PADMA TULSIDAS SANGHAVI PUBLIC CHARITABLE TRUST ,MUMBAI vs. COMMISSIONER OF INCOME TAX (EXEMPTION) , MUMBAI

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ITA 926/MUM/2026Status: DisposedITAT Mumbai27 April 20266 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 followed a Bombay High Court judgment which held that rejecting applications solely for the absence of explicit irrevocability/dissolution clauses is untenable. The Tribunal also held that answering 'Yes' to the irrevocability question in Form 10AB, in the absence of such a clause, should not be treated as furnishing false information.

What were the facts?

The assessee trust applied for registration under Section 12AB of the Income Tax Act, 1961. The CIT(E) rejected the application on the grounds that the trust deed lacked explicit clauses for irrevocability and dissolution, and that the assessee had made a 'specified violation' by answering 'Yes' to a question about irrevocability in Form 10AB.

What were the issues?

Whether the absence of explicit irrevocability and dissolution clauses in the trust deed is a valid ground for rejecting registration under Section 12AB. Whether answering 'Yes' to the irrevocability question in Form 10AB, when the deed is silent, constitutes a 'specified violation'.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 12A(1)(ac),Section 12AB(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “C” BENCH, MUMBAI

[ Per Rahul Chaudhary, Judicial Member:

1.

The present appeal preferred by the Assessee is directed against the order, dated 26/12/2025, 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.10AB 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. On the facts and in the circumstances of the case, and in law, the Ld. CIT(E) erred in rejecting the appellant's application u/s. 12A(1)(ac) of the Act seeking registration u/s.12AB of the Act, on the ground of non-inclusion of explicit clauses of irrevocability and dissolution/winding up of the appellant-Trust in the its Trust Deed. The Ld. CIT(E) also erred in holding that the appellant made 'specified violation' as referred to in Clause (g) of the Explanation to Section 12AB(4) of the Act. Your appellant, therefore, prays that the Ld. CIT(E) be directed to grant registration u/s. 12AB of the Act to the appellant.”

3.

We have heard both the sides and have perused the material on record.

4.

In the present case the Assessee is aggrieved by the fact that the Learned CIT(E) has rejected the application filed by the Assessee in Form 10AB seeking registration under Section 12AB of the Act holding as under:

“4. In view of the above, it is noted that the applicant has violated the statutory requirements defined 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 the view of above mentioned violation, the undersigned is left with no other option but to reject the application seeking registration under section 12AB of the Act.

6.

In the view of the above, the application for renewal of registration in Form 10AB filed by the assessee is not allowable on the grounds of non-inclusion of irrevocability or dissolution clause in trust deed/MoA 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.

7.

In conclusion, this application for grant of registration stands rejected.” (Emphasis Supplied)

5.

During the course of hearing Learned Authorized Representative for the Assessee placed reliance upon recent 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, 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 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.”

6.

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 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.”

7.

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.

8.

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

Order pronounced on 27.04.2026. (Vikram Singh Yadav) Judicial Member मुंबई Mumbai; िदनांक Dated : 27.04.2026 Milan,LDC आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : अपीलाथ" / The Appellant

1.

""थ" / The Respondent. 2. आयकर आयु"/ The CIT

3.

"धान आयकर आयु" / Pr.CIT 4. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT,

5.

Mumbai गाड" फाईल / Guard file. 6. आदेशानुसार/ BY ORDER, स"ािपत "ित //// उप/सहायक पंजीकार /(Dy./Asstt.

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