SHRI SURTI MODH VANIK JAGRUTI MANDAL,MUMBAI vs. CIT EXEMPTION, MUMBAI

The Learned Commissioner of Income Tax (Exemption) erred in not considering the full reply filed by assessee & facts that filing of an application with charitable commissioner is only a process and procedure and that cannot be used against trust.

The Commissioner of Income Tax (Exemption) has purposefully, without giving personal hearing cancelled the assessee's registration u/s 12A in violation of grounds of natural justice for reasons best known to him.

The Learned Commissioner of Income Tax(Exemption) erred in applying section 13(1)(b) while cancelling registration, ignoring factual position that the assessee trust had not spent any amount for the particular Gnyati or caste. "

The learned Commissioner of Income Tax (exemption) has wrongly alleged that assessee has wrongly availed the benefits given vide circulars no. 07/2024, dated 25.04.2024.

The learned Commissioner of Income Tax(exemption) has erred in not considering the fact that the assessee has amended the trust deed and necessary resolutions had been filed before The Commissioner of Income Tax(exemption) and the same cannot be ignored based on surmises and conjectures.

The learned Commissioner of Income Tax (exemption) erred in stating that the assesser trust's amendment to object of trust was an afterthought, without considering the fact that the assessee has not used single penny for particular community (Gnyati) as was evident from the details filed.

The learned Commissioner of Income Tax(exemption) erred in not considering the full reply filed by assessee & facts that filing of an application with charitable commissioner is only a process and procedure and that cannot be used against trust.

The Commissioner of Income Tax exemption) has purposefully without giving personal hearing cancelled the assessee's registration u/s 80G in violation of grounds of natural justice for reasons best known to him.

The learned Commissioner of Income Tax(exemption) erred in applying section 13(1)(b) while cancelling registration, ignoring factual position that the assessee trust had not spent any amount for the particular Gnyati or caste.”

Briefly stated, the assessee herein is a charitable organization, have filed applications in Form 10AB on 31.03.2022 seeking regularization of registration under section 12AB and 80G(5) of the Act. The aforesaid applications of the assessee were rejected on 27.09.2022, stating the reason that certain objects of the assessee-trust are in contravention to the pre-conditions required to be fulfilled by 3 & 8229/Mum/2025 Shri Surti Modh Vanik Jagruti Mandal a Charitable Trust as per Income Tax Act. The objects which were considered in violation of the provisions of Act are as under:

Regarding aforesaid three objects, the ld. CIT(E) observed that the Trust is involved in activities which favours a particular community (Gnati). Also, the membership rules are favouring the particular community (Surti Modh Vanik Ganati) to the extent that it is the birthright of the members of a particular community to become a member of the Trust, it is observed that such issues are in contravention to section 13(1)(b) of the Act, therefore the registration of assessee trust cannot be allowed. In response to aforesaid contraventions noted by the ld. CIT(E), assessee submitted that the objectionable objects of the Trust are revised by the Board of Trustee by making necessary amendment in the Trust-deed. A resolution dated 25.09.2024 was also furnished before the ld. CIT(E), however such changes in object were not informed to the Charity Commissioner, Ld. CIT(E) noted that the intention of the assessee trust is never to amend the Trust- deed that is why it had submitted a copy of back dated resolution passed by it regarding amendment made in the Trust-deed also such facts substantiate that the 4 & 8229/Mum/2025 Shri Surti Modh Vanik Jagruti Mandal date of issue of regular registration order for 12A, the object which are in violation of section 13(1)(b) of the Act are still present.

With the aforesaid observation, the applications of assessee were rejected and the existing registration of assessee-trust were cancelled by the ld. CIT(E), hence, the assessee is in present appeals before us.

At the very threshold, ld. AR submitted that the reason for cancellation was certain objects of the Trust which were never acted upon by the Trust since its inception. Further, such objects are amended, which is informed to ld. CIT(E) also. The main objection of the ld. CIT(E) was that such changes in the objects clause of the Trust were not informed to the Charity Commissioner, which is also done by the Trust later, vide its report of changes submitted to the office of Charity Commissioner on 26.12.2025, a copy of such submission was furnished before us at PB page no. 65. Since the alleged changes in the objects has been addressed and the contravention observed by the ld. CIT(E) are now removed by the assessee trust, it was the prayer that registration under section 12AB and 80G are to be allowed and granted to the assessee trust.

Further, the ld. AR placed his reliance on the decision of Hon’ble Gujarat High Court in the case of CIT(E), Ahmadabad vs. Jamiatul Banaat Tankaria [ 2024] 168 taxmann.com 35 (Guj. HC), wherein the Hon’ble Court has held that the violation of section 13(1)(b) cannot be a ground for refusing registration & 8229/Mum/2025 Shri Surti Modh Vanik Jagruti Mandal under section 12A/12AB, they are to be applied when determining the entitlement to exemption under section 11 of the Act.

Per contra, the ld. DR supported the orders of ld. CIT(E).

We have considered the rival submissions, perused the material available on record and case law relied upon by the assessee. Admittedly, in present case the ld. CIT(E) has rightly pointed out certain objects of the Trust which triggers the provisions of section 13(1)(b), being the activities of Trust are for favour to a particular community. However, since it has been clarified by the assessee trust that such objects were never acted upon by the Trust and now the amendments have take place, also the objectionable objects of the Trust are amended by a resolution passed by the Board of Trustees and such changes were informed to the Charity Commissioner, though after passing of the cancellation order by the ld. CIT(E), however since all the defects and contraventions observed and noted by the ld. CIT(E) are now addressed and rationalized by the assessee trust, we deem it appropriate to restore this matter back to the file of ld. CIT(E) to re- consider the application of the assessee-trust and decide the same afresh as per law, in light of aforesaid observations.

Needless to say, the assessee trust be afforded with reasonable opportunity of being heard in the set aside proceedings.