SHREE BALAJI EDUCATIONAL AND WELFARE TRUST ,PALWAL vs. CIT(E), CHANDIGARH

ITA 945/CHANDI/2026Status: DisposedITAT Chandigarh30 September 2026AY 2025-2617 pages
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What did the Tribunal hold?

The Tribunal held that the rejection of the application for registration under section 12AB was upheld. The CIT(E) was not satisfied about the genuineness of the assessee's activities, as there was no ongoing activity and no documentary evidence of steps towards revival. The Tribunal referred to section 12AB(1)(b) which requires the CIT(E) to be satisfied about the genuineness of activities and compliance with other laws. The assessee's admission of non-operational status and lack of evidence supported the CIT(E)'s finding on this aspect. However, the Tribunal found that the CIT(E) erred in cancelling or superseding the existing registration as an automatic consequence of rejecting the new application. The cancellation of existing registration requires following the specific procedure under section 12AB(4), including identifying a specified violation, issuing a show-cause notice, and providing an opportunity of hearing, as per the principle in Nazir Ahmad v. King Emperor. Since this procedure was not followed, the cancellation was set aside and the matter was restored to the CIT(E) for fresh adjudication on the cancellation aspect, if he proposes to proceed, by following the due process. The appeals were partly allowed for statistical purposes.

What were the facts?

The assessee, Shree Balaji Educational & Welfare Trust, filed an application in Form No. 10AB on 29.09.2025 seeking registration under section 12A(1)(ac)(ii) of the Income-tax Act, 1961, for Assessment Year 2025-26. The Commissioner of Income-tax (Exemptions) [CIT(E)], Chandigarh, rejected the application. The CIT(E) noted that the application lacked an activity report and documentary evidence of charitable activities. The assessee stated its school operations were suspended due to COVID-19 and intended to revive them. The CIT(E) found no documentary evidence of ongoing educational activities, substantial receipts, or meaningful charitable expenditure, concluding the genuineness of activities was unfulfilled. The CIT(E) also observed that the rejection would supersede the existing registration. The assessee appealed this rejection.

What were the issues?

1. Whether the CIT(E) was justified in rejecting the assessee's application for registration under section 12AB of the Income-tax Act, 1961, on the ground that the assessee was not carrying on any charitable activity at the relevant time, thus failing to satisfy the genuineness of activities requirement under section 12AB(1)(b)? Assessee's contentions: The assessee argued that its objects fall under section 2(15), and the temporary suspension of school activities due to COVID-19 should not lead to rejection, as it intended to revive them. The scope of examination under section 12AB is limited, and past activities and intention should be considered, citing Sir CV Raman Educational & Charitable Trust v. CIT(E) and Mewari Tolly Charitable Trust v. CIT. The rejection was based on the school not functioning at a specific point, ignoring the explanation for suspension. Revenue's contentions: The revenue contended that section 12AB(1)(b) requires the CIT(E) to be satisfied about the genuineness of activities and compliance with other laws. This cannot be ignored due to charitable objects or past activities. The assessee admitted the school was not functioning, and without ongoing activity, genuineness could not be examined. The assessee failed to provide documentary evidence of recommencement steps.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 12A(1)(ac)(ii),Section 2(15),Section 12AB(1)(b),Section 12AB(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘B’ CHANDIGARH

Before: SHRI LALIET KUMAR & SHRI VIJAY VARMA

For Appellant: Shri Deepanshu Singla, Advocate
For Respondent: Smt. Vandana Vijay Mohite, CIT DR
Hearing: 30.09.2026Pronounced: 30.09.2026

PER LALIET KUMAR, JM

These two connected appeals have been filed by the assessee- trust against the order passed by the learned Commissioner of Income-tax (Exemptions), Chandigarh [“CIT(E)”], whereby the application filed by the assessee in Form No.10AB seeking registration under section 12AB of the Income-tax Act, 1961 (“the Act”) was rejected. Since both the appeals arise from the same

ITA 945 & 946/CHD/2026 A.Y. 2025-26 2 proceedings and involve interconnected issues, they are being disposed of by this consolidated

The order continues below.

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