RAGHU NATH RAI MEMORIAL EDUCATIONAL CHARITABLE TRUST,MOHALI, PUNJAB vs. CIT(E) ,, CHANDIGARH

ITA 883/CHANDI/2026Status: DisposedITAT Chandigarh28 September 2026AY 2022-2310 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(E) had not considered crucial documents and submissions made by the assessee, including the One Time Settlement (OTS) documents, correspondence with the bank, notices under the SARFAESI Act, and details of financial assistance extended by trustees and specified persons. The Tribunal noted that the contributions from specified persons were interest-free and aimed at protecting the institution from financial collapse, which could be a valid ground for granting registration. The Tribunal found it inappropriate to verify these documents for the first time in appellate proceedings. Therefore, the Tribunal set aside the impugned orders and restored the matters to the file of the CIT(E) for a fresh examination. The assessee was directed to furnish all relied-upon documents, and the CIT(E) was instructed to objectively verify the utilization of funds, the interest-free nature of loans, and the absence of personal benefit to specified persons. The CIT(E) was also directed to afford an adequate opportunity of hearing and pass a fresh, reasoned order. The Tribunal clarified that it had not expressed any opinion on the merits of the controversy. The appeals were allowed for statistical purposes.

What were the facts?

The assessee, Raghu Nath Rai Memorial Educational Charitable Trust, filed appeals against the orders of the Commissioner of Income Tax (Exemptions) (CIT(E)), Chandigarh, dated 10/03/2026. These orders rejected the assessee's applications for registration under Section 12A(1)(ac)(ii) read with Section 12AB of the Income Tax Act, 1961, for Assessment Year 2022-23 (ITA No. 883/Chd/2026) and Assessment Year 2027-28 (ITA No. 884/Chd/2026). The CIT(E) rejected the applications primarily on the grounds that the assessee failed to establish the genuineness of its financial transactions, its financial propriety and prudence were unsatisfactory, and there were substantial secured loans, unsecured borrowings from trustees and related parties, and substantial assets shown under 'Loans & Advances'. The assessee contended that the loans were for repaying secured bank loans under a One Time Settlement (OTS) scheme and that funds were introduced by trustees to protect the institution.

What were the issues?

1. Whether the CIT(E) erred in rejecting the assessee's application for registration under Section 12A(1)(ac)(ii) read with Section 12AB of the Income Tax Act, 1961, on grounds of alleged financial impropriety and lack of genuineness of transactions? (Question of law and fact). The assessee argued that the CIT(E)'s order was mechanical, non-speaking, and cryptic, and that the rejection was incorrect as the financial support from trustees was to protect the institution. The revenue relied on the CIT(E)'s order. 2. Whether the CIT(E) erred in rejecting the application for approval under Section 80G of the Act solely on the ground that registration under Section 12AB was not granted, without independently examining the application on its merits? (Question of law). The assessee argued this action was arbitrary and unjustified. The revenue relied on the CIT(E)'s order. 3. Whether the CIT(E) erred in rejecting the application under Section 12A when no defect was found in the objects and activities of the society? (Question of law). The assessee argued its objects are purely charitable. The revenue relied on the CIT(E)'s order. 4. Whether the CIT(E) erred in rejecting the renewal of registration under Section 12A read with Section 12AB when no new reason existed to deny such registration post the grant of earlier registration? (Question of law). The assessee argued its earlier registrations were valid. The revenue relied on the CIT(E)'s order. 5. Whether the CIT(E) failed to appreciate that the assessee already had valid registrations under Section 12AB and Section 12A(1)(ac)(i) which could not be cancelled without following the procedure under Section 12AB(4)? (Question of law). The assessee argued for specific cancellation procedures. The revenue relied on the CIT(E)'s order. 6. Whether the order passed by the CIT(E) deserves to be quashed for not affording a reasonable opportunity of being heard? (Question of law). The assessee argued for a fair hearing. The revenue relied on the CIT(E)'s order.

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(ii),Section 12AB,Section 12A,Section 80G,Section 12AB(4)

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Heard together (2 matters)

ITA No. 883 /Chd/ 2026
ITA No. 884 /Chd/ 2026

Read from the judgment's own cause title. This page is filed under one of them.

आयकर अपीलीय अिधकरण,च"ीगढ़ "ायपीठ “बी” , च"ीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “B”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE "ी लिलत कुमार, "ाियक सद" एवं "ी िवजय वमा" , लेखा सद" BEFORE: SHRI. LALIET KUMAR, JM & SHRI. VIJAY VARMA, AM आयकर अपील सं./ ITA No. 883 /Chd/ 2026 िनधा"रण वष" / Assessment Year : 2022-23 Raghu Nath Rai Memorial Educational बनाम The CIT(E)

Charitable Trust Chandigarh 1025 Sector, Sector 71, Mohali-160071, Punjab "ायी लेखा सं./PAN NO: AAATR6500J अपीलाथ"/Appellant ""थ"/Respondent आयकर अपील सं./ ITA No. 884 /Chd/ 2026 िनधा"रण वष" / Assessment Year : 2027-28 Raghu Nath Rai Memorial Educational बनाम The CIT(E)

Charitable Trust Regd Chandigarh 1025 Sector, Sector 71, Mohali-160071, Punjab "ायी लेखा सं./PAN NO: AAATR6500J अपीलाथ"/Appellant ""थ"/Respondent िनधा"रती की ओर से/Assessee by : Shri Parikshit Aggarwal, C.A राज" की ओर से/ Revenue by : Smt. Geetinder Mann, CIT DR सुनवाई की तारीख/Date of Hearing : 03/09/2026 उदघोषणा की तारीख/Date of Pronouncement : 28/09/2026 आदेश/Order PER VIJAY VARMA, A.M: Both the above appeals have been filed by the Assessee against the respective orders of the Ld. CIT Exemptions, Chandigarh each dt. 10/03/2026. 2. Si

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