ITAT Clarifies Scope of Section 12AB: Cancellation Requires Proof of Non-Genuine or Non-Charitable Activities

Case: Raya Naik Memorial Gowshala Trust v. Commissioner of Income-tax (Exemptions)

Court: ITAT Bangalore

ITA No.: 1920 (BANG.) of 2025

Date of Order: January 27th, 2026

Brief Facts:

• The assessee was a charitable trust registered under section 12A/12AB of the Income-tax Act, 1961 and engaged in running a gowshala for protection, maintenance and care of cows, along with related charitable activities.

• The Commissioner (Exemptions) invoked the powers under section 12AB to cancel the registration of the trust on the ground that the activities were allegedly not being carried out in accordance with its stated objects.

• It was alleged that certain receipts and activities indicated deviation from charitable purposes.

• Aggrieved by the cancellation of registration, the assessee preferred an appeal before the ITAT Bangalore.

Observations of the Tribunal:

The Tribunal examined the scope of section 12AB relating to cancellation of registration and observed that registration can be cancelled only if:

• The activities of the trust are not genuine; or

• The activities are not being carried out in accordance with its objects.

The Tribunal noted that:

• The primary object of the trust was protection and maintenance of cows, which squarely falls within the scope of “charitable purpose”.

• The Commissioner had not brought any cogent material on record to demonstrate that the activities were non-genuine.

• Mere generation of receipts or incidental surplus does not automatically lead to the conclusion that activities are non-charitable.

• For cancellation of registration, there must be clear evidence of deviation from objects or non-genuine conduct, which was absent in the present case.

• The Tribunal emphasised that registration proceedings are distinct from assessment proceedings, and alleged violations affecting exemption should be examined during assessment rather than by cancelling registration mechanically.

Accordingly, the Tribunal found that the conditions necessary for invoking section 12AB cancellation powers were not satisfied.

Hence, the ITAT held that the Commissioner (Exemptions) was not justified in cancelling the registration of the assessee-trust under section 12AB in the absence of evidence showing that the activities were non-genuine or contrary to its objects. The order cancelling registration was set aside, and the registration of the trust was restored.