NARAYANI GULAB FOUNDATION,MUMBAI vs. CIT (EXEMPTION) MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY, VICE PRESIDENT & SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER 1. ITA No. 2193/Mum/2026 (Assessment Year: 2027-28) 2. ITA No. 2194/Mum/2026 (Assessment Year: 2027-28) Narayani Gulab CIT (Exemptions) Foundation Mumbai-400 001 44 Vaikunth, Near Vs. Lallubhai Park, Andheri West, Mumbai – 400 058 PAN/GIR No. AAATN2871N (Applicant) (Respondent) Assessee by Shri Hemant O. Sharma (virtually appeared), Ld. AR Revenue by Shri Yogesh Kamat, Ld. DR Date of Hearing 22.06.2026 Date of Pronouncement 24.06.2026 आदेश / ORDER PER MAKARAND VASANT MAHADEOKAR, AM: These two appeals filed by the assessee are directed against separate orders dated 31.12.2025 passed by the learned Commissioner of Income Tax (Exemptions), Mumbai [hereinafter

2 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation referred to as "the CIT(E)"] whereby the application for renewal of registration under section 12AB of the Income-tax Act, 1961 [hereinafter referred to as "the Act"]was rejected, and (ii) the application for approval under section 80G(5) of the Act was also rejected. Since both the appeals arise out of common facts and the rejection of approval under section 80G is consequential to rejection of registration under section 12AB, both the appeals were heard together and are being disposed of by this consolidated order. FACTS OF THE CASE 2. The assessee is a public charitable trust registered with the Charity Commissioner; Mumbai. The trust was also granted registration under section 12A of the Act, 1961 by the Director of Income-tax (Exemption), Mumbai vide Certificate No. TR/35517 dated 19.06.2001 with effect from 14.09.2000. Subsequently, pursuant to the new registration regime, the assessee was granted registration under section 12AB vide Form No.10AC dated 24.09.2021, valid from Assessment Year 2022-23 to Assessment Year 2026-27. 3. The assessee filed Form No.10AB on 14.05.2025 seeking renewal of registration under section 12AB. Simultaneously, the assessee also filed an application seeking approval under section 80G(5) of the Act. 4. During the course of proceedings relating to renewal of registration under section 12AB, the learned CIT(E) called upon

3 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation the assessee to furnish documents prescribed under Rule 17A(2) of the Income-tax Rules, 1962. Thereafter, a specific notice dated 15.11.2025 was issued requiring the assessee to furnish, inter alia, evidence of charitable activities carried out by the trust and a copy of registration held under section 12A/12AA or approval under section 10(23C) under the old regime prior to 01.04.2021. 5. Upon examination of the financial statements and other material available on record, the learned CIT(E) formed a prima facie view that the assessee had not carried out charitable activities during Assessment Years 2022-23 to 2025-26. The learned CIT(E) also entertained a doubt regarding the validity of the registration granted under Form No.10AC on the premise that the assessee had allegedly failed to establish that it possessed registration under section 12AA or approval under section 10(23C) prior to 01.04.2021. Consequently, a show cause notice was issued proposing rejection of the application. 6. After considering the material available on record, the learned CIT(E) observed that the assessee had not furnished any satisfactory response to the specific query regarding registration held under the old regime and, therefore, concluded that the assessee was not registered under section 12AA nor approved under section 10(23C) prior to 01.04.2021. On that basis, the learned CIT(E) held that the registration granted to the assessee under Form No.10AC dated 24.09.2021 lacked statutory foundation and was invalid. The learned CIT(E) further observed that the assessee had failed to establish that any charitable

4 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation activities had been carried out during Assessment Years 2022-23 to 2025-26. Accordingly, vide order dated 31.12.2025 passed under section 12AB of the Act, the learned CIT(E) rejected the assessee's application for renewal of registration on two grounds, namely, invalid registration obtained under section 12AB through Form No.10AC, and absence of charitable activities. 7. Consequent upon rejection of registration under section 12AB, the learned CIT(E) proceeded to adjudicate the assessee's application for approval under section 80G(5). Referring to section 80G(5)(i) of the Act, the learned CIT(E) observed that approval under section 80G can be granted only to an institution or fund to which the provisions of sections 11 and 12 or section 10(23C) are applicable. Since the assessee's application for renewal of registration under section 12AB had already been rejected by separate order dated 31.12.2025, the learned CIT(E) held that the assessee failed to satisfy the statutory conditions prescribed under section 80G(5)(i). Accordingly, vide a separate order dated 31.12.2025 passed under section 80G(5), the application seeking approval under section 80G was also rejected. 8. Being aggrieved by the aforesaid orders passed by the learned CIT(E), the assessee is in appeal before us and has raised following grounds of appeal: ITA No. 2194/Mum/2026 (Assessee's Appeal against rejection of registration under section 12AB) Ground 1 Material and relevant documents on record ignored

5 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation a) The ld. CIT (E) ignored the material & relevant documents (certificate of section 12A registration prior to 1.4.2021 & expense details) specifically placed on record by ‘YA’ & passed an order rejecting application for renewal under section 12AB; the order deserves to be quashed. b) Without prejudice, even if it is assumed that section 12A registration prior to 1.4.2021 is not produced by ‘YA’, it being issued by the department and formed the basis of its renewal by CPC always existed on the record of CIT (E); rejecting application for renewal does violence to the persuasive value of the direction of CBDT on SOP for Assessment Unit; the order deserves to be quashed. Ground 2 Satisfaction of the triple conditions a) The conditions to be examined by the CIT (E), vide section 12AA (1), at the stage of renewal of registration, are limited to ‘satisfying himself about the objects of the trust & the genuineness of activities…& the compliance of such requirements of any other law for the time being in force’ – the violation of none of which is the basis of rejection; the order deserves to be quashed. b) Without prejudice the notice mandating existence of irrevocability and dissolution clauses in the trust deed, else rejection of renewal, when mandated neither by this Act nor demonstrated to exist in any other law for the time being in force, violates the tenet of this Act & deserves to be quashed in limine, even when ‘YA’ has complied with the said mandate. Ground 3 CIT (E) be directed to rectify his order under section 154 The failure of the ld. CIT (E) to pass an order under section 154 to rectify the mistake apparent from the record, requires that he be directed to do so, in accordance with judgment of Hon’ble ITAT in Kashmir Steel Rolling Mills & Rupam Impex upholding the order of CIT (A) directing AO to rectify the mistake apparent from the record; in the alternative the order be quashed. Ground 4

6 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation Harsh provisions to be enforced when all other options exhausted The ld. CIT (E) failed to realise that there are sufficient provisions in the Act—assessments & reassessments, section 115TD etc—always available to the department, that should obviate easy enforcement of the harsh action of denial of registration. Ground 5 Citizen’s charter violated The said order violates the proclaimed mission in the Citizen’s Charter (Section 119A), inter alia, ‘to be accountable and transparent and act…in a fair and judicious manner’; the order deserves to be quashed at the very threshold. Ground 6 Comment of CPC deserves to be expunged The licentious innuendo that ‘CPC Bangalore without any verification and human intervention granted the registration in Form 10AC for 5 years’ ignores the fact that it resulted from a policy decision, which is beyond the jurisdiction of the protégé of CBDT; the comment deserves to be expunged. Ground 7 ‘YA’ pleads leave to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each of the above grounds without prejudice to one another. ITA No. 2193/Mum/2026 (Assessee's Appeal against rejection of approval under section 80G) Ground 1 Order rejecting section 80G renewal bad in law

On the facts and in circumstances of the case and in law, the order rejecting the application for renewal of registration under section 80G is bad in law.

7 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation Ground 2 ‘YA’ pleads leave to add, alter, classify, reclassify, delete or modify any of the above grounds of appeal and requests to consider each ground without prejudice to the other. 9. During the course of hearing before us, the learned Authorised Representative (AR) submitted that both the reasons assigned by the learned CIT(E) were contrary to the material already available on record. Referring to the paper book, it was submitted that in response to the show cause notice dated 15.11.2025, the assessee had filed a detailed submission dated 25.11.2025 wherein it had furnished a copy of the registration granted under section 12A prior to 01.04.2021, details of charitable expenditure, bank statements, donation receipts and other supporting documents. It was contended that these documents were completely ignored while passing the impugned order. 10. The learned AR drew our attention to the registration certificate dated 19.06.2001 issued by the Director of Income-tax (Exemption), Mumbai granting registration under section 12A of the Act with effect from 14.09.2000. He submitted that the very foundation of the impugned order, namely absence of registration under the old regime, is factually incorrect. 11. The learned AR further invited our attention to the order passed under section 143(3) read with section 144B for Assessment Year 2022-23 dated 23.02.2024. It was submitted that during scrutiny proceedings the Assessing Officer had

8 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation examined the charitable activities of the trust, voluntary contributions and application of income and, after verification of the details furnished, accepted the returned income at Nil. It was therefore argued that the observation of the learned CIT(E) that no activities were carried out by the trust was contrary to the material available on departmental records. 12. The learned AR further submitted that the conditions required to be examined while granting or renewing registration are confined to the charitable objects of the trust, genuineness of its activities and compliance with applicable laws. It was contended that the learned CIT(E) had not recorded any adverse finding regarding the charitable nature of the objects or the genuineness of the activities. 13. We have heard the rival submissions and perused the material available on record. 14. The first reason assigned by the learned CIT(E) for rejecting the application is that the assessee did not possess registration under section 12AA or approval under section 10(23C) prior to 01.04.2021 and, therefore, the registration granted under Form No.10AC was invalid. From the material placed before us, we find that the assessee has produced a copy of the registration certificate dated 19.06.2001 issued by the Director of Income-tax (Exemption), Mumbai granting registration under section 12A of the Act with effect from 14.09.2000. The said certificate forms part of the paper book. We further find from the submission dated 25.11.2025 filed before the learned CIT(E) that a copy of

9 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation the aforesaid registration certificate was specifically enclosed before the learned CIT(E). Therefore, the finding recorded in the impugned order that the assessee had not furnished registration under the old regime is factually incorrect and contrary to the material placed on record. 15. We further note that the assessee was granted registration under section 12AB vide Form No.10AC dated 24.09.2021 valid from Assessment Year 2022-23 to Assessment Year 2026-27. If according to the learned CIT(E) such registration was wrongly granted, the statute itself provides a mechanism under section 12AB(4) for cancellation of registration in appropriate circumstances. However, while considering an application for renewal, the learned CIT(E) could not disregard the existing registration and proceed on the assumption that it was non est, particularly when the assessee had produced evidence of registration under the old regime. 16. The second reason assigned by the learned CIT(E) is that no charitable activities were carried on by the assessee. Here again, we find that the assessee had furnished details of expenditure, bank statements and supporting documents along with its submission dated 25.11.2025. More importantly, the assessment for Assessment Year 2022-23 was completed under section 143(3) read with section 144B on 23.02.2024 after scrutiny. The Assessing Officer recorded that the details furnished by the assessee had been verified and no adverse inference was warranted. The returned income was accepted. Thus, the material

10 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation available on record does not support the conclusion reached by the learned CIT(E) that no activities were carried out by the assessee. 17. In our considered view, the impugned order proceeds on factual assumptions which are demonstrably contrary to the record. The registration under section 12A held prior to 01.04.2021 was available. The assessee had also furnished details in support of its activities. The learned CIT(E) has not examined the material placed before him and has rejected the application solely on grounds which do not survive upon verification of the record. 18. Accordingly, we set aside the impugned order dated 31.12.2025 passed by the learned CIT(E) under section 12AB and restore the matter to his file with a direction to examine afresh the documents furnished by the assessee and decide the application in accordance with law after granting reasonable opportunity of being heard. All contentions of the assessee are kept open. 19. In the result, the appeal of the assessee in ITA No.2194/Mum/2026 is allowed for statistical purposes. ITA No. 2193/Mum/2026 20. Since we have already set aside the order passed under section 12AB and restored the matter to the file of the learned CIT(E) for fresh adjudication, the consequential order rejecting approval under section 80G also cannot survive independently.

11 ITA No. 2193 & 2194/Mum/2026 Narayani Gulab Foundation 21. Accordingly, the impugned order dated 31.12.2025 rejecting approval under section 80G is also set aside and the matter is restored to the file of the learned CIT(E) for fresh adjudication in accordance with law after disposal of the proceedings relating to registration under section 12AB.

Order pronounced in the open court on 24.06.2026.

Sd/- Sd/- (SAKTIJIT DEY) (MAKARAND VASANT MAHADEOKAR) VICE PRESIDENT ACCOUNTANT MEMBER Mumbai, Dated 24/06/2026 Dhananjay, Sr.PS आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलाथी / The Appellant प्रत्यथी / The Respondent. 2. संबंधधत आयकर आयुक्त / The CIT(A) 3. आयकर आयुक्त(अपील) / Concerned CIT 4. धिभागीय प्रधतधनधध, आयकर अपीलीय अधधकरण, मुम्बई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, सत्याधपत प्रधत //True Copy// 1. उि/सहायक िंजीकार ( Asst. Registrar) आयकर अिीिीय अतिकरण, मुम्बई / ITAT, Mumbai