SHREE KARADIYA RAJPUT SAMAJ BAGHI,BAGHI-PADDHARI vs. THE COMMISSIONER OF INCOME TAX (EXEMPTION), AHMEDABAD

2.1 Based on the aforesaid observation, a show-cause notice dated 22.12.2024 was issued to the assessee calling upon it to explain why the application under section 12A(1)(ac)(iii) should not be rejected and the provisional registration cancelled, having regard to clause (d) of the Explanation to section 12AB(4) which treats as a “specified violation” the application of income for the benefit of any particular religious community or caste. The assessee was also asked to furnish evidence that no expenditure had been incurred for the benefit of any particular community.

2.2 The assessee filed a reply on 24.12.2024, submitting that the trust was engaged in activities of charitable nature and that its benefits were not restricted to any one caste or religion. It was stated that the mention of “Karadiya Rajput Samaj” in the trust deed was merely historical and that, in actual functioning, the trust was rendering assistance for education, relief to poor, and social welfare generally available to all persons irrespective of caste or creed. However, according to the CIT(E), the assessee did not produce any corroborative evidence or activity report to substantiate these claims.

2.3 The CIT(E) therefore held that the case involved a specified violation within the meaning of clause (d) of the Explanation below section 12AB(4), as the trust’s income and property appeared to be applied for the benefit of a particular religious community or caste. On this basis, he held that the provisional registration earlier granted under section 12A(1)(ac)(vi) was liable to be cancelled and the application for regular registration under section 12A(1)(ac)(iii) deserved to be rejected.

2.4 Aggrieved by the order of CIT(E), the assessee is in appeal before us raising following grounds:

1. The order passed under Section 12AB(1)(b)(ii) of the Act is bad in law.

2. The learned CIT (Exemption) has erred in law as well as on facts in rejecting the application for registration u/s 12A(1)(ac)(iii) of the Act.

3.1 The AR further cited the decision of the ITAT, Rajkot Bench, in Shree Nani Khakhhar Rajput Kshatriya Samaj Seva Trust (ITA No. 40/RJT/2025), wherein, on similar facts, the Tribunal directed the CIT(E) to grant registration after verifying the amended trust deed and activities.

3.2 It was further submitted that on identical facts, the same CIT(Exemption), Ahmedabad had granted registration under section 12A(1)(ac) to Shree Kshatriya Rajput Samaj Trust vide order dated 25.12.2024, subject to the condition that the assessee should not undertake activities relating to the community objects until their amendment was approved by the Charity Commissioner. The AR specifically referred to the operative portion of that order, wherein the CIT(E) had directed that “after amendment in the trust deed, the assessee shall file a copy of the amended objects with this office, and delay in obtaining approval from the Charity Commissioner shall not be viewed adversely.” The AR contended that the CIT(E) has adopted an inconsistent approach by granting registration in one case on similar facts and rejecting the present application without assigning any distinguishing reason.

3.3 Based on these submissions, the AR urged that the matter be restored to the file of the CIT(Exemption) for fresh consideration in light of the trust’s amended objects and consistent judicial view.

5.1 From the material placed before us, it is observed that the assessee has now produced a copy of the Change Report filed before the Charity Commissioner, Rajkot, along with the amended trust deed reflecting modification of its objects so as to remove the reference restricting benefits to a particular caste and to expressly state that the activities and benefits of the trust shall extend to all persons irrespective of caste, creed, or religion. It is an undisputed position that this amended deed was not before the learned CIT(Exemption) at the time of passing the impugned order. The learned Authorised Representative (AR) has submitted that the amendment application has been duly lodged and is pending before the Charity Commissioner for approval.

5.2 The AR contended that since the charitable character of the trust has now been expressly clarified through the amended objects, the same ought to be considered while deciding the question of registration. He further relied on the decision of the ITAT, Rajkot Bench, in Shree Nani Khakhhar Rajput Kshatriya Samaj Seva Trust (ITA No. 40/RJT/2025), wherein, on similar facts, the Tribunal had directed the CIT(Exemption) to grant registration after verifying the amended trust deed and the activities of the assessee. Following the said precedent, the AR urged that the Tribunal may similarly direct the learned CIT(E) to issue registration after due verification of the amended deed and activities.

5.3 On perusal of the impugned order, it is apparent that the CIT(E) did not verify or examine the assessee’s actual activities or financial records to determine whether, in practice, the trust had applied its income for the benefit of a particular caste or religious community. The audited financial statements and the audit report in Form No. 10BB, which were admittedly filed before the CIT(E), have not been analysed or discussed in the order. Before concluding that there was a violation falling within clause (d) of the Explanation below section 12AB(4), the CIT(E) was required to record a clear finding based on factual verification that the income or property of the trust was so applied. The absence of such finding renders the order factually incomplete.

5.4 We also note the contention of the learned AR that the same CIT(E), Ahmedabad, on identical facts, had granted registration under section 12A(1)(ac) to Shree Kshatriya Rajput Samaj Trust vide order dated 25.12.2024, subject to a condition that the assessee shall not undertake activities relating to community-based objects until approval of the amended deed by the Charity Commissioner. In the present case, the CIT(E) has adopted a different approach without any distinguishing reasoning, resulting in inconsistency in the application of the law.

5.5 Having regard to the facts and the judicial precedent relied upon, we are of the considered view that the impugned order suffers from lack of factual verification and non-consideration of subsequent developments, including the amendment to the trust deed. Therefore, in the interest of substantial justice, the matter is required to be restored to the file of the learned CIT(Exemption) for fresh adjudication.

5.6 The learned CIT(Exemption) shall, while re-adjudicating the matter, verify—(i) whether the amended trust deed filed before the Charity Commissioner, Rajkot, has been duly approved or remains pending for approval; (ii) whether the activities of the trust, as reflected in its audited financial statements and audit report in Form No. 10BB, are in conformity with the charitable purposes defined under section 2(15) of the Act; and (iii) whether any expenditure has, in fact, been incurred for the benefit of a particular community or caste.

5.7 Upon such verification, the CIT(Exemption) shall pass a reasoned and speaking order in accordance with law after granting the assessee a reasonable opportunity of being heard. In doing so, the CIT(Exemption) may, having regard to the decision of the Hon’ble ITAT, Rajkot Bench in Shree Nani Khakhhar Rajput Kshatriya Samaj Seva Trust (ITA No. 40/RJT/2025), consider granting conditional registration under section 12A(1)(ac), subject to appropriate safeguards—such as restraining the assessee from undertaking activities linked to community-specific objects until the amended deed is formally approved by the Charity Commissioner and filed before the department.

5.8 Such conditional approval, if granted, shall be consistent with the approach adopted in similar cases and will safeguard the revenue’s interest while ensuring that bona fide charitable institutions are not denied registration merely on account of pending procedural approval of amended objects.

5.9 We make it clear that we have not expressed any opinion on the merits of the claim. All issues are left open for determination by the learned CIT(Exemption).

Accordingly, the impugned order is set aside, and the matter is restored to the file of the CIT(Exemption) for de novo consideration in accordance with law.

Order pronounced in the Court on 16th October, 2025 at Ahmedabad.