The Jaipur Bench of the Income Tax Appellate Tribunal (ITAT) has given a charitable trust another opportunity to seek registration under Section 12AB and approval under Section 80G of the Income Tax Act after it produced documents showing progress in its registration under the Rajasthan Public Trust Act, 1959.

The bench of Kuldip Singh (Judicial Member) and Annapurna Gupta (Accountant Member) remanded both applications to the Commissioner of Income Tax (Exemption), Jaipur, for a fresh decision and noted that the trust had brought documents on record indicating that the state registration process was complete and that registration was being issued.

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The Tribunal allowed both appeals for statistical purposes. It did not itself grant registration or approval; those applications will be reconsidered by the Commissioner.

The appellant/assessee had filed applications in Form 10AB seeking registration under Section 12A(1)(ac)(ii) and approval under Section 80G(5)(ii) of the Income Tax Act, 1961.

The Commissioner rejected both applications through orders dated March 12, 2026. The Tribunal recorded that the applications were declined because the trust was not registered under the Rajasthan Public Trust Act.

The trust challenged the two orders before the ITAT, arguing that the Commissioner had rejected its applications without finding that its objects were non-charitable or that its activities were non-genuine.

The trust contended that non-registration under the Rajasthan Public Trust Act was a procedural issue and could not, by itself, be treated as a conclusive ground for denying income tax registration.

It argued that compliance with another law could be examined under Section 12AB only to the extent that the compliance was material to achieving the trust’s objects. According to the trust, the Commissioner had not established how the absence of state registration had a material bearing on its charitable objects.

The trust also submitted that, even if state registration was required, the deficiency was capable of being cured. It maintained that it should have been given a reasonable opportunity to provide evidence of its application or registration before the Devasthan Department.

The trust further argued that a deficiency letter dated January 18, 2026 required compliance by January 23, 2026, leaving it a short period to address a matter involving registration under another law. It said there was no allegation of misuse of funds, diversion of income, personal benefit to trustees or non-charitable activity.

In its separate appeal concerning Section 80G, the trust contended that the Commissioner had rejected its application on a consequential basis because its Section 12AB application had been rejected.

It argued that its eligibility for Section 80G approval had not been independently examined and that there was no adverse finding that its activities were non-genuine or contrary to its stated objects.

The trust sought reconsideration of the approval application in light of the outcome of its appeal against the denial of Section 12AB registration.

The Tribunal examined the records and noted that the trust had subsequently placed documents before it relating to its registration under the Rajasthan Public Trust Act.

These included an application to the Assistant Commissioner, Devasthan Vibhag, Bikaner, a notice issued by the ACIT, an application dated July 19, 2024 and a newspaper notice.

The bench observed that the documents showed that the process for issuing registration under the state law was complete and that registration was being issued.

In these circumstances, the Tribunal held that the trust should be given another opportunity. It sent the matter back to the Commissioner to decide the applications afresh upon production of the Rajasthan Public Trust Act registration.

The order turned on the progress shown in this trust’s state registration process. The Tribunal did not decide as a general rule whether the absence of such registration can, by itself, justify rejection of every Section 12AB or Section 80G application.

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