ITAT Delhi Clarifies: 12AB Registration Cannot Be Denied Merely for Missing Irrevocability or Dissolution Clauses

1. Background of the Dispute

In Suraj Devi Charitable Trust Vs CIT (ITAT Delhi), the Delhi Bench of the Income Tax Appellate Tribunal examined whether an application for Section 12AB registration and consequential Section 80G approval could lawfully be refused solely because the trust deed did not contain:

  • an explicit irrevocability clause, and
  • a specific dissolution clause dealing with the fate of assets on winding up.

The CIT(E) had passed two separate orders dated 12.03.2026:

  • One rejecting the trust’s application in Form 10AB for registration under Section 12A(1)(ac)(ii) / Section 12AB; and
  • Another declining approval under Section 80G(5)(ii) of the Income Tax Act 1961.

Both refusals stemmed from the same perceived defect: the omission of express irrevocability and dissolution clauses in the trust deed. The assessee challenged these orders before the ITAT, Delhi through ITA No. 6151/Del/2026 (registration) and ITA No. 6150/Del/2026 (80G).

Since the factual and legal issues overlapped, the Tribunal disposed of both appeals by a common order, treating ITA No. 6151/Del/2026 as the lead appeal.

2. Facts: Application, Notices and Grounds of Rejection

2.1 Existing registration and fresh application under new regime

The assessee, Suraj Devi Charitable Trust, was already enjoying:

  • registration under Section 12A; and
  • approval under Section 80G,

which had been granted long before the new Section 12AB regime came into force.

To align with the amended provisions, the assessee filed an application in Form 10AB for registration under Section 12A(1)(ac)(ii). This was a revalidation/transition step under the new framework, not a de novo application for a new trust.

2.2 Queries raised by CIT(E)

Upon receipt of the Form 10AB application, the CIT(E) issued:

  • an initial notice dated 06.01.2026 asking for documents and clarifications; and
  • a subsequent show cause notice dated 16.02.2026 reiterating and refining his requirements.

The following details were specifically called for:

  1. Clarification on deed clauses

    • The CIT(E) flagged the absence of ‘IRREVOCABLE’ & ‘DISSOLUTION (how its assets will be on dissolution)’ clauses in the trust deed and treated this as a deficiency.

  2. Financials

    • Audited financial statements for FY 2024–25 along with all annexures and schedules.

  3. Earlier approvals

    • Copies of registration/approval granted under Section 12A/Section 80G prior to 01.04.2021`.

2.3 Assessee’s response to show cause notice

In its reply dated 19.02.2026, the assessee:

  • submitted the audited accounts for FY 2024–25;
  • produced copies of earlier Section 12A and Section 80G approvals; and
  • categorically contended that merely not having explicit irrevocability and dissolution clauses in the deed is not a ground in law to reject registration.

The assessee emphasised that:

  • it had been carrying out charitable activities consistently for several years;
  • there had been no modification in its objects or manner of functioning;
  • its activities benefited the general public, including weaker and marginalised sections; and
  • its income and surplus, if any, were entirely applied for charitable purposes in line with Section 2(15) of the Act.

2.4 Reasoning adopted by CIT(E)

Despite receiving the documents, the CIT(E) recorded that:

  • the trust deed suffered from “absence of irrevocable clause in the Trust Deed of incorporation”;
  • the assessee was “advised to remove the said deficiency”, but this was not done; and
  • because of this, he could not complete “necessary verification in support of genuineness of the activities, charitable objects, commencement of the activities”.

On that basis, he:

  • rejected the application in Form 10AB for registration under Section 12A(1)(ac)(ii); and
  • granted the assessee liberty to file a fresh application after inserting the desired clauses.

For the 80G application, the CIT(E) simply held that in the absence of registration under Section 12A(1)(ac)(ii), the request for approval under Section 80G(5)(ii) was not maintainable and therefore rejected it.

3. Grounds Raised Before the Tribunal

3.1 Grounds in ITA No. 6151/Del/2026 (Registration under Section 12A/12AB)

The assessee essentially argued that:

  • the CIT(E) erred in law and on facts by rejecting registration only because the trust deed did not have explicit irrevocable and dissolution clauses;
  • such a condition is not prescribed anywhere in the Act, including Section 12AB; and
  • in any event, in light of the judgment in Chamber of Tax Consultants vs. CIT(E) [2026] 184 Taxmann.com 374 (Bombay), refusal of registration on this sole ground was unsustainable and required to be reversed.

3.2 Grounds in ITA No.