genuineness of activities, and the compliance of any other law for the time being in force as are material for the purposes of achieving its objects. In view of the above mentioned violation and absence of necessary documentary evidence confirming the necessary steps have been taken by the applicant, the undersigned is left with no other option but to reject the application seeking registration under section 12AB of the Act.

In the view of the above, the application for regularization of provisional registration in Form 10AB filed by the assessee is not allowable non-inclusion of irrevocability or dissolution clause in trust deed/MoA and and specified violation as per Explanation (g) to the Section 12AB(4) of the Income tax Act, 1961. However, the applicant is at liberty to pursue the remedies available in Statute, without any prejudice.

In conclusion, this application for grant of registration stands rejected.

No new facts or circumstances have been brought on record by the Assessee in order to controvert or rebut the findings so recorded by Ld. CIT(E), therefore, we find no reasons to interfere into the said findings. Hence the ground raised by the Assessee stands dismissed. Consequently, the appeal filed by the Assessee stands dismissed.

In the result appeal filed by the Assessee stands dismissed.