SHRI NARSINGLANE SWETAMBER MURTIPUJAK JAIN SANGH,MUMBAI vs. CIT (EXEMPTIONS), CUMBALLA HILL, MTNL OFFICE

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ITA 1936/MUM/2026Status: DisposedITAT Mumbai15 May 2026AY 2027-285 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, following the Bombay High Court's decision in Chamber of Tax Consultants, held that rejection of registration solely on the absence of explicit irrevocability and dissolution clauses is erroneous. The Tribunal set aside the CIT(E)'s order and directed a fresh decision.

What were the facts?

The assessee's application for renewal of registration under Section 12AB was rejected by the CIT(E) solely for not having explicit irrevocable and dissolution clauses in its trust deed. The assessee had initiated the process to amend the trust deed but faced procedural delays.

What were the issues?

Whether the absence of explicit irrevocable and dissolution clauses in the trust deed is a valid ground for rejecting an application for registration/renewal under Section 12AB. Whether the assessee's response to a query about irrevocability in Form 10AB, when the deed was silent, constituted furnishing false information.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 12A(1)(ac)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

[ Per Rahul Chaudhary, Judicial Member:

1.

The present appeal preferred by the Assessee is directed against the order, dated 25/12/2025, passed by the Learned Commissioner of Income Tax (Exemption), Mumbai [hereinafter referred to as the ‘CIT(E)’] whereby the application filed by the Assessee in Form No.10AD seeking registration under Section 12AB of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] was rejected.

2.

The Assessee has raised following grounds of appeal:

“1. The impugned rejection order dated 25/12/2025 rejecting the assesses application for renewal of registration under Section 12A (1) (ac) (ii) of the Income Tax Act, 1961 filed on 28.08 2025 for assessment year 2027-2028, is erroneous, arbitrary, and contrary to law, in as much as it solely hinges on the non-inclusion of a irrevocable & dissolution clauses in the trust deed, overlooking the Assessment Year 2027-2028 assesses bonafide efforts to rectify the same.

2.

The assessee trust is a genuine religious institution duly registered under Bombay Public Trusts Act, 1950, engaged in religious activity, and has been compliant with all statutory obligations

3.

The assessee has approached the Charity Commissioner, seeking amendment to the trust deed to incorporate the requisite irrevocable & dissolution clauses as per Section 12A (1) (ac) (s). The amendment process, being statutory, is underway but is likely to extend beyond 31.03.2026 due to procedural timelines under the relevant Trusts Act.

3.

When the appeal was taken up for hearing, none was present on behalf of the Assessee. However on the perusal of the grounds raised by the Assessee in the present case we find that the issue raised therein had come up for consideration before the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions) [2026] 184 taxmann.com 374, dated 09/03/2026. On perusal of the same, we find that a writ petition was filed under Article 226 of the Constitution of India before the Hon’ble Bombay High Court challenging the action of the Learned CIT(E) rejecting application for renewal under Section 12AB of the Act. The issues requiring determination were recorded in Paragraph 4 of the said judgment which reads as under:

“4. The core issue arising for our determination revolves around a view taken by Respondent No. 1 (which the Petitioners allege is untenable) while processing renewal applications filed in Form 10AB under the registration regime effective from 1st April 2021 in terms of section 12AB of the Act. Respondent No. 1 has rejected the applications for renewal of registration of Petitioner Nos. 3 to 8, primarily, on two grounds: a. the trust deed or instrument constituting the concerned entities does not contain an explicit clause stating that the trust is "irrevocable" and/or providing for the manner of dissolution; b. the applicants, in their online Form 10AB, were compelled to answer "Yes" to the question in Row 6, viz., "Whether the trust deed contains clause that the trust is irrevocable?". Since, the trust deeds were silent on this aspect, Respondent No. 1 has treated this reply as 2 Assessment Year 2027-2028 furnishing "false or incorrect information," which constitutes a "specified violation" in terms of clause (9) of the Explanation below section 12AB(4) of the Act.”

4.

The Hon’ble Bombay High Court answered the above issued in favour of the Assessee and quashed the order passed by the Learned CIT(E) while allowing the writ petition giving following directions:

“46. In the result, the Writ Petition is allowed. Due to the peculiar facts, as presented by the Petitioners, we pass the following order:

(i) The Respondents shall refrain from rejecting applications for registration/renewal under section 12AB solely on the ground of the absence of an explicit irrevocability and/or dissolution clause in the Trust Deed/instrument. (ii) The Respondents shall not treat the answer "Yes" to Row 6 of Form 10AB, in the absence of any explicit clause of irrevocability, as furnishing "false or incorrect information" constituting a "specified violation". Further, this shall not be a ground to reject an application for registration under section 12AB of the Act. (iii) The Respondents shall also amend the utility of Form 10A/10AB to allow applicants to correctly state their position regarding the irrevocability clause without being forced to make an incorrect declaration. This should be done as soon as possible. (iv) Question number 6 in Form 10AB should be modified to read thus, "Is the trust/institution revocable?". (v) The impugned orders passed in the case of Petitioner Nos. 3 to 8 rejecting registration under section 12AB of the Income-tax Act, are hereby quashed and set aside. (vi) All such orders where renewal of registration under Section 12AB has been rejected on the grounds discussed above, are also hereby quashed and set aside. (vii) Further, it is also directed that all consequential orders passed denying registration under section 80G of the Act, where such rejection is on the ground that once registration under section 12AB is denied, registration under section 80G also cannot be granted, are also hereby quashed and set aside. This would, of course, apply only to a case where

3 Assessment Year 2027-2028 registration under section 12AB has been rejected on the grounds discussed above. The above order that we pass is to avoid any multiplicity of litigation so as to not require the trusts to challenge the orders passed by Respondent No. 1 denying registration under section 12AB and 80G of the Act on the grounds as discussed in this order. (viii) Respondent No.1 shall decide the applications of the Petitioners and all other similarly situated trusts, whose orders are hereby quashed, afresh and in accordance with the law and the ratio laid down in this judgment, within a period of six weeks from today. Any order so passed shall be deemed to come into effect from 1 April, 2026,

47.

Rule is made absolute in the aforesaid terms and the Writ Petition is also disposed of in terms thereof. However, there shall be no order as to costs.”

5.

The above judgment of the Hon’ble Bombay High Court is applicable to the issued raised in the present appeal. Accordingly, respectfully following the above judgment of the Hon’ble Bombay High Court in the case of Chamber of Tax Consultants Vs. Commissioner of Income-tax (Exemptions) [2026] 184 taxmann.com 374, we set aside the impugned Order, dated 26/12/2025, passed by the Learned CIT(E) with the directions to decide application [CIT(Exemptions), MUMBAI/2025-26/12AA/11760] filed by the Assessee afresh in accordance with the aforesaid judgment of the Hon’ble Bombay High Court. In terms of the aforesaid, all the Grounds raised by the Assessee are allowed for statistical purposes.

6.

In result, the present appeal preferred by the Assessee is allowed for statistical purposes.

Order pronounced on 15.05.2026. (Om Prakash Kant) Judicial Member म ुंबई Mumbai; दिन ुंक Dated :15.05.2026 Aditi Pandare, Private Secretary

4 Assessment Year 2027-2028

आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : अपील र्थी / The Appellant 1. 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीय प्रदिदनदध ,आयकर अपीलीय अदधकरण ,म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file.

आिेश न स र/ BY ORDER, सत्य दपि प्रदि //// उप/सह यक पुंजीक र /(Dy./Asstt.

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