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Facts
The assessee, Khaja Education Society, filed appeals against the order classifying it as a 'religious Trust' instead of an 'Educational Trust' and consequently rejecting its application for recognition under section 80 G of the Act. The appeals were filed with a delay of 262 days, which the assessee sought to condone due to the sickness of its President and a change in management.
Held
The Tribunal held that the assessee has been consistently treated as a public charitable trust for over 50 years, running educational institutions, and its application clearly stated it was an educational trust. The CIT(E) did not provide any material or reasoning to classify it as a religious trust and reject the 80G approval.
Key Issues
Whether the assessee society is a religious trust or an educational trust, and whether the rejection of 80G recognition based on this classification is justified.
Sections Cited
12 AB, 80 G
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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI SOUNDARARAJAN K.
Per Prashant Maharishi, Vice President 1. These are the two appeals filed by Khaja Education Society (the assessee/appellant/trust) against granting of registration under section 12 AB of the Act as ' religious Trust' and not as ' Educational Trust' and consequently also rejection of application for recognition under
section 80 G (5) of the Act by the Commissioner Of Income Tax (Exemption) Bangalore by order dated 30 August 2024.
Iimpugned appeals are filed on 18 July 2025 against the order rejecting the registration dated 30 August 2024, which should have been filed on or before 31 October 2024 and thereby causing a delay of 262 days.
The assessee has filed an application for condonation of delay praying for admission of the appeal. The assessee submits that the impugned assessee society was managed by Mr. Syed Shah Khusro Hussaini, President of the assessee society who was sick for a long time during the proceedings under section 12 A and section 80 G of the Act. When he came to know that these are the orders which have been passed on the application of the assessee which has been disposed of by the learned CIT Exemption by holding the assessee trust as 'religious trust'. As the application of the trust was not rejected but assessee was granted registration under section 12 AB of the Act but the assessee was stated to be a religious trust, As this fact is not correct, as it is brought to the notice of the trustee, immediately the appeal was filed. Accordingly it was submitted that as such the assessee is not aggrieved by the order of the learned CIT Exemption granting registration to the assessee under section 12 AB of the Act but it is aggrieved with the fact that the assessee has been classified as religious trust. As this information has come to the notice, immediately the appeal was filed. This has caused delay of 262 days.
The learned authorized representative Mr. Siva Prasad Reddy the reiterated the reason stated in the petition for condonation of delay and submitted that the delay has been caused because of the reason of sickness of the President of the society, and further there was a change in the management of the trust. Society trust is managing the number of institution and therefore the transition process took substantial time for filing of the appeal. He submitted that when the annual accounts are audited by the auditors of the assessee society, they brought to the notice of the President of the society that in fact the registration granted to the assessee is not as a public charitable trust but as a religious trust and further if the assessee trust is held to be a religious trust, the approval under section 80 G of the Act would not be available to the assessee. Therefore knowing of the consequences of the same, the assessee immediately filed the appeal which was delayed, He referred to several judicial precedent and submitted that the delay of 262 days in filing of the appeal before the Tribunal is for 'sufficient cause' and therefore it deserves to be condoned and appeal of the assessee deserves to be admitted.
The learned departmental representative vehemently submitted that the reasons stated by the assessee for filing appeal late before the Tribunal do not show any sufficient cause and therefore it should not be condoned.
We have carefully considered the rival contention and perused the orders of the learned lower authorities. We find that the assessee
applied for registration under section 12 AB of the Act as a public charitable trust. However, the learned CIT Exemption granted the registration to the trust as religious trust. If the assessee is registered as a religious trust and not as a public charitable trust, there may be some impediment in getting the recognition under section 80 G of the Act to the assessee society. In fact, the 80G has been rejected in the case of the assessee for this reason. Because of these consequences the assessee has filed an appeal before us. The fact that the assessee has been registered as a religious trust comes to the notice of the assessee through its auditors when the books of accounts of the assessee trust are audited by them and the registration certificate was found to have been granted to the assessee by CIT Exemption as religious trust. We find that there is a reasonable cause that on coming to know about the consequences of the registration certificate granted to the assessee, the assessee immediately filed an appeal. Thus, delay of 262 days occurred in filing of the appeal. We find that the delay is for sufficient cause and therefore we condone delay in the appeals of the assessee. we find that assessee is aggrieved by the order dated 30 August 2024 passed under section 12 AB of the Act for the reason that the registration was granted to the assessee as a “religious society” and not as a charitable society. This is the only grievance.
The brief facts of the case shows that that assessee is a society established in the year 1958 having the objects of running various
educational institutions such as girls school, high school for boys, engineering College, medical College, science College, arts College, commerce College, education college, law college, sports College pre- university colleges and further maintaining the hostels for boys, medical sciences, engineering students. The assessee has been registered under section 12 A of the Act as a charitable trust since 26 August 1980. And subsequently assessee has also been registered under section 80 G of the Act since 1980. The 80 G certificate is continuously renewed from year to year. Further on 27 May 2021 provisional registration under section 12 A was granted to the assessee along with the provisional approval under section 80 G of the Act.
Assessee applied for the registration under section 12 AB of the Act for assessment year 2021 – 22 to 2025 – 26, in form No. 10 AD the assessee was registered by the No. AAAAK0785B 24 BL01 under section 12 AB (1) (b) of the Act as per order dated 30 August 2024 by the learned Commissioner of Income Tax (Exemption), Bangalore. Along with the approval an annexure was attached which was subject to the conditions. As per serial No. 1 of that condition, it was mentioned that the trust/society/institution is registered as religious trust/society/institution. The grievance of the assessee is that it is not religious trust but is a public charitable trust.
Consequent to the above registration the Learned CIT (Exemption) passed an order in form No. 10 AD on the same date, which is 30 August 2024 and rejected the application for approval under section 80
G of the Act on the ground that assessee is a religious trust. Therefore, assessee has also filed an appeal in against such order also.
The learned authorized representative submitted that assessee society was granted registration under section 12 A as well as recognition under section 80 G of the Act for more than 50 years as a public charitable trust. The learned CIT – E without asking the assessee any query, without bringing any material on record, the ld CIT E has granted the registration under section 12 A of the Act to the assessee as a religious trust and consequently denied the recognition under section 80 G of the Act. He submits that the issue is squarely covered by the decision of the Honourable Supreme Court in case of CIT v. Dawoodi Bohara Jamat (2014) 364 ITR 31 (SC) wherein it is required to be established whether the entity is a religious trust or a charitable trust with the purpose behind the establishment of the society, objects of the trust and the beneficiaries. He submitted that the objects of the assessee society are providing secular education particularly for Muslim students and not confined to minority community, but it is open for students of all communities. It is running technical, medical, Unani , engineering, professional institutions research Centre hospitals etc. Therefore, the object of the assessee is education and therefore classifying it as a religious society is not in accordance with the object of the trust. He submitted that assessee trust is established solely for the purpose of education, benefits of the activities is open to public at large and not confined to Muslim or to the minorities and therefore the assessee cannot be classified as a religious trust. He even otherwise submitted that there is no reason given by the learned CIT – E why he classified the assessee as a religious trust despite knowing the fact that for the last 50 years the assessee is existing and is categorized by the income tax department as public charitable trust carrying on educational activities. Therefore, the order passed by the learned CIT – E holding assessee to be a religious trust and consequently not granting recognition to the assessee under section 80 G of the Act is not sustainable in law and therefore it is prayed to be quashed.
The learned CIT DR vehemently supported the orders of the learned lower authority and submitted that as the assessee trust has objects relating religion , the order of the ld CIT E is in order.
We have carefully considered the rival contentions and perused the order of the ld CIT E . We on the basis of evidence produced before us find that assessee is a public charitable trust running several schools and colleges. Assessee in its application for registration u/s 12AB of the act has classified itself as an educational trust. It is also the claim of the assessee that it is not at all engaged in the religious activity and all its activities are educational only. It is also the claim of the assessee that neither the ld CIT E enquired from the assessee about any alleged religious activity being carried out nor in the order he refers to any material based on which he reaches at the conclusion that assessee is a religious trust. It is also the fact that the assessee trust is existing for decades carrying on the same activity and assessee is always
having registration u/s 12 AB of the Act as well as recognition u/s 80G (5) of the Act. Even this trust also does not exist for benefit of any particular community but for all. It is also claimed that issues is squarely covered in favour of the assessee by the decision of Honourable Supreme court in case of Commissioner of Income tax, Ujjain vs. Dawoodi Bohara Jamat [2014] 43 taxmann.com 243 (SC)/[2014] 222 Taxman 228 (SC) (MAG)/[2014] 364 ITR 31 (SC)/[2014] 268 CTR 1 (SC)[20-02-2014].
However, as in the present case there is no finding in the order that assessee's objects are religious in nature or the activity of the trust is restricted to a particular community, it is not possible to ascertain on what basis the ld CIT {E} has reached at that conclusion. Even otherwise, if the ld. CIT E is having such an understanding based on the material available, he is duty bound to state such material and confront assessee and after granting an opportunity of hearing decide the same. No such exercise is undertaken by the ld. CIT E, and he straight way held that assessee is a religious trust and granted Registration u/s 12 AB of the Act. The consequent result of that is that assessee was not granted recognition u/s 80G (5) of the act being titled as "religious Public trust''.
As the ld CIT E has failed to refer to any material based on which he has reached at the conclusion that assessee is a public religious Trust" , we find that order passed granting registration to the assessee u/s 12 AB and consequently rejection recognition u/s 80G (5) of The Act are not sustainable. Hence, we restore both the appeals back to the file of the ld CIT E, to examine the material, then decide why he is not holding the assessee as an educational Trust. If the ld CIT E is satisfied about the object and activity of the trust, the registration granted to the assessee as Religious Trust is to be amended. The Ld CIT E is also directed to give assessee an opportunity of hearing and then decide the issue of registration by passing a speaking order. After deciding the issue of registration u/s 12 AB of the Act, the ld. CIT E may thereafter decide the issue of recognition u/s 80 G (5) of The Act .
In the result the appeals are allowed for statistical purposes.
Pronounced in the open court on this 24th day of February, 2026.