KARAUMBAIAHS ACADEMY FOR LEARNING AND SPORTS vs. COMMISSIONER OF INCOME TAX TAX (EXEMPTIONS),

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WP/23940/2026HC KarnatakaKAHC01052577202619 August 2026Author: B M SHYAM PRASAD8 pages
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What did the High Court hold?

The High Court held that while the petitioner was extended some opportunity, it was neither complete nor reasonable. The Court noted that the petitioner requested two weeks to collate documents, but before the expiry of this period, a new notice was issued offering only three days. The Court found that the petitioner's attempt to submit documents via email after the deadline, due to an intervening weekend, highlighted the lack of sufficient time. Consequently, the Court quashed the impugned order and allowed the petition in part, restoring the proceedings for reconsideration. The petitioner was granted liberty to file all documents by 05.10.2026. The Court explicitly left open all questions for the first respondent to decide, including whether the prudence in the use of contributions could be examined at the stage of deciding on permanent registration.

What were the facts?

The petitioner, Karaumbaiahs Academy for Learning and Sports, a public charitable trust, was granted provisional registration under Section 12A of the Income Tax Act, 1961. The petitioner filed a writ petition before the High Court of Karnataka challenging the order dated 30.06.2026 passed by the Commissioner of Income Tax (Exemptions), the first respondent, which denied permanent registration. The petitioner argued that the denial was based on an allegation of imprudent utilization of charitable funds, a matter that should be decided by the Assessing Officer, not the authority deciding on registration. The petitioner also contended that they were not afforded a complete and reasonable opportunity to present their case, citing a series of notices and their attempts to collate documents.

What were the issues?

1. Whether the Commissioner of Income Tax (Exemptions) has the jurisdiction to refuse permanent registration under Section 12A of the Income Tax Act, 1961, on the ground of imprudent utilization of charitable funds, or if this is a matter for the Assessing Officer? 2. Whether the petitioner was afforded a complete and reasonable opportunity to present its case before the denial of permanent registration? Assessee's arguments: The petitioner contended that the issue of prudent utilization of funds falls within the purview of the Assessing Officer and not the authority deciding on Section 12A registration. Furthermore, the petitioner argued that the opportunity provided was not adequate, detailing a sequence of notices and their efforts to gather and submit requested documents, including an intervening weekend that hampered timely submission. They sought restoration of proceedings for reconsideration in light of these circumstances. Revenue's arguments: The revenue contended that the petitioner cannot claim a lack of opportunity, as they were issued multiple notices informing them of the potential reasons for refusal of permanent registration.

Which sections of the Income-tax Act were involved?

Section 12A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19TH DAY OF AUGUST, 2026 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 23940 OF 2026 (T-IT)

BETWEEN:

KARAUMBAIAHS ACADEMY FOR LEARNING AND SPORTS A PUBLIC CHARITABLE TRUST HAVING ITS REGISTERED OFFICE AT NO. 2502, EMBASSY GROVE, 34/1, RUSTAMBAGH MAIN ROAD, KODIHALLI, BENGALURU 560 017

REP. BY ITS TRUSTEE, DATHA KARUMBAIAH S/O, MANEYAPANDA NACHAIAH KARUMBAIAH, AGED ABOUT 64 YEARS, R/O NO. 2502, EMBASSY GROVE, 34/1, RUSTAMBAGH MAIN ROAD, KODIHALLI, BENGALURU - 560 017 …PETITIONER

(BY SRI. HEMANT VENKATRAY PAI., ADVOCATE) AND:

1.

COMMISSIONER OF INCOME TAX (EXEMPTIONS),

Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA

UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU 560 027

2.

DEPUTY COMMISSIONER OF INCOME TAX (EXEMPTIONS), CIRCLE 1, UNITY BUILDING ANNEXE, MISSION ROAD, BENGALURU - 560 027 …RESPONDENTS

(BY SRI. ARAVIND V. CHAVAN, ADVOCATE A/W; SRI. NIRMAL MATHEW, ADVOCATE)

THIS WP IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASHING THE REJECTION ORDER DATED 30.06.2026 BEARING DIN ITBA/EXM/F/EXM45/2026- 27/1090643130(1) AND DIRECT R1 TO RECONSIDER THE PETITIONERS APPLICATION FOR REGISTRATION UNDER SECTION 12A OF THE ACT IN ACCORDANCE WITH LAW, HEREIN ENCLOSED AND MARKED AS ANNX-A.

THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD

ORAL ORDER

The petitioner, an Academy for Learning and Sports, is admitted to provisional registration under Section 12A of the Income Tax Act, 1961 [for short, 'the IT Act'], and the petitioner's cause for the present writ petition is the first respondent’s decision to deny permanent registration vide Order dated 30.06.2026 [Annexure - A].

2.

Mr. Hemant Venkatray Pai, the learned counsel for the petitioner, submits that the petitioner challenges the first respondent's order not just on the ground of lack of opportunity but also on the ground of the first respondent's jurisdiction to refuse permanent registration on the allegation that the charitable funds contributed have not been utilized prudentially. The learned counsel submits that this aspect viz., whether the contributions have been spent prudently, is a matter that will have to be decided by the Assessing Officer and not by the

first respondent while deciding on whether there must be permanent registration under Section 12A of the IT Act.

3.

Crucially, Mr. Hemant Venkatray Pai submits that this Court could consider restoring the proceedings for reconsideration in the light of the petitioner's grievance with the lack of complete opportunity. In elaboration, the learned counsel submits the following.

a) The petitioner has been issued with notice, and the petitioner has filed a detailed response. b) On 12.06.2026, the petitioner is issued with further notice requiring the petitioner to produce further documents. c) The petitioner has responded to such notice on 16.06.2026 with the request for additional time stating that the petitioner

is in the process of collating documents to comply with the notice dated 12.06.2026. d) The petitioner is once again issued with the notice dated 26.06.2026 allowing time till 29.06.2026 to furnish the documents. e) The petitioner was in the process of collating papers, but with an intervening weekend, could not furnish the documents before the closing hours of 29.06.2026. f) The petitioner, because the submissions was closed on 29.06.2026, has addressed an e-mail on the same day, but at 7:42 p.m. requesting for another opportunity.

4.

Mr. Hemant Venkatray Pai canvasses that these circumstances must be considered by this Court to examine whether the petitioner must have another opportunity before the petitioner is visited with a serious consequence of the refusal of permanent registration notwithstanding

petitioner's case that there is no imprudence in utilizing the funds and the contributions and that whether there is any imprudence in the utilization, is a matter to be examined by the Assessing Officer.

5.

Mr. Aravind V. Chavan, the learned Senior Standing counsel, supported by Mr. Nirmal Mathew, a learned Standing counsel for the respondents, submits that the petitioner cannot really complain of lack of opportunity because the petitioner is not only issued with notice dated 12.06.2026 but was also issued with earlier notices putting it on notice of the reasons that could prevail with the first respondent to refuse permanent registration under Section 12A of the IT Act.

6.

This Court must opine that it cannot be in dispute that the petitioner has been extended with some opportunity, but the real question is whether that opportunity is complete and

reasonable. The petitioner, when issued with notice dated 12.06.2026 to produce other documents, has made a request for additional two weeks stating that it is in the process of collating the documents. This request for two weeks is made on 16.06.2026 and before the expiry of two weeks, notice dated 26.06.2026 is issued offering a window of three days only.

7.

In the circumstances, this Court is of the view that the opportunity extended to the petitioner is not a complete or a reasonable opportunity and the petitioner must have another opportunity to produce all documents to substantiate its case that the contributions is put to use with prudence and and to impress upon the first respondent that the question of prudent utilization of the contributions will not be open for consideration at the stage of deciding on whether there must be permanent registration. As such, the following order observing

that all questions are left open to be decided by the first respondent, including question whether the prudence in use of the contributions could be examined at this stage. ORDER A. The petition is allowed in-part, and the first respondent's impugned Order dated 30.06.2026 [Annexure - A] is quashed restoring proceedings for due consideration. B. The petitioner is reserved with liberty as now requested, to file all the documents by 05.10.2026 calling upon first respondent to decide on all questions as are left open by this Court.

Sd/- (B M SHYAM PRASAD) JUDGE RB

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