Tribunal cannot direct registration under Section 12AB and 80G without inquiry into genuineness of trust activities.

The Respondent Trust, which held provisional registration, applied for final registration under Section 12A(1)(ac)(iii) and Section 80G of the Income Tax Act, 1961.

The Commissioner of Income Tax (Exemption) rejected the application on June 26, 2024, noting that the Respondent failed to produce relevant records or respond to specific queries raised on February 22, 2024, and March 8, 2024.

On appeal, the Income Tax Appellate Tribunal (ITAT) set aside the rejection and directed the Commissioner to grant the registration, observing that the Trust had produced documents before the Tribunal showing its activities were genuine.

The Revenue appealed this direction to the High Court.

1. Whether, in the facts of the present case, the Tribunal was justified in directing the CIT (Exemption) to grant registration under Section 12AB and Section 80G of the Act of 1961 or it should have remanded the matter back to the CIT (Exemption)?

The court primarily applied Sections 12A, 12AB, and 80G of the Income Tax Act, 1961.

Under Section 12AB(1)(b), when an institution transitions from provisional to five-year registration, the Commissioner is statutorily mandated to call for documents and conduct inquiries to satisfy himself regarding the genuineness of the activities and compliance with other laws.

Regarding Section 80G, the court emphasized that because it provides tax deductions to donors, the "genuineness of the trust’s activities is certainly a mandatory requirement" and not merely a relevant consideration.

The Court found the Tribunal’s approach ex-facie erroneous because it bypassed the statutory inquiry process required for final registration.

While the Tribunal relied on its own precedent (*Mata Parvati Educational and Innovative Society*), the High Court distinguished that case, noting it applied to initial provisional registrations where activities may not have commenced; here, the Trust had been provisionally registered for over two years, making an inquiry into actual activities imperative.

Since the Respondent had "withheld" information from the Commissioner, the Commissioner’s initial rejection was justified as he could not grant registration without scrutiny.

The Tribunal erred by issuing a "sweeping direction" to grant registration based on documents produced for the first time before it, instead of remanding the matter for the Commissioner to perform his statutory duty of verification under Section 12AB(1)(b).

The Court set aside the ITAT order dated February 12, 2025, and remanded the matter to the Commissioner to decide the application afresh.

The Commissioner was directed to inquire into the genuineness of the Trust's activities within the parameters of the Act, preferably within three months.

Moving forward, the Respondent Trust is directed to place the order before the Commissioner for the completion of the exercise.