TaxTMI 
TaxTMI 
2026 (2) TMI 1178
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....The assessee was granted a provisional registration u/s 12A(1)(ac)(vi) of the Act. The assessee applied for regular registration in the prescribed form 10AB dt. 28.11.2024 5. The Ld. CIT(E) during the proceedings observed that the assessee trust failed to establish the genuineness of its activities as required under section 12AB of the Act. The observation of the ld. CIT(E) was based on the facts detailed below: i. There was a mismatch in the number of cows stated in the assessee's submissions and the number of cows reflected on the assessee's website. ii. The expenditure incurred towards fodder was disproportionately low when compared to the number of cows claimed to be maintained in the gaushala. iii. The assessee received a donation of Rs.25,00,000 from one Shri Kamalaksha R. Naik and that the assessee failed to furnish the income-tax return and ITR-V of the donor, thereby rendering the creditworthiness of the donor unverifiable. iv. The land and building used for running the gaushala were not owned by the trust and that the entire cost of acquisition and construction was borne by one of the trustees, Shri N. N. Savant, thereby raising doub....
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....d are carried out without any profit motive. 8.5 With regard to the objection relating to low fodder expenditure, the Ld. AR submitted that fodder is sourced not only through purchases but also through self-cultivation, locally available agricultural by-products and donations in kind. It was pointed out that the assessee has access to agricultural land where green fodder is cultivated, thereby reducing dependence on purchased fodder. 8.6 In respect of the donation of Rs.25,00,000 received by the trust, the Ld. AR submitted that the learned CIT(E) had questioned the creditworthiness of the donor, which is beyond the scope of proceedings under section 12AB of the Act. It was contended that identity of the donor was available on record and that verification of source of donation, if required, falls within the domain of assessment proceedings. 8.7 It was further submitted that denial of registration on the ground that the land and building are owned by a trustee is legally unsustainable, as there is no requirement under the Act that charitable activities must be carried out only on assets owned by the trust. The Ld. AR also contended that the Ld. CIT(E) failed to utilise the p....
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.... of granting registration under section 12AB of the Act, the scope of enquiry is confined to examining (i) the charitable nature of the objects of the trust and (ii) the genuineness of its activities. The provision does not empower the Commissioner to conduct a roving or detailed enquiry into the application of income, adequacy of expenditure, accumulation of funds, or the source and creditworthiness of donations. In so far as the objection regarding mismatch in the number of cows is concerned, we find merit in the explanation of the assessee that the figure mentioned on the website represents the capacity of the gaushala and not the actual number of cows housed at the relevant time. Minor inconsistencies in website disclosures, even if assumed, cannot by themselves lead to an inference that the activities of the trust are not genuine, particularly when the charitable objects and nature of activities are not disputed. 10.3 With respect to the observation of the Ld. CIT(E) that the fodder expenditure incurred by the assessee is on the lower side, we are of the considered view that the adequacy or quantum of expenditure cannot be a criterion for examining the genuineness of activi....
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.... is also pertinent to note that the assessee for the A.Y. 2024-25 has accumulated an amount of Rs. 40 Lakh which constitute 81.55 % of income or receipt towards setting up "free training facility centre for skill development for poor and needy" which strengthened the above view. 10.5 In our considered opinion, the Ld. CIT(E) has adopted a highly technical and pedantic approach by focusing on the mode of expenditure rather than evaluating the genuineness of the objectives and the growing stage of the trust's activities. The assessee's explanation that it is in the process of setting up infrastructure and mobilizing resources for larger projects has not been found to be false or untrue. 10.6 Furthermore, the law prescribes that any violation regarding the actual application of income can be examined during the assessment proceedings, and appropriate action under the relevant sections read with Section 12AB can be taken, but such potential violations cannot be pre-judged at the registration stage. 10.7 Therefore, based on the facts and circumstances of the case, applicable legal provisions, and the judicial precedents referred to above, we hereby set....
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....re, the revenue's appeal deserved to be dismissed. [Para 18]" 10.8 Further, reliance placed on the decision of the Chandigarh Bench of the Tribunal in Char Nihal Charitable Trust vs. Commissioner of Income-tax (Exemptions), Chandigarh reported in [2021] 90 ITR(T) 191 / 191 ITD 587 (Chandigarh - Trib.) is also apposite, wherein it has been held that once the objects are charitable and the genuineness of activities is not in doubt, registration cannot be refused on irrelevant considerations. 10.9 We also note the decision of the Delhi Bench of the Tribunal in Ideal Relief Trust vs. Commissioner of Income-tax (Exemptions) reported in [2025] 213 ITD 303 (Delhi - Trib.), wherein it has been held that questioning the source of donations is not relevant for the purpose of granting registration under section 12AB of the Act. The relevant extracts are reproduced here for the ready reference: "10. As to the genuineness of donations allegedly not proved, though ld. Counsel has submitted that donations were received online and therefore, it was not possible to maintain complete details / PAN, which is also not the requirement of section 115BBC of the Act for religious & char....