SNEHBANDH FOUNDATION SANGALI,SANGALI, MAHARASHTRA vs. THE CIT (EXEMPTION), PUNE, PUNE, MAHARASHTRA

ITA 838/PUN/2026Status: DisposedITAT Pune08 October 2026AY 2025-202614 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the CIT(E)'s order was to be set aside and the matter restored to his file for fresh adjudication. Regarding the first issue, the Tribunal found that while the CIT(E) considered the Prerana Samajik Sanskrutik Bahuddeshiya Shikshan Sanstha decision, the facts of the present case were different. The assessee trust could not demonstrate the same compelling circumstances (like delay in government grants) that necessitated huge loans from the trustee without prior sanction. Furthermore, the assessee's financial statements showed an outstanding loan of Rs. 19,03,800/- for FY 2023-24, contradicting the claim of full repayment. The assessee also failed to clearly inform the Charity Commissioner for post-facto approval. Thus, the Tribunal found that the trust had not come with clean hands. The Tribunal directed the CIT(E) to verify if there was genuine urgency necessitating the loan without prior sanction and if the non-compliance was intentional, to decide afresh as per law. For the second issue, the Tribunal found that the claim of full repayment by 2023 was incorrect as per the balance sheet for FY 2023-24, and the assessee had not clearly sought post-facto approval. Therefore, this ground was dismissed. The appeal was partly allowed for statistical purposes.

What were the facts?

The assessee, Snehbandh Foundation, filed an application for registration under section 12A(1)(ac)(iii) of the Income Tax Act, 1961, in Form No. 10AB on 25.03.2024. The Commissioner of Income Tax (Exemption), Pune (CIT(E)), rejected the application on 30.09.2024, citing non-compliance with Section 36A(3) of the Maharashtra Public Trusts Act, 1950, regarding loans taken by the trust without prior sanction from the Charity Commissioner. The Tribunal, in a prior appeal (ITA No. 838/PUN/2026), had restored the matter to the CIT(E) for de novo adjudication, directing that a reasonable opportunity be afforded to the assessee and that the issue of temporary loans from trustees be dealt with in light of a coordinate bench decision. Subsequently, the CIT(E), by order dated 18.12.2025, again rejected the application.

What were the issues?

1. Whether the CIT(E) erred in rejecting the assessee's application for registration under section 12A(1)(ac)(iii) of the IT Act, 1961, for failing to obtain prior sanction from the Charity Commissioner under Section 36A(3) of the Maharashtra Public Trusts Act, 1950, for loans taken from trustees, despite the loans being interest-free and advanced from personal funds of the trustee? (Question of law and fact, turning on Section 12AB(1)(b)(i)(B) of the IT Act and Section 36A(3) of the Maharashtra Public Trusts Act, 1950). Assessee's Contention: The loan is an interest-free advance from the trustee's personal funds, not a 'borrowing' requiring sanction. The trust has repaid the loan and sought post-facto approval. Reliance was placed on the coordinate bench decision in Prerana Samajik Sanskrutik Bahuddeshiya Shikshan Sanstha. Revenue's Contention: The trust and trustee are distinct legal entities. Any obligation to repay creates a borrowing. The assessee failed to demonstrate urgency or necessity for huge loans without prior sanction. The assessee has not come with clean hands. The decision in Prerana Samajik Sanskrutik Bahuddeshiya Shikshan Sanstha was not accepted by the department and is under appeal before the High Court. 2. Whether the CIT(E) erred in rejecting the application without appreciating that the assessee had filed for post-facto approval and fully repaid the temporary loan?

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(iii),Section 12AB(1),Section 36A(3),Section 36A(3A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE

For Appellant: Shri Bhuvanesh Kankani
For Respondent: Shri Amit Bobde
Hearing: 22.07.2026Pronounced: 08.10.2026

PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 18.12.2025 passed by Ld. CIT, Exemption, Pune rejecting the application for registration u/s 12A(1)(ac)(iii) of the IT Act.

2.

Facts of the case, in brief, are that the assessee has filed application for registration u/s 12A r.w.s. section 12AB of the IT Act in Form No.10AB under clause (iii) of section 12A(1)(ac) of the IT Act on 25.03.2024. The above application for regular

2 registration was rejected by Ld. CIT(E) vide order dated 30.09.2024 by observing as under :- “6. The assessee furnished its reply in response to the notice on 31/08/2024. However, it is seen that the assessee has not furnished any clarification o

The order continues below.

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