ITAT Chandigarh Sends Back Section 12AB Registration Case for Fresh Review Where Trust Deed Was Initially Incomplete

Background of the Dispute

The Chandigarh Bench of the Income Tax Appellate Tribunal in Thakur Ram Singh Smriti Nyas Vs ITO (ITAT Chandigarh) examined a cluster of four appeals concerning denial of registration under Section 12AB of the Income Tax Act 1961. All four appeals stemmed from orders of the CIT(E) rejecting applications filed in Form No.10AB by two charitable trusts.

Since the core controversy was identical in each case, the Tribunal analysed the facts in ITA No.697/CHD/2026 relating to Thakur Ram Singh Smriti Nyas, Himachal Pradesh, and applied its decision uniformly to the remaining connected matters.

The assessee had sought registration under Section 12AB by filing Form No.10AB on **24.09.2025underSection 12A(1)(ac)(ii)**. While examining the request, the CIT(E)` scrutinised the Trust Deed, financial statements and written responses furnished during the proceedings. The key issues raised were:

  • The Trust Deed submitted was allegedly incomplete.
  • Expenditure on charitable activities was perceived to be disproportionately low compared to total receipts.
  • Surplus balances before depreciation were unusually high over multiple years.

These factors led the CIT(E) to doubt the genuineness of the assessee’s activities and reject the registration application.

Statutory Framework: Registration Under Section 12AB

Scope of Examination by CIT(E)

The Tribunal reiterated that under Section 12AB, when an existing charitable institution applies for registration, the CIT(E) must examine:

  • The objects of the trust or institution;
  • The genuineness of its activities;
  • The application of income towards its stated objects; and
  • Compliance with statutory requirements under the Income Tax Act 1961.

For an existing assessee seeking registration, the authority is entitled to look beyond the Trust Deed and examine how income is actually being utilised, whether activities align with declared charitable objects, and whether statutory conditions are being adhered to.

Findings of CIT(E): Incomplete Trust Deed and Low Charitable Spend

Show-Cause Notice on Incomplete Trust Deed

During scrutiny, the CIT(E) formed the view that the Trust Deed provided was not a complete copy of the registered governing instrument.