Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ITAT) 10892

INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
Beena Pillai, JM, Jagadish, AM
Shri Swami Narayan Hari Mandir Trust Sadhana Soc Amarshi Rd Malad W Mumbai 400064 – Appellant
Versus
CIT (Exemptions) – Respondent
ITA No. (Not provided)

Advocates:
For the Appellants/Petitioners: Shri Ajay R Singh, Shri Akshya Pawar
For the Respondents: Shri Aurn Kanti Datta

A public charitable trust is deemed irrevocable by operation of law unless the trust deed expressly provides a power of revocation, so absence of an irrevocability clause is not a valid ground for rejecting registration under section 12AB.

Headnote:(A) Income-tax Act, 1961 - Sections 12A, 12AB, 12AB(4), Rule 17A(2), Explanation (g) to section 12AB(4) - Bombay Public Trust Act, 1950 - Sections 22(3A), 22(3B), 55, 36A - Indian Trusts Act, 1882 - Section 78 - Registration of charitable trust - Renewal of registration under section 12AB - Requirement of irrevocability and dissolution clause in trust deed - Specified violation - 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. The Revenue is directed to refrain from rejecting applications on this sole ground, and shall not treat an answer in Form 10AB regarding irrevocability as furnishing false or incorrect information. (Paras 45, 46 of Chamber of Tax Consultants vs. CIT)

(B) Principles of Natural Justice - Any deficiency in the application was a curable defect; denial of registration without granting a meaningful opportunity to rectify the alleged defect constitutes a clear violation of the principles of natural justice and fair play. (Para 4)

Facts of the case:
The assessee, a public charitable trust registered under section 12A of the Act, filed an application in Form No.10AB on 29/05/2025 seeking renewal of its registration under section 12AB. The Ld.CIT(E) rejected the application on the ground that the trust deed did not contain a clause relating to irrevocability or dissolution, treating it as a specified violation under Explanation (g) to section 12AB(4). Consequently, the existing registration was cancelled. The assessee appealed, contending that all documents as prescribed under Rule 17A(2) were filed, and that the sole ground of rejection was untenable based on the binding decision of the Hon’ble Bombay High Court in Chamber of Tax Consultants vs. CIT.

Findings of Court:
The impugned order suffers from a fundamental lack of application of mind. The assessee had furnished all prescribed documents, and the denial of registration without granting a meaningful opportunity to rectify any alleged defect violates principles of natural justice. The principal ground of rejection, absence of an explicit irrevocability/dissolution clause, is directly and conclusively answered by the binding decision of the Hon’ble Bombay High Court, which holds that a public charitable trust is deemed irrevocable by operation of law unless the instrument expressly provides a power of revocation. The High Court’s directions are mandatory and binding, and the action of the Ld.CIT(E) in rejecting the application on this ground reflects a misapplication of law and disregard of binding judicial directions. The allegation of furnishing incorrect information is also untenable as the High Court directed that such responses shall not be treated as a specified violation.

Issues: The main issues were whether the absence of an explicit irrevocability or dissolution clause in the trust deed constitutes a valid ground for rejecting an application for renewal of registration under section 12AB, and whether the assessee’s response in Form 10AB regarding irrevocability amounted to furnishing false or incorrect information.

Ratio Decidendi: 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. The Revenue is bound by the explicit directions of the Hon’ble Bombay High Court to refrain from rejecting applications on this ground and shall not treat an answer in Form 10AB regarding irrevocability as furnishing false or incorrect information. (Paras 45, 46) Result : Appeal allowed. The impugned order is set aside. The Ld.CIT(E) is directed to grant registration under section 12AB forthwith, in accordance with law and uninfluenced by the untenable reasoning in the impugned order. (Para 4.5)

Table of Content
1. the assessee's registration renewal application under section 12ab was rejected due to absence of an irrevocability/dissolution clause in the trust deed, leading to the appeal. (Para 1 , 2)
2. the assessee argued substantial compliance with rule 17a(2) and that the rejection basis (absence of irrevocability clause) is not a valid specified violation under section 12ab(4). (Para 3 , 4)

ORDER

Per Smt. Beena Pillai, JM:

The present appeal filed by the assessee arises out of the order dated 27/12/2025 passed by the Learned Commissioner of Income Tax (Exemptions) [hereinafter the “Ld.CIT(E)”].

2. Brief facts of the case are as under:-

The assessee is a public charitable trust formed on 7/07/1995 and was granted registration under section 12A of the Act, with effect from 01/04/1998. The said registration continued to remain in force. Pursuant to the amended provisions of the Act, the assessee filed an application in Form No.10AB on 29/05/2025 before the Ld.CIT(E) seeking renewal of its registration under section 12AB of the Act.

2.1. Ld.CIT(E) rejected the application on the ground that the trust deed/Memorandum of Association does not contain clause relating to irrevocability or dissolution, and treated the same as a specified violation within the meaning of Explanation (g) to section 12AB(4) of the Act. Consequently, the Ld.CIT(E) refused to grant approval and proceeded to cancel the existing registration of the assessee.

Aggrieved by the said action of the Ld.CIT(E), the assessee is in appeal before this Tribunal.

3. The Ld.AR submitted that, the assessee duly filed its application in Form No. 10AB along with all requisite documents as prescribed under Rule 17A(2) of the Income-tax Rules. Referring to the specific requirements enumerated in clauses (a) to (h), the Ld.AR submitted that the assessee substantially complied with all applicable conditions.

3.1. It was submitted that the assessee was created by way of a duly executed trust deed and, therefore, the requirement under clause (a) stood satisfied by furnishing a self-certified copy of the trust deed. Further, the assessee is a registered public charitable trust and had already placed on record the registration certificate issued by the competent authority, thereby complying with clause (c). The Ld.AR submitted that the assessee is not governed by the provisions of the Foreign Contribution (Regulation) Act, 2010, and therefore clause (d) is not applicable to the facts of the present case. With regard to clause (e), it was submitted that the assessee has been granted registration under section 12A w.e.f. 01/04/1998 and the copy of such registration order was duly furnished along with the application. It was further submitted that there is no order rejecting registration in the past and hence clause (f) has no application.

3.2. The Ld.AR submitted that, the assessee has been in existence for several years and had duly furnished self-certified copies of its audited financial statements for the relevant preceding years in compliance with clause (g). It was further submitted that the assessee do not carry on any business undertaking within the meaning of section 11(4) or section 11(4A) of the Act and, therefore, the requirements under clause (h) are not applicable.

3.3. The Ld.AR contended that the observation of the Ld.CIT(E) regarding the application to be incomplete is thus factually incorrect and contrary to the material placed on record. The Ld.AR further submitted that even assuming without admitting that any document was deficient, the same was a curable defect and the Ld. CIT (Exemption) ought to have granted a reasonable opportunity to rectify the same instead of proceeding to reject the application.

3.4. Without prejudice to the above, the Ld. AR submitted that the sole basis for rejection, i.e., absence of an explicit irrevocability or dissolution clause in the trust deed, cannot be treated as a specified violation within the meaning of Explanation (g) to section

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2026 Supreme(Online)(ITAT) 10892

INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)Beena Pillai, JM, Jagadish, AMShri Swami Narayan Hari Mandir Trust Sadhana Soc Amarshi Rd Malad W Mumbai 400064 – AppellantVersusCIT (Exemptions) – RespondentITA No. (Not provided)

A public charitable trust is deemed irrevocable by operation of law unless the trust deed expressly provides a power of revocation, so absence of an irrevocability clause is not a valid ground for rejecting registration under section 12AB.

INCOME TAX APPELLATE TRIBUNAL (MUMBAI BENCH)
Beena Pillai, JM, Jagadish, AM
Shri Swami Narayan Hari Mandir Trust Sadhana Soc Amarshi Rd Malad W Mumbai 400064 – Appellant
Versus
CIT (Exemptions) – Respondent
ITA No. (Not provided)