Application for Section 12AB registration cannot be rejected

Application for Section 12AB registration cannot be rejected without recording a reasoned finding on specified violations.

Issue

Whether the Commissioner (Exemptions) is justified in rejecting a trust’s application for fresh registration under section 12AB on the grounds that its activities benefit a specific religion, without recording a clear, specific, and categorical finding of a “specified violation” under section 12AB(4).

Facts

The assessee-trust, which is engaged in religious and educational activities through Madrasas and associated institutions, filed an application for fresh registration under section 12AB.
The Commissioner (Exemptions) rejected the application after reviewing the trust’s received donations and bank transactions.
The rejection was based on the view that the trust’s activities were confined to the propagation of a particular religion or community, invoking the restrictions of section 13(1)(b).
The assessee-trust countered by furnishing detailed explanations supported by documentary evidence during the proceedings.
The Commissioner (Exemptions) did not record any definitive finding on whether the bank transactions violated any provision of the Income-tax Act or any other law currently in force.

Decision

The order rejecting the registration under section 12AB is set aside, and the matter is remanded back to the Commissioner (Exemptions) for fresh adjudication.
The tax authority failed to record a clear, specific, or categorical finding demonstrating how the trust committed any “specified violation” within the meaning of section 12AB(4) and its accompanying Explanation.
Because the Commissioner failed to provide a reasoned finding on the existence of statutory violations, a blanket rejection cannot legally stand and must be re-evaluated in accordance with the law.

Key Takeaways

Reasoned Order is Mandatory: Rejection of a charitable or religious trust’s registration under section 12AB requires strict adherence to statutory parameters. The Revenue cannot deny registration based on generalized assumptions about religious propagation without proving a “specified violation.”
Burden of Proof on the Revenue for Violations: While evaluating a registration application, if the Commissioner intends to invoke restrictive provisions like section 13(1)(b), they must clearly document and prove how the trust’s transactions or objectives violate the law, rather than ignoring the documentary evidence filed by the assessee.

IN THE ITAT CHANDIGARH BENCH ‘A’

Dawat-e-lslami Hind (Jammu)Jamiatul Madina Faizan E Makhdoom Ashraf

Commissioner of Income-tax, Exemption

Laliet Kumar, Judicial Member
and Manoj Kumar Aggarwal, Accountant Member

IT APPEAL No.448 (Chd) OF 2026
[Assessment years 2022-23 to 2026-27]

JUNE 1, 2026

Dharminder Kumar, CA for the Appellant. Manav Bansal, CIT DR

ORDER

Laliet Kumar, Judicial Member.- The present appeal has been preferred by the assessee against the order dated 27.12.2025 passed by the Ld. Commissioner of Income Tax (Exemptions), Chandigarh [in short ‘the CIT(E)’] under section 12AB of the Income Tax Act, 1961 whereby the application filed by the assessee seeking registration/approval under section 12AB of the Act came to be rejected.

2. In the present appeal Assessee has raised following grounds:

That Ld. CIT(E) erred to reject the application of the appellant for renewal of registration under section 12A(1)(ac)(ii) of the Act in view of the provisions of section 13(1)(b) of the Act, which are applicable in case where a charitable trust applies its income for the benefit of any particular religious community or caste. Since appellant is a religious-cum-charitable trust and does not work for any specific religious community, but for providing the teachings of Islam to the general public as a whole, hence provisions of section 13(1)(b) of the Act are inapplicable, accordingly, rejection of application for aforesaid reason is illegal and without jurisdiction. Further, evaluation under the provisions of section 13(1)(b) of the Act is not applicable at the time of grant of registration under section 12A r.w. section 12AB of the Act, but is applicable at the time of determination of income of a religious / charitable trust, in collaboration with section 11 and section 12 of the Act.

That Ld. CIT(E) has not mentioned single observation in respect of wrongful application of income by the appellant, i.e. activities of the trust were in accordance with the objects of the trust. None of the expenses incurred in fulfilling the objects of the appellant was doubted, hence Ld. CIT(E) is not justified to mention in the order that activities of the trust seem to be suspicious and non-genuine. Accordingly, rejection of application for aforesaid reason is illegal and without jurisdiction.

That the objects of the appellant clearly provide to make payment of expenses or give assistance by donation or otherwise to other trust, society or other organization for spreading the Islamic education or promotion and dissemination of spiritual teaching of Islam and also provided to receive donation and assistance from other trust, society or other organization for fulfilling the objects of the trust. Further, various persons give donation by cash, UPI, banking channel or other mode to the appellant for fulfilling the objects of the trust. Hence Ld. CIT(E) erred to reject the registration application filed under section 12A(1)(ac)(ii) of the Act for procedural and other reasons.

That the appellant reserves right to modify and / or add any other ground or grounds of appeal as the circumstances of the case might require or justify.

3. Briefly stated, the facts of the case are that the assessee trust filed an application seeking registration/approval under section 12AB of the Act. During the course of proceedings, the Ld. CIT(E) issued detailed notices calling upon the assessee to furnish various details including the trust deed, details of commencement of activities, audited financial statements, income and expenditure account, details of donations received, copies of returns of income, bank statements, details of charitable/religious activities carried out, documentary evidences in support thereof and explanation regarding various expenditures reflected in the accounts.

4. In response thereto, the assessee furnished detailed replies along with voluminous documentary evidences explaining that it was engaged in religious and educational activities through Madrasas and other associated institutions and that the activities were being carried out in accordance with the objects of the trust. The assessee also furnished copies of audited accounts, details of donations, photographs and details of expenditure incurred towards religious and educational activities. It was further explained that the trust was carrying out religious-cum-charitable activities, and the donations received from the public and other trusts were utilised towards fulfilment of its stated objects.

5. However, the Ld. CIT(E), after examining the material placed on record, observed that the assessee was receiving substantial donations from public and other trusts and that huge expenditure had been incurred under various heads including travelling expenses, conveyance expenses, salary expenses, legal and professional charges and expenditure relating to Madrasas and associated activities. The Ld. CIT(E) further referred to certain bank transactions and receipts received by the assessee and formed a view that the activities of the assessee appeared to be confined towards propagation of a particular religion/community. The Ld. CIT(E), placing reliance upon the provisions of section 13(1)(b) of the Act and certain judicial precedents, concluded that the assessee was not eligible for registration under section 12AB of the Act and accordingly rejected the application filed by the assessee.

6. Against the order of the Ld. CIT(E) the assessee preferred an appeal before the Tribunal.

7. Before us, the Ld. AR for the assessee vehemently assailed the findings recorded by the Ld. CIT(E). The Ld. AR submitted that the assessee had furnished complete details before the Ld. CIT(E), including audited financial statements, income and expenditure accounts, details of activities, documentary evidence, photographs and bank statements and there was no finding recorded by the Ld. CIT(E) that the activities of the assessee were non-genuine or not carried out in accordance with the objects of the trust. It was contended that the Ld. CIT(E) had travelled beyond the limited scope of enquiry permissible under section 12AB of the Act.

8. The ld. AR has drawn our attention to page 28 of the Paper Book wherein the Aims & Objects of the assessee Trust were mentioned as under :

” AIMS AND OBJECTS

To serve the people of India through the expositions, propagation and implementation of the spiritual teaching of Islam.

To establish, found, build, assist, set up, maintain, manage, administer and run Masajid, Madaris, Jamiat, Darul Ifta, Religious Education Center/Institution, Online Institutions and research Institutions with or without hostel facilities and a like other institutions to propagate Islam in accordance with Quran and Sunnah.

To Set up/run schools, hospitals, shelters, homes, orphanages and such other institutions to achieve the object of the organization.

To promote education including English Medium and Other Medium Islamic School System and promote modern education in Madarsas by teaching English, Mathematics, Science and other subjects and conducting exams through Recognized Institute or Body.

To circulate, publish Islamic Books and other Islamic Literatures.

To hold periodical Islamic and educational Conventions, Seminar etc. at any city within India for the promulgation and attainment of the objects of the Trust.

To establish Reading Rooms, Community Centers, Libraries Reference/Lending and publishing Islamic Literatures.

To make arrangements for providing housing accommodations and other staying facilities to the students, preachers, volunteers, promulgator etc. within India.

Awarding scholarship and giving stipends to students engaged in Islamic Studies.

10.

To organize and manage ways and means for eradication of Social and Religious evils from the Society.

11.

To establish rehabilitation centers for differently abled children to help them being functional part of society Free of Charge or at subsidized charges.

12.

To Work in the health sector through medical camps to achieve the object of the organization.

13.

To arrange meals and medical facilities by arranging and sponsoring such activities and educate people of cleanliness and to promote cleanliness in the society.

14.

Managing and serving humans during natural disasters like floods, Earthquake, Draught.

15.

To organize tree plantation activities and inculcates the sense of response the young students and people across India.

16.

To support the deserving families for meeting their basic necessities relating to food, medical, hospitalization, temporary shelter provisions, wedding arrangements etc.

17.

To make arrangements for holding Lectures, Seminars, Debates and Symposium on different Islamic topics.”

9. Thereafter, the Ld. AR has drawn our attention to page 30 of the Paper Book where in clause (18), it was mentioned as under :

” 18. For achieving the above objects, the Trust shall do all such lawful acts and things as are incidental or conducive to the attainment of the above objects of the company including: –

(a)

To receive voluntary contributions from any person or persons from India or outside India, after complying with the statutory formalities, by way of donation, gifts or in any other manner and to hold the same upon Trust for the objects set forth herein.

(b)

To raise funds through activities and sources including, but not limited to, events, programs, charity shows, donations, corpus and recurring grants from government and other sources, one-off contributions from individuals, corporate and other organizations, a percentage or fixed amount as contribution.

(c)

To support NGOs who are working with the same or similar object by sharing any donations we may have received in cash or kind.

(d)

To work with other NGOs in all possible manner to achieve the object of the Organization.

(e)

The Trustees shall have powers to sell/ Transfer/Exchange and dispose of any movable and immovable property (s) belong to the trust and / or in its possession which shall be in the interest of the trust with the mutual consent of the Board of Trustees of the trust.

(f)

To purchase, acquire, receive, acknowledge and accept any land, property, premises and / or building meant for the purpose of Masajid, madaris, Jamiats, Darul Ifta, Schools and English Medium Schools etc. to accept and acquire any donation, gift or Waqf in respect of any movable and immovable property (s) etc. and to manage, use, utilize and supervise such properties under their own control and / or to establish / create committee / Sub-Committee for the smooth running of the same.

(g)

To Co-operate and Co-ordinate with any Government, Semi-Government and any other such office / agencies for achieving the aforementioned aims and objects.

(h)

The Trust shall be run on non-commercial & non-political basis.

(i)

The Trust can give Islamic Education on TV and electronic media. It shall disseminate the non-political and progressive Religious teachings for social, education and religious upliftment of common people of the Country, through any medium whatsoever, including dissemination through broadcasting and distribution facilities / services of satellite or Cable or internet or any other medium. It may enter into agreements with various persons legal and / or natural, for the purposes of disseminating the said teachings and shall apply and obtain permissions / license from the relevant authorities / Ministries, etc. including the license for Channel and for distribution there of subject to the applicable Legal and regulatory regime.

(j)

The Trust will not carry out any activities with the intention of earning profit and will perform with service motive only.”

10. Thereafter, the Ld. AR has drawn our attention to page 86 of the Paper Book and he has more particularly drawn our attention to third row wherein the activities were mentioned as ‘Religious’ and against Column No.5, ‘Aims and Objects’ it was mentioned as ‘Religious Education’. The Ld. AR had drawn our attention to page 139 and 140 which is the note of tangible outcomes/social impart of the activities of the assessee, which are as under :

–Note on Tangible Outcomes / Social Impact of Religious Expenditure

Name of Trust: DAWAT-E-ISLAMI-HIND (JAMMU)

PAN: AADTD5014G

Subject: Tangible Outcomes and Social Impact Achieved from Religious Activities

Our Trust is a religious organization dedicated to transforming lives through Islamic education, moral reformation, and social upliftment. The funds and donations received are wholly applied towards activities that result in visible, positive change in individuals and society. The tangible outcomes and impact of our Religious expenditure include the following:

1. Religious Education and Value Transformation

– Over 800 students are being provided free education in Aalim and Ilifz courses.

– These students are groomed with strong moral and spiritual values, and they will contribute as scholars, imams, and teachers within the Society.

– Students have already been trained not only in religious knowledge but also in discipline, character building, and leadership.

2. Free Meal Services

– Two meals a day (lunch and dinner) are served free of cost to all students and staff (approx. 700 students and 100 staff), ensuring nourishment and health support.

3. Reformative & Social Awareness Initiatives

– Thousands of Muslims have already been encouraged and guided to establish regular prayers.

– Hundreds of Disobedient children have already been counselled through religious Counseling to respect and serve their parents

– Many Alcoholics and addicts have already reformed to gave up their bad habits through religious counselling and support.

– Individuals involved in misconduct, bullying, or criminal tendencies are reformed through Islamic education and moral guidance. Many such individuals have transformed into responsible and respectful members of society.

– Regular Islamic lectures, awareness sessions, and workshops have already been conducted conducted to spread moral awareness and bring positive lifestyle changes.

4. Encouragement and Support to Specially Abled Persons

– The Trust provided moral and emotional support to too many specially abled individuals, including those who are mute, deaf, or blind through religious education & Counseling.

– Through religious education and motivational guidance, they were encouraged to live with dignity and faith, helping them gain self-confidence and acceptance in society.

– The environment of the Trust fostered inclusion, empathy, and spiritual strength for these individuals.

1. Community Impact

– Hundreds of families in nearby areas experienced social change due to our religious and spirituality, teachings and services.

– Many dropouts and underprivileged children rejoined the educational stream through our religious institution setup.

– Our Trust acted guiding center for the community in matters of ethics, social behavior, and faith-based reforms.

Conclusion

The expenditure incurred by the Trust is fully dedicated to religious, educational, social, and moral upliftment of society. The outcomes are tangible, visible, and measurable through the transformation of individuals into responsible, spiritual, and ethical citizens.”

11. The Ld. AR has drawn our attention to page 117 and 130 of the Paper Book wherein the ‘Financial Income & Expenditure Account’ for the year ending as on 31.03.2023 is available. It was submitted that the anonymous donation received by the assessee was Rs. 39,55,745/-, the donation from other Trusts was Rs. 1,06,18,000/-, and the general donation was Rs. 1,82,56,242/- and the bank interest was Rs. 88,909/-. On the expenditure side, as against the ‘Salary Expenses’, an amount of Rs.1,98,88,577/- was mentioned and ‘Building Rent’ was mentioned as Rs.13,21,666/-.

12. At the stage, the Bench has enquired from the Ld. AR as to whether the aspect of the expenses incurred by the assessee and the mode of payment made by the assessee as salary to its staff were verified by the Ld. CIT (E) or not ?

13. In reply to that, Ld. AR has fairly submitted that this aspect was not examined nor any question was posed to the assessee during the proceedings before the lower authorities. Though it was submitted that the details, if any would be submitted by the assessee to the concerned authority, as and when the same was called for.

14. Before that, Ld. AR had drawn our attention to the various provisions of the Income Tax Act and he has drawn our attention to Section 12A(1)(ac) of the Act which provides the machinery provision for grant of regard to the Charitable or Religious Trust, as envisaged u/s 11 of the Income Tax Act. The relevant provision of Section 12A(1)(ac) reads as under :

12A(1)

The provision of Section 11 and 12 shall not apply in relation to the income of any Trust or Institution unless the following conditions are fulfilled :

(a) x x

aa) x x

ab) x x

ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution,

(i) where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first day of April, 2021;

(ii) where the trust or institution is registered under section 12AB and the period of the said registration is due to expire, at least six months prior to expiry of the said period;

(iii) where the trust or institution has been provisionally registered under section 12AB, at least six months prior to expiry of period of the provisional registration or within six months of commencement of its activities, whichever is earlier;

(iv) where registration of the trust or institution has become inoperative due to the first proviso to sub-section (7) of section 11, at least six months prior to the commencement of the assessment year from which the said registration is sought to be made operative;

(v) where the trust or institution has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, within a period of thirty days from the date of the said adoption or modification;

(vi) in any other case, where activities of the trust or institution have –

(A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought;

(B) commenced and no income or part thereof of the said trustor institution has been excluded from the total income on account of applicability of subclause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of Section 10, or Section 11 or Section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities

and such trust or institution is registered under Section 12AB;]

15. The Ld. AR has also drawn our attention to the procedure being followed for fresh registration u/s 12AB of the Act and our at was drawn to Section 12AB of the Act which are to the following effect :

12AB. [Procedure for fresh registration.

12AB.(1)The Principal Commissioner or Commissioner, on receipt of an application made under clause (ac) of sub-section (1) of section 12A, shall,—

(a) where the application is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years;

(b) where the application is made under sub-clause (ii) or sub-clause (iii) or subclause (iv) or sub-clause (v) or item (B) of sub-clause (vi) of the said clause,-

(i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary in order to satisfy himself about—

(A) the genuineness of activities of the trust or institution; and

(B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects;

(ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A) and compliance of the requirements under item (B), of sub-clause (i),—

(A) pass an order in writing registering the trust or institution for a period of five years; or

(B) if he is not so satisfied, pass an order in writing-

(I) in a case referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (v) of clause (ac) of sub-section (1) of Section 12A rejecting such application and also cancelling its registration ;

(II) in a case referred to in sub-clause (iv) or in item (B) of sub-clause (vi) of subsection (1) of Section 12A, rejecting such application,

after affording a reasonable opportunity of being heard;

(c) where the application is made under item (A) of sub-clause (vi) of the said clause or the application is made under sub-clause (vi) of the said clause, as it stood immediately before its amendment vide the Finance Act, 2023, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the trust or institution.

x x x

16. It was submitted by the Ld. AR that at the time of registration, what is required to be examined by the Ld. Pr. CIT/Commissioner is the genuineness of the activities of the Trust or Institution and the compliance of such requirement of any other law for the time being in force by the Trusts/Institutions, as are material for purposes of achieving its objects. It was submitted that in the impugned order, the Ld. CIT (E) has merely referred to various violations and in para 3.3, 3.4 and 3.5, having reference to the various incomes and expenditures, has mentioned in paragraph 4 that the assessee has received the donation of Rs.56,18,000/- from Dawat-E-Islami Hind and said Dawat-E-Islami Hind has received donations from individuals to the amount of Rs.100/- to Rs.500/- and therefore, the Ld. CIT (E) has concluded that the activities of the Trust seems to be suspicious and non-genuine. Further, in para 4.1, 4.2 and 4.2.1, the Ld. CIT (E) has concluded that the Trust is created for implementation of teachings of the Islam only which is in violation of Section 13(1)(a)(b) of the Act and therefore, the Trust is not entitled to any registration and the application for registration has been rejected.

17. The Ld. AR further submitted that the provisions of section 13(1)(b) of the Act pertain to denial of exemption at the stage of assessment and the same could not be invoked as the sole basis for rejection of registration under section 12AB of the Act. It was argued that the assessee is a religious-cum-charitable institution and is not carrying out activities exclusively for the benefit of any particular religious community or caste. The Ld. AR submitted that no categorical finding had been recorded by the Ld. CIT(E) regarding any specific violation either under the provisions of the Income Tax Act or under any other law while making payments or carrying out the activities of the trust. It was further submitted that the financial transactions and expenditures referred to in the impugned order were duly supported by documentary evidences and were incurred towards fulfillment of the stated objects of the trust. The Ld. AR also argued that various legal grounds specifically raised by the assessee including the scope and ambit of section 12AB(1)(b) read with section 12AB(4) of the Act and the Explanation defining “specified violation” had not been properly examined by the Ld. CIT(E).

18. Per contra, the Ld. DR strongly relied upon the impugned order passed by the Ld. CIT(E). The Ld. DR submitted that the Ld. CIT(E), after detailed verification of the material available on record, had rightly concluded that the activities of the assessee were directed towards propagation of a particular religion/community and therefore hit by the provisions of section 13(1)(b) of the Act. It was submitted that the Ld. CIT(E) had examined the receipts, expenditure pattern, bank accounts and activities of the assessee in detail and thereafter arrived at a conclusion that the activities of the assessee were not eligible for registration under section 12AB of the Act. The Ld. DR accordingly prayed that the order passed by the Ld. CIT(E) deserved to be upheld.

19. We have heard the rival submissions, carefully considered the orders of the authorities below and perused the entire material placed on record, including the impugned order passed by the Ld. CIT(E), the replies and documentary evidence furnished by the assessee from time to time, and the grounds urged before us. Upon a consideration of the same, we find that the application of the assessee seeking registration under section 12AB of the Act has been rejected principally on the basis of certain observations recorded by the Ld. CIT(E) with regard to the applicability of section 13(1)(b) of the Act and certain financial transactions reflected in the books of account of the assessee.

20. On a careful perusal of the impugned order, it emerges that although the assessee had furnished detailed explanations supported by documentary evidence in response to the queries raised during the course of proceedings, the Ld. CIT(E) has not recorded any clear, specific and categorical finding demonstrating how the assessee had committed any “specified violation” within the meaning of section 12AB(4) of the Act read with the Explanation appended thereto. We further find that while making various observations regarding the receipts, donations and expenditure reflected in the accounts of the assessee, no definitive finding has been recorded as to whether any of such transactions resulted in violation of any provision of the Income-tax Act, 1961, or of any other law for the time being in force. In the absence of such findings, the conclusion reached by the Ld. CIT(E) lacks the requisite statutory foundation contemplated under the provisions governing cancellation or refusal of registration under section 12AB of the Act.

21. We also find considerable force in the contention advanced by the Ld. AR that the powers exercisable under section 12AB of the Act are circumscribed by the statutory framework contained in section 12AB(1)(b) read with section 12AB(4) of the Act. The Explanation to section 12AB(4) specifically enumerates and defines the circumstances constituting a “specified violation”. Therefore, before drawing any adverse inference against an assessee or rejecting its claim for registration, the competent authority is required to examine the facts of the case within the parameters prescribed under the statute and record a definite and reasoned finding as to the existence of one or more of the specified violations contemplated therein.

22. In the present case, the impugned order does not clearly indicate which particular specified violation, as envisaged under section 12AB(4) of the Act read with the Explanation thereto, has allegedly been committed by the assessee. The Ld. CIT(E), in paragraphs 4.1 and 4.2 of the impugned order, has observed that cash deposits were made in the HDFC Bank account and were subsequently transferred to an Axis Bank account. The Ld. CIT(E) has further observed that substantial donations were received through UPI and other digital modes, including donations from certain trusts and institutions. However, beyond recording such factual observations, no finding has been rendered demonstrating how such transactions constitute a violation falling within the ambit of section 12AB(4) of the Act or any other provision of law. We further find that various legal and factual contentions raised by the assessee, including the applicability of section 13(1)(b) of the Act at the stage of grant or continuation of registration, the nature and genuineness of the activities carried out by the assessee, and the evidentiary material furnished in support thereof, have not been comprehensively examined or adjudicated by the Ld. CIT(E). Such issues, being germane to the controversy involved, required a specific consideration and reasoned adjudication before arriving at any adverse conclusion against the assessee.

23. Having regard to the entirety of the facts and circumstances of the case, and upon careful consideration of the rival submissions and material available on record, we are of the considered opinion that the issues involved require a fresh and comprehensive examination at the end of the Ld. CIT(E). Accordingly, in the interest of justice, equity and fair play, the impugned order passed by the Ld. CIT(E) is set aside and the matter is restored to his file for de novo adjudication in accordance with law.

24. While undertaking the fresh examination, the Ld. CIT(E) shall, inter alia, carry out the following inquiries and record specific findings thereon:

(a)

The financial statements of the assessee trust, the nature and character of its receipts, and the source, genuineness and circumstances relating to donations received from other trust(s)/institution(s);

(b)

The aims and objects of the donor trust(s) and ascertain whether the objects pursued by the assessee trust are identical, similar, ancillary or otherwise connected with those of the donor trust(s);

(c)

The application and utilization of funds by the assessee trust, the nature of activities actually carried out, and whether any expenditure has been incurred in contravention of any provision of the Income-tax Act, 1961, including but not limited to Sections 36, 37 and 40A of the Act. The Ld. CIT(E) shall further examine whether any violation of Section 13 of the Act is attracted on the facts of the case. Such examination assumes significance in view of the fact that, out of the total expenditure of Rs.3,29,18,897/-, an amount of Rs.1,98,88,577/- has been claimed towards salary expenditure;

(d)

The purpose, necessity and justification of the aforesaid salary expenditure and whether the same was incurred wholly and exclusively for carrying out the charitable objects of the trust or, directly or indirectly, for the benefit of any particular religious community, caste, group or specified person;

(e)

Upon completion of the aforesaid exercise, the Ld. CIT(E) shall record clear, categorical and reasoned findings as to whether any violation of the provisions of the Income-tax Act, 1961, or of any other law for the time being in force, has been committed by the assessee in the course of carrying out its activities or while making the impugned payments.

25. The Ld. CIT(E) shall adjudicate the matter strictly within the framework of Section 12AB(1)(b) read with Section 12AB(4) of the Act and the Explanation thereto defining the expression “specified violation”. The Ld. CIT(E) shall also consider and adjudicate all legal and factual contentions raised by the assessee before the Tribunal as well as before the authorities below, and thereafter pass a comprehensive, reasoned and speaking order in accordance with law. Needless to observe, adequate and effective opportunity of hearing shall be afforded to the assessee, and all evidences and submissions that may be placed on record shall be duly considered before arriving at any conclusion.

26. In the result, the appeal of the assessee is allowed for statistical purposes.