SHIKSHA TRUST,BANGALORE, KARNATAKA vs. CIT(EXEMPTIONS) BANGALORE, BANGALORE, KARNATAKA

We heard the learned authorised representative, Shri P.R. Suresh, Chartered Accountant, appearing for the assessee, and Shri N S Sashidhara CIT DR the learned Departmental Representative appearing for the Revenue.

Briefly stated, the assessee is an educational trust engaged in running schools. It applied to the learned Commissioner of Income Tax (Exemption) for registration under section 12AA of the Income Tax Act. The learned CIT(E) issued a notice on 5 March 2026, stating that there had been a change in incumbent and directing the assessee to submit the required information within four days.

The assessee is admittedly a public charitable trust formed to promote education and run schools. However, Form No. 10AB, filed on 19 August 2025, was not accompanied by complete records before the learned CIT(E). The details of assets and liabilities showed a corpus of ₹1 lakh, other liabilities of ₹86,69,749, and other assets of ₹87,69,749. The assessee reported nil receipts for the financial years ending in 2022 and 2023.

However, the details placed before us show that the assessee is running schools. The learned CIT(E) also noted that the trust had started preschools in financial year 2024– 25 at Bangalore and in Telangana, with fee collections of ₹67.40 crores.

According to the CIT(E), this amount was abnormally high and required verification through bank statements, student numbers, fees charged per child, and related records. The learned CIT(E) was therefore of the prima facie view that the assessee’s activities were commercial in nature. We find, however, that the assessee was granted only four days to respond to the notice dated 5 March 2026. Since the matter was becoming time- barred on 31 March 2026 and there had been a change in incumbent, the assessee was not given adequate opportunity to present its case before the learned CIT(E). At the same time, the allegedly high fee collection also requires examination. The assessee must reconcile the fee receipts with its activities and demonstrate before the CIT(E) whether the activities are educational in nature or carried on for profit.

Since these issues require fresh investigation and examination, the assessee’s appeal in ITA No. 1721/Bangalore/2026 for assessment year 2025–26 is restored to the file of the learned CIT(E). The assessee is directed to substantiate before the CIT(E) that it is carrying on educational activities and is entitled to registration under section 12AB of the Act. The assessee shall also furnish a reconciliation of the fee receipts, which formed the basis for rejection of its application. The learned CIT(E) may verify the facts and decide the matter on merits after giving the assessee a proper opportunity of hearing.

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