Income Tax Appellate Tribunal - Mumbai
Shree Kandivli Sanstha Congress Seva ... vs Cit(Exemption), Mumbai on 20 April, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "A" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI ANIKESH BANERJEE (JUDICIAL MEMBER)
ITA No. 561/MUM/2026
Assessment Year- NA
Shree Kandivali Sanstha CIT (Exemptions)
Congress Seva Trust Room No. 601, 6th Floor,
102, Kamla Vihar Chs Ltd. Vs. Cumballa Hill MTNL, TE
Parekh Lane, Off S.V. Road, Building, Pedder Road, Dr.
Kandivali (W) Mumbai 400067 Gopalrao Deshmukh Marg,
Cumballa Hill, Mumbai 400026
PAN NO. AABTS7201A
Appellant Respondent
Assessee by : Shri. Ajay Singh & Shri. Akshay
Pawar
Revenue by : Shri. Rajesh Kumar Yadav (CIT-DR)
Date of Hearing : 09/04/2026
Date of pronouncement : 20/04/2026
ORDER
PER OM PRAKASH KANT, AM
This appeal by the assessee trust is directed against order dated 30.12.2025 passed by the Ld. Commissioner of Income-tax (Exemptions), Mumbai, wherein he has rejected the application of the assessee seeking regularisation of the registration of the trust. The relevant grounds raised by the assessee are reproduced as under:
Kandivali Sanstha Congress Seva Trust 2 ITA No. 561/MUM/2026 "1. The ld CIT(Exemption) erred in rejecting the Application in Form No. 10AB dated 23.06.2025 for seeking regularization of provisional registration u/s. 12AB of the Act on the alleged ground that trust deed/MOA does not include irrevocability or dissolution clause and this amounts to specified violation as per explanation (g) to the Section 12AB(4) of the Act.
2. The ld CIT (Exemption) further erred in law and on facts in not appreciating that the assessee is a registered Public Charitable Trust formed under the Maharashtra Public Trust Act, 1950 in the year 1977, registration u/s 12A and approval u/s 80G of the Act was granted, thus refusal to grant approval and cancelling the registration is patently wrong.
3. The ld CIT (Exemption) failed to appreciate that a public charitable trust created and registered under the MPT Act, 1950 in Maharashtra is irrevocable once property is dedicated for public charitable purposes, the settlor cannot revoke or reclaim it and the Charity Commissioner or competent court can permits any alteration / amendment to the objects or property use requires sanction u/s 36 or 50 of the MPT Act. Hence, no false or incorrect information was provided in Form 10AB and there is no specified violation as defined under explanation (g) to section 12AB(4) of the Income Tax Act, 1961. The Trust by it is nature is irrevocable.
4. The assessee further submits that it is alleged in para no 3.2 that a show cause notice dated 15.12.2025 was issued, however, no such notice is received either on portal or email. Further the order refers to show cause notice asking for copy of approval from competent authority to operate the school, however, the Trust conducts activity of Homeopathy Medicine Clinic, Magnet Therapy Centre, Yoga and Wellness Programs.
5. The Assessee craves leave to add, alter modify or delete one or more ground before or at the time of hearing of Appeal.
2. Briefly stated, the material facts are that the assessee is a trust engaged, inter alia, in activities relating to a Homeopathy Medicine Clinic, Magnet Therapy Centre, and Yoga and Wellness Programmes. The assessee was initially granted provisional registration under section 12AB(4) of the Income-tax Act, 1961 for the period from Assessment Year 2022-23 to Assessment Year Kandivali Sanstha Congress Seva Trust 3 ITA No. 561/MUM/2026 2026-27. It was also granted approval under section 80G for the period commencing from 02.10.2021 up to Assessment Year 2024-
25. 2.1 Subsequently, the assessee filed an application in Form No. 10AB seeking renewal of approval under section 80G on 08.11.2024, which came to be allowed by the learned Commissioner of Income-tax (Exemptions) on 19.06.2025 for the period from Assessment Year 2025-26 to Assessment Year 2029-30. Thereafter, the assessee preferred an application, in the prescribed Form No. 10AB, on 23.06.2025 for regularisation of its registration under section 12AB.
2.2 In response thereto, a notice dated 25.09.2025 was issued by the learned CIT (Exemptions) calling for requisite details. The said notice was duly served upon the assessee, and the assessee furnished the requisite information within the stipulated time, i.e., on 07.10.2025, as against the due date of 08.10.2025.
2.3 However, the application of the assessee for regularisation of registration under section 12AB(4) came to be rejected by the learned CIT (Exemptions) vide impugned order dated 30.12.2025, primarily on the following grounds:
(i) that the trust deed did not contain clauses pertaining to irrevocability and dissolution; and
(ii) that the assessee had allegedly failed to comply with a Kandivali Sanstha Congress Seva Trust 4 ITA No. 561/MUM/2026 subsequent notice dated 15.12.2025 and had not furnished certain additional details, including approval from the competent authority for carrying on its stated activities. The relevant findings of the Ld. CIT (exemptions) are reproduced as under:
3.1 On perusal of the present Form 10AB and the submission filed by the applicant, it is noticed that at para no. 6, in reply of the question, "whether the trust deed contains clause that the trust is irrevocable?" The applicant has stated "Yes". However, as per the trust deed/MOA, there is no clause regarding irrevocability or dissolution/ winding up of the applicant trust/Institution, which is mandatory as per the provisions of the Income Tax Act. In the absence of an explicit irrevocability and dissolution clause, there exists no statutory safeguard to ensure that the assets of the applicant trust/institution shall be applied solely towards charitable purposes and, upon dissolution, shall be transferred to another trust or institution having similar charitable objects, as mandated under the provisions of the Income-tax Act, 1961. Such furnishing of false or incorrect information squarely falls within the ambit of a "specified violation" as defined under Explanation (g) to section 12AB(4) of the Income-tax Act, 1961, which provides as under:
"(g) the application referred to in clause (ac) of sub-section (1) of section 12A is not complete or it contains false or incorrect information.".
3. Before us, the learned counsel for the assessee contended that: (i) the alleged second notice dated 15.12.2025 was neither served upon the assessee nor reflected on the e-proceedings portal of the Department, and therefore, the finding of non-compliance is factually untenable; (ii) the said notice proceeds on an erroneous premise that the assessee was engaged in running a school and, consequently, called for approval from the competent educational authority, whereas, in fact, the assessee is engaged in activities relating to homeopathy and wellness, rendering such requirement Kandivali Sanstha Congress Seva Trust 5 ITA No. 561/MUM/2026 wholly inapplicable; and (iii) though a rectification application against the impugned order was filed on 31.01.2026, the same remains undisposed of till date.
3.1 Before us the Ld. Counsel for the assessee relied on the decision of the Hon'ble Bombay High Court in the case of Chamber of Tax Consultants Vs CIT (Exemptions) [2026] 184 taxmann.com 374 (Bombay), wherein it is held that no such condition of irrevocability or dissolution was prescribed u/s. 12AB and therefore the rejection of the registration was held to be unsustainable. Further the Ld. Counsel referred to the decision of the coordinate bench of the Tribunal in the case of Amita Memorial Trust Vs. CIT (Exemptions) in ITA No. 1262, 1263/Mum/2026 dated 30.03.2026, where in decision of Hon'ble Bombay High Court in Chamber of Tax Consultants Vs CIT (Exemptions) (supra) has been followed.
4. We have carefully considered the rival submissions and perused the material placed on record. The grievance of the assessee arises on two distinct counts.
4.1 Firstly, insofar as the alleged non-compliance of notice dated 15.12.2025 is concerned, the categorical assertion of the assessee that the said notice was neither served nor made available on the e- proceedings portal has remained unrebutted by the Revenue. Even otherwise, the nature of information sought therein--pertaining to approval for running an educational institution--proceeds on an Kandivali Sanstha Congress Seva Trust 6 ITA No. 561/MUM/2026 erroneous factual foundation, which is demonstrably inapplicable to the activities carried on by the assessee. In such circumstances, the rejection of the application on the ground of non-compliance, without ensuring proper service of notice and without affording an effective opportunity of being heard, is in clear violation of the principles of natural justice and cannot be sustained in law.
Coming to the second limb of reasoning adopted by the learned CIT (Exemptions), namely, absence of clauses relating to irrevocability and dissolution in the trust deed, we find that the issue is no longer res integra. The Hon'ble Bombay High Court in Chamber of Tax Consultants (supra) has authoritatively held that a public charitable trust is deemed to be irrevocable by operation of law and that absence of an explicit clause to that effect cannot be a ground for rejection of registration under section 12AB. The Hon'ble High Court has further deprecated the practice of treating such absence as furnishing ―false or incorrect information‖ so as to attract the mischief of ―specified violation‖. The relevant finding of the Hon'ble High Court is reproduced as under:
"45. In summary, we hold that a public charitable trust is deemed irrevocable by operation of law unless the instrument of trust expressly provides a power of revocation. The absence of an explicit irrevocability clause is not a ground for rejecting an application for registration or renewal under section 12AB of the Act. Even if the Deed provides for any revocability clause, due to operation of sections 22(3A) and 22(3B) of the MPT Act, such trusts which are registered under the MPT Act, would be irrevocable insofar as the Income-tax Act is concerned but we leave this issue open to be decided in an appropriate case. The action of Respondent No. 1 is therefore, contrary to the plain language of the statute, binding Kandivali Sanstha Congress Seva Trust 7 ITA No. 561/MUM/2026 judicial precedents of this Court, and is manifestly arbitrary. Such action, as rightly pointed out by the Petitioners, have shaken the entire ecosystem of functioning of the charitable trusts. It cannot be forgotten that the trusts are contributing to nation building by doing charitable activities and that too voluntarily and, thus, must be treated with a fair and reasonable approach by the revenue.
46. In the result, the Writ Petition is allowed. Due to the peculiar facts, as presented by the Petitioners, we pass the following order:
(i) The Respondents shall refrain from rejecting applications for registration/renewal under section 12AB solely on the ground of the absence of an explicit irrevocability and/or dissolution clause in the Trust Deed/instrument.
(ii) The Respondents shall not treat the answer "Yes" to Row 6 of Form 10AB, in the absence of any explicit clause of irrevocability, as furnishing "false or incorrect information" constituting a "specified violation". Further, this shall not be a ground to reject an application for registration under section 12AB of the Act.
(iii) The Respondents shall also amend the utility of Form 10A/10AB to allow applicants to correctly state their position regarding the irrevocability clause without being forced to make an incorrect declaration. This should be done as soon as possible.
(iv) Question number 6 in Form 10AB should be modified to read thus, "Is the trust/institution revocable?".
(v) The impugned orders passed in the case of Petitioner Nos. 3 to 8 rejecting registration under section 12AB of the Income-tax Act, are hereby quashed and set aside.
(vi) All such orders where renewal of registration under Section 12AB has been rejected on the grounds discussed above, are also hereby quashed and set aside.
(vii) Further, it is also directed that all consequential orders passed denying registration under section 80G of the Act, where such rejection is on the ground that once registration under section 12AB is denied, registration under section 80G also cannot be granted, are also hereby quashed and set aside. This would, of course, apply only to a case where registration under section 12AB has been rejected on the grounds discussed above. The above order that we pass is to avoid any multiplicity Kandivali Sanstha Congress Seva Trust 8 ITA No. 561/MUM/2026 of litigation so as to not require the trusts to challenge the orders passed by Respondent No. 1 denying registration under section 12AB and 80G of the Act on the grounds as discussed in this order.
(viii) Respondent No. 1 shall decide the applications of the Petitioners and all other similarly situated trusts, whose orders are hereby quashed, afresh and in accordance with the law and the ratio laid down in this judgment, within a period of six weeks from today. Any order so passed shall be deemed to come into effect from 1st April, 2026."
4.2 Further, the Coordinate Bench of the Tribunal in the case of Amita Memorial Trust (Supra) following the decision of the Hon'ble Bombay High Court has set aside the order passed by the CIT(Exemptions) and directed him to grant registration u/s. 12(AB) and 80G of the Act. Respectfully following the ratio laid down by the Hon'ble jurisdictional High Court (supra), which is binding upon us, we hold that the rejection of the assessee's application on the aforesaid ground is legally unsustainable.
4.3 In view of the foregoing discussion, the impugned order passed by the learned CIT (Exemptions) is set aside. The matter is restored to the file of the said authority for fresh adjudication of the assessee's application for registration under section 12AB, strictly in accordance with law and in the light of the binding judicial precedents referred to hereinabove, after affording due and effective opportunity of hearing to the assessee.
5. The ground nos. 01 and 02 of the appeal of the assessee are accordingly allowed for statistical purposes Kandivali Sanstha Congress Seva Trust 9 ITA No. 561/MUM/2026
6. In the result the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 20/04/2026.
Sd/- Sd/-
(ANIKESH BANERJEE) (OM PRAKASH KANT)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 20/04/2026
Aditi Pandare, Private Secretary.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai