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Judgment
PER KRINWANT SAHAY AM
Appeal in this case has been filed by the assessee against the order dated 05.03.2026 passed by the CIT(E), Delhi. The Ld. CIT(E) in this order dated 05.03.2026 has given a finding for rejection of application u/s.12AB (1)(b)(ii) of the Act by holding that the trust applied funds beyond its stated objects by maintaining a temple which is specified violation under clause (a) of Explanation to Section 12AB (4); running a temple is religious and not charitable u/s.2(15).
The Ld. Counsel of the assessee argued during proceedings before us that the Ld. CIT(E) has not gone into details of charitable activities done by the trust and he has taken a very narrow view about the said provision. He has filed a written submission on this issue which is reproduced as under :-
ITA No. 5061/DEL/2026
Sunder Lal & Sons Charitable Trust (PAN: AAATS2295M) WRITTEN SUBMISSIONS ON BEHALF OF THE APPELLANT
(Synopsis for Hearing)
A. THE CORE ISSUE IN BRIEF
The Sunder Lal & Sons Charitable Trust is a 32-year-old registered charitable society whose dominant and primary activity is running a charitable hospital at Vivek Vihar, Delhi providing OPD, laboratory and free/subsidised medical treatment to the poor. It has held 12A registration continuously since 26.11.1992, vide registration certificate dated 28.10.1993 (Reg. No. 175/93-94). In addition to the hospital, the Trust maintains a Dharmshala housing a public Ram Mandir — open to all without caste or community restriction — from which it receives ‘Galla’ (temple offerings).
On Form 10AB filed on 30.09.2025 for renewal registration u/s 12A(1)(ac)(ii), the CIT(Exemption) rejected the application vide order dated 05.03.2026 (Form 10AD). The rejection proceeds on four findings, each of which is legally untenable and factually incorrect. The Appellant submits as follows.
BRIEF ABOUT THE TRUST AND ITS WORK
The Appellant Trust was registered as a society under the Societies Registration Act, XXI of 1860, vide Registration No. S-23590/1992 dated 26.11.1992, with the Registrar of Societies, Delhi. It has thus been in continuous and uninterrupted existence for over 32 years, and has held registration u/s 12A of the Income Tax Act with effect from 26.11.1992, vide registration certificate dated 28.10.1993 (Reg. No. 175/93-94). The Trust was also granted 80G approval on 19.08.2011 and, under the post-2020 registration regime, provisional registration vide Form 10AC (URN: AAATS2295ME20213) dated 21.01.2022, valid for AY 2022-23 to AY 2026-27.
Throughout this period, the Trust has carried on three streams of charitable activity in pursuance of its registered objects: (i) Medical Relief — running a charitable hospital/dispensary at Vivek Vihar, Delhi, providing OPD consultation, laboratory facilities, eye-care camps and free or subsidised medical treatment to economically weaker sections, which has at all times remained the Trust’s dominant and primary activity; (ii) Educational Aid — extending scholarships, books and prizes to poor and meritorious students; and (iii) General Welfare promoting social, cultural, sports and library activities, and assisting widows, the infirm and the elderly. It is as part of this third, general-welfare that the Trust maintains a Dharmshala, within which is situated a public Ram Mandir open to all communities without restriction, from which it receives nominal and steeply declining ‘Galla’ offerings.
It is against this 32-year, unbroken backdrop of registered and uninterrupted charitable work — and a subsisting provisional registration valid up to AY 2026-27 — that the Trust filed Form 10AB on 30.09.2025 seeking regular (5/10-year) registration u/s 12A(1)(ac)(ii). The CIT(Exemption) issued a Show Cause Notice dated 04.02.2026 raising a solitary objection concerning the Ram Mandir and the Galla receipts, to which the Trust filed a detailed reply dated 09.02.2026. The application nonetheless came to be rejected vide the impugned order dated 05.03.2026 (Form 10AD), giving rise to the present appeal. The Grounds on which the impugned order is assailed are set out below.
It bears particular emphasis that the Trust’s objects, including the Dharmshala and Ram Mandir activity, have remained unchanged since inception in 1992. The original registration certificate dated 28.10.1993 (Reg. No. 175/93-94) was granted on the very same objects, with effect from 26.11.1992, without any query, qualification or objection whatsoever regarding the temple/Dharmshala activity. Thereafter, when the registration regime was overhauled with effect from 01.04.2021 and every existing 12A-registered trust was required to migrate afresh, the Department itself examined the Trust’s objects and activities once again and granted provisional registration vide Form 10AC dated 21.01.2022, valid for AY 2022-23 to AY 2026-27 once again without raising any objection to the temple/Dharmshala activity. At no point in 32 years not at original registration in 1993, and not at the 2022 migration to the new regime did the Department ever take the view that the Dharmshala/Ram Mandir activity was inconsistent with, or beyond, the Trust’s charitable objects. The impugned order is thus the first occasion, in three decades of continuous registration on identical objects, on which this objection has ever been raised a fact which goes directly to the unreasonableness and disproportionality of the rejection. Even if the CIT(E) genuinely entertained any doubt as to whether the temple/Dharmshala activity was sufficiently reflected in the MOA, that is, at best, a curable defect of drafting — remediable by directing an amendment of the MOA and not a ground for outright refusal of registration to a 32-year-old, continuously-functioning charitable hospital trust.
B. SUBMISSION I — JURISDICTIONAL ILLEGALITY (GROUND 1)
The CIT(E) has applied the cancellation framework of Section 12AB(4) to a registration proceeding — this is ultra vires.
The statutory mandate in a registration proceeding u/s 12AB(1)(b) is limited to two inquiries: (a) genuineness of activities, and (b) compliance with other applicable laws. The CIT(E) has nevertheless recorded findings under Explanation clause (a) (‘application of income beyond objects’) and clause (e) (‘non-compliance with Section 115BBC’) — both of which are cancellation-grade findings — to refuse a renewal of registration. This is a jurisdictional transgression of the highest order.
E. SUBMISSION IV ADVERSE INFERENCE FROM MISREAD EMAIL (GROUND 4)
The email dated 16.02.2026 sought withdrawal of the 80G application only. It had nothing to do with the 12A registration proceeding. The adverse inference drawn from it is perverse.
The CIT(E) records (at para 5 of the impugned order) that the Trust “upon realizing that it has committed specified violations” sought to withdraw its ‘application’ vide email dated 16.02.2026, and treats this as a clinching admission. This is a fundamental factual error: the email sought withdrawal of the 80G application only. The 12A registration application was never sought to be withdrawn and remained live throughout. The text of the email placed on record confirms this.
The impugned order is therefore vitiated by: (a) a factual error — the 12A application was never withdrawn; (b) a perverse adverse inference drawn from a document misidentified as to its very subject-matter; (c) No opportunity was given to the Trust to explain the email before the inference was drawn;
F. SUBMISSION V — NON-SPEAKING ORDER (GROUND 5)
The Trust’s reply dated 09.02.2026 specifically cited and relied upon CIT v. Dawoodi Bohra Jamat (2014) 364 ITR 31 (SC). The impugned order does not even refer to this authority — it simply asserts that “religious activities are not charitable”.
G. SUBMISSION VI — GROSS DISPROPORTIONALITY (GROUND 6)
Outright rejection of 32-year-old charitable hospital trust on the basis of a steeply declining, negligible Galla receipt is grossly disproportionate. The minimum the CIT(E) could have done was invite MOA amendment.
H. PRAYER
In view of the above, the Appellant most respectfully prays that this Hon’ble Tribunal may be pleased to:
(a)ALLOW the appeal and SET ASIDE the impugned order dated 05.03.2026 — being without jurisdiction, contrary to binding Supreme Court authority, perverse on facts, and violative of natural justice;
(b)DIRECT the CIT(Exemption), Delhi to grant regular registration u/s 12A(1)(ac)(ii) to the Appellant Trust with effect from the date of the application.
(c)DIRECT that any cancellation proceedings specified in the impugned order stand stayed pending disposal of this appeal; and
(d)PASS such other orders as this Hon’ble Tribunal deems fit and proper.
Submitted on behalf of the Appellant Sunder Lal & Sons Charitable Trust
CA Rudra N. Dubey (AR No. 536261) Authorised Representative / Tax Counsel
E. SUBMISSION IV ADVERSE INFERENCE FROM MISREAD EMAIL (GROUND 4)
The email dated 16.02.2026 sought withdrawal of the 80G application only. It had nothing to do with the 12A registration proceeding. The adverse inference drawn from it is perverse.
The CIT(E) records (at para 5 of the impugned order) that the Trust “upon realizing that it has committed specified violations” sought to withdraw its ‘application’ vide email dated 16.02.2026, and treats this as a clinching admission. This is a fundamental factual error: the email sought withdrawal of the 80G application only. The 12A registration application was never sought to be withdrawn and remained live throughout. The text of the email placed on record confirms this.
The impugned order is therefore vitiated by: (a) a factual error — the 12A application was never withdrawn; (b) a perverse adverse inference drawn from a document misidentified as to its very subject-matter; (c) No opportunity was given to the Trust to explain the email before the inference was drawn;
F. SUBMISSION V — NON-SPEAKING ORDER (GROUND 5)
The Trust’s reply dated 09.02.2026 specifically cited and relied upon CIT v. Dawoodi Bohra Jamat (2014) 364 ITR 31 (SC). The impugned order does not even refer to this authority — it simply asserts that “religious activities are not charitable”.
G. SUBMISSION VI — GROSS DISPROPORTIONALITY (GROUND 6)
Outright rejection of 32-year-old charitable hospital trust on the basis of a steeply declining, negligible Galla receipt is grossly disproportionate. The minimum the CIT(E) could have done was invite MOA amendment.
H. PRAYER
In view of the above, the Appellant most respectfully prays that this Hon’ble Tribunal may be pleased to:
(a)ALLOW the appeal and SET ASIDE the impugned order dated 05.03.2026 — being without jurisdiction, contrary to binding Supreme Court authority, perverse on facts, and violative of natural justice;
(b)DIRECT the CIT(Exemption), Delhi to grant regular registration u/s 12A(1)(ac)(ii) to the Appellant Trust with effect from the date of the application.
(c)DIRECT that any cancellation proceedings specified in the impugned order stand stayed pending disposal of this appeal; and
(d)PASS such other orders as this Hon’ble Tribunal deems fit and proper.
Submitted on behalf of the Appellant Sunder Lal & Sons Charitable Trust
CA Rudra N. Dubey (AR No. 536261) Authorised Representative / Tax Counsel
Per contra the ld. DR relied on the order of the Ld. CIT(E).
We have considered the findings given by the CIT(E) in his order and we have also considered the arguments and written submission filed before us by the ld. Counsel of the assessee.
After going through the written submission and listening arguments of Ld. Counsel of the assessee we find that the action of Ld. CIT(E) in rejecting the application for registration u/s.12AB of the assessee trust is not justified because of the reason that the assessee trust is mainly engaged in the charitable activities for which it came into the existence. Maintaining a temple/ expenditure on religious activities has not been calculated by the CIT(E). In any case, expenditure upto 5 % of total expenditure may be allowed for such activities. Accordingly, the order passed by the Ld. CIT(E) cannot be sustained. Thus, the assessee’s appeal on this issue is allowed.
In the result, the appeal filed by the assessee is allowed.