Absence of Express Irrevocability Clause Cannot Justify Rejection of Section 80G Approval

By | August 11, 2026
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Absence of Express Irrevocability Clause Cannot Justify Rejection of Section 80G Approval

Issue

Whether the CIT(E) can reject an application for regular approval under Section 80G/12AB on the ground that the trust deed lacks an express irrevocability or dissolution clause, and whether selecting “Yes” to the irrevocability question in Form 10AB constitutes furnishing false or incorrect information under Explanation (g) to Section 12AB(4).

Facts

  • Background & Application: For Assessment Year 2026-27, the assessee, a charitable society holding provisional approval under Section 80G(5) in Form 10AC, filed Form 10AB seeking regular approval under Section 80G.
  • Ground of Rejection: The CIT(E) rejected the application because the society’s trust deed or memorandum of association did not explicitly contain an express irrevocability or dissolution clause.
  • Allegation of Specified Violation: The CIT(E) observed that the assessee answered “Yes” to point No. 6 in Form 10AB regarding irrevocability. The CIT(E) characterized this as false/incorrect information, deeming it a “specified violation” under Explanation (g) to Section 12AB(4).
  • Absence of Express Power to Revoke: The CIT(E) rejected the application without making any finding that the constitutional document contained an express power of revocation, re-transfer of assets, or re-assumption of control by the settlor.

Decision

  • Invalidity of Independent Rejection Ground: The absence of an express irrevocability or dissolution clause, in the absence of any explicit power of revocation or re-transfer in the constituent documents, cannot serve as an independent ground to reject Section 80G approval.
  • No False or Incorrect Information: Selecting “Yes” at point No. 6 of Form 10AB does not constitute furnishing false or incorrect information merely because the governing deed lacks an express irrevocability clause.
  • Rejection Set Aside: The CIT(E)’s treatment of the answer as a specified violation under Explanation (g) to Section 12AB(4) was held legally unsustainable, and the issue was decided in favor of the assessee.

Key Takeaways

  • Presumption of Irrevocability: A trust/charitable entity is not automatically deemed revocable simply because an express irrevocability clause is absent, provided there is no explicit clause allowing revocation or asset re-vesting by the settlor.
  • Narrow Construction of “Specified Violation”: Answering affirmatively on statutory forms regarding irrevocability based on a bona fide position cannot be branded as “false or incorrect information” under Section 12AB(4).
  • Scope of CIT(E) Verification: Revenue authorities examining Form 10AB applications must evaluate the actual legal character and non-revocable nature of the trust rather than rejecting requests on hyper-technical omissions in constitutional drafting.
IN THE ITAT MUMBAI BENCH ‘B’
Bombay Patel Welfare Society
v.
Commissioner of Income-tax (Exemptions)*
SAKTIJIT DEY, Vice President
and MAKARAND VASANT MAHADEOKAR, Accountant Member
IT Appeal No. 1944 (Mum) OF 2026
[Assessment year 2026-27]
JULY  3, 2026
Yogesh Kamat, Ld. DR for the Respondent.
ORDER
Makarand Vasant Mahadeokar, Accountant Member. – This appeal has been preferred by the assessee against the order dated 31.12.2025 passed by the learned Commissioner of Income Tax (Exemptions), Mumbai [hereinafter referred to as “the learned CIT(E)”], in Form No. 10AD. By the impugned order, the learned CIT(E) rejected the application filed by the assessee in Form No. 10AB under clause (iii) of the first proviso to section 80G(5) of the Income-tax Act, 1961[hereinafter referred to as “the Act”], seeking regular approval under section 80G of the Act.
2. The assessee has raised the following grounds of appeal:
1. The learned CIT (Exemptions) has erred in law and on facts in rejecting the application for registration solely on technical and procedural grounds.
2. The rejection on the ground that the trust deed does not expressly contain an irrevocability or dissolution clause.
3. The learned CIT (Exemptions) has erred in ignoring the settled legal principle that curable defects in the Trust Deed cannot be a valid ground for rejection of registration when the Trust objects are charitable and genuine.
4. The learned CIT (Exemptions) has erred in not granting an opportunity to cure the defect by amendment of trust deed, which is well recognized and judicially accepted practice.
5. The Learned CIT (Exemptions) erred in rejecting the application merely on the ground that Form 10AB was filed beyond the alleged time limit, without appreciating that the Appellant already held a valid provisional approval and the delay was procedural in nature.
6. The impugned order is passed in a mechanical manner without proper appreciation of submissions and without granting reasonable opportunity to rectify defects, thereby violating principles of natural justice.
7. The appellant craves leave to add, amend, alter or delete any of the above grounds at the time of hearing.
3. The assessee is stated to be a charitable society registered under the Bombay Public Trusts Act, 1950 and engaged in carrying out charitable activities in accordance with its stated objects.
4. The assessee was granted provisional approval under section 80G(5) of the Act in Form No. 10AC vide order dated 08.03.2023. The provisional approval was valid up to the assessment year 2025-26. The assessee thereafter filed an application in Form No. 10AB on 10.06.2025 under clause (iii) of the first proviso to section 80G(5), seeking regular approval under section 80G of the Act.
5. The learned CIT(E) observed that the assessee’s application in Form No. 10AB was initially incomplete and, therefore, issued a notice dated 22.09.2025 calling for the prescribed documents and information. The assessee furnished its online response on 01.12.2025. Upon consideration thereof, the learned CIT(E) held that, having obtained provisional approval on 08.03.2023, the assessee was required to file the application for regular approval within the period prescribed under clause (iii) of the first proviso to section 80G(5). Since Form No. 10AB was filed only on 10.06.2025, the learned CIT(E) treated the application as delayed by 21 months and beyond the permissible time limit. It was also observed that the assessee had not availed the benefit of the extended period granted under CBDT Circular No. 07/2024 dated 25.04.2024.
6. The learned CIT(E) further noted that, although the assessee had stated in Form No. 10AB that the trust was irrevocable, the trust deed or memorandum of association did not contain an express irrevocability or dissolution clause. The said declaration was, therefore, treated as false or incorrect information and as a specified violation under Explanation (g) to section 12AB(4). On these grounds, namely, belated filing of Form No. 10AB, absence of an irrevocability or dissolution clause, and the alleged specified violation, the application for regular approval under section 80G was rejected. Aggrieved, the assessee preferred the present appeal before the Tribunal.
7. The learned Authorised Representative (AR) submitted that the assesseehas been carrying out charitable activities in accordance with its objects. He submitted that the assessee was granted provisional approval under section 80G(5) in Form No. 10AC dated 08.03.2023, which remained valid up to the assessment year 2025-26. The assessee thereafter filed its application in Form No. 10AB on 10.06.2025 seeking regular approval under section 80G.
8. The learned AR submitted that the assessee duly responded to the notice dated 22.09.2025 and furnished its online submissions on 01.12.2025. Notwithstanding the compliance made by the assessee, the learned CIT(E) rejected the application on technical and procedural grounds without examining the charitable character of the assessee or the genuineness of its activities.
9. It was submitted that the assessee was already holding provisional approval under section 80G(5) and that the delay in filing Form No. 10AB was procedural in nature. According to the learned AR, the application ought not to have been rejected at the threshold merely on account of the delay, particularly when no adverse finding had been recorded regarding the charitable objects or activities of the assessee.
10. As regards the absence of an express irrevocability or dissolution clause, the learned AR submitted that such absence could not constitute a valid ground for rejection of the application. Without prejudice, it was submitted that the alleged deficiency was curable and the learned CIT(E) ought to have afforded a reasonable opportunity to the assessee to rectify the same instead of rejecting the application.
11. The learned AR further submitted that the impugned order had been passed without proper appreciation of the facts and without granting an effective opportunity to cure the alleged procedural deficiencies. He, therefore, prayed that the impugned order be set aside and the matter be restored to the file of the learned CIT(E) for fresh adjudication on merits.
12. The learned Departmental Representative relied upon the impugned order passed by the learned CIT(E). However, he fairly stated that he had no objection if the matter was restored to the file of the learned CIT(E) for fresh adjudication in accordance with law after affording a reasonable opportunity of being heard to the assessee.
13. We have considered the rival submissions and perused the material available on record. The material facts are not in dispute. The assessee was granted provisional approval under section 80G(5) in Form No. 10AC dated 08.03.2023, valid up to the assessment year 2025-26. The assessee filed Form No. 10AB on 10.06.2025 seeking regular approval under section 80G. The learned CIT(E) rejected the application on the following three grounds:
i. delay of 21 months in filing Form No. 10AB;
ii. absence of an express irrevocability or dissolution clause in the trust deed or memorandum of association; and
iii. furnishing of allegedly false or incorrect information in point No. 6 of Form No. 10AB, which was treated as a specified violation under Explanation (g) to section 12AB(4).
14. It is also evident from the impugned order that the learned CIT(E) has not recorded any independent adverse finding regarding the charitable nature of the objects of the assessee or the genuineness of its activities. The application has substantially been rejected at the threshold on limitation and on the alleged defect in the constitutional document.
15. The revised registration and approval regime for charitable institutions introduced multiple forms, separate statutory timelines and approvals having different periods of validity. The successive extensions granted by the Board themselves indicate that charitable institutions faced practical difficulty in complying with the transitional requirements. Though such extensions cannot automatically be applied beyond the period prescribed therein, the circumstances which necessitated the extensions remain relevant while examining whether a procedural delay deserves to extinguish the assessee’s claim without any examination on merits.
16. In the present case, the assessee was already holding provisional approval under section 80G(5), and there is nothing in the impugned order to indicate that the delayed filing was accompanied by any deliberate suppression, contumacious conduct or attempt to obtain an unintended benefit. The rejection of the application without examination of the assessee’s substantive eligibility would, in the circumstances, result in the charitable institution being denied an adjudication on merits solely on account of a procedural lapse.
17. We are, therefore, of the considered view that the delay in filing Form No. 10AB deserves to be condoned and the application requires examination on merits in accordance with the statutory conditions governing approval under section 80G.
18. The other principal ground for rejection is that the trust deed or memorandum of association does not contain an express irrevocability or dissolution clause. The learned CIT(E) further treated the answer “Yes” furnished by the assessee in point No. 6 of Form No. 10AB as false or incorrect information constituting a specified violation under Explanation (g) to section 12AB(4).This issue now stands authoritatively considered by the Hon’ble jurisdictional High Court in Chamber of Tax Consultants v. CIT (Exemptions) (Bombay)/Writ Petition (L) No. 7587 of 2026, judgment dated 09.03.2026, neutral citation 2026:BHC-OS:6814-DB. The Hon’ble High Court has held as under that the absence of an explicit irrevocability clause is not a ground for rejecting an application for registration or renewal under section 12AB of the Act. The Hon’ble jurisdictional High Court has explained that a public charitable trust is deemed to be irrevocable by operation of law unless the instrument expressly reserves a power of revocation. The relevant test is, therefore, whether the constitutional document contains a positive clause enabling revocation or retransfer of the income or assets to the settlor. Mere absence of an express declaration that the trust is irrevocable does not render it revocable.
19. The Hon’ble High Court has also held that an assessee cannot be treated as having furnished false or incorrect information merely because it answered “Yes” to point No. 6 of Form No. 10AB in the absence of an express irrevocability clause. The online utility itself required the applicant to answer the question in that manner for the form to be uploaded. Consequently, such an answer cannot, by itself, constitute a specified violation under Explanation (g) to section 12AB(4).Although the judgment of the Hon’ble jurisdictional High Court arose in the context of registration under section 12AB, the principle laid down therein directly applies to the objection raised in the present proceedings. The impugned order itself invokes Explanation (g) to section 12AB(4) and treats the answer furnished in the same Form No. 10AB as a specified violation. Further, the legal character of a public charitable trust registered under the Maharashtra Public Trusts Act, 1950 does not vary merely because the application under consideration is for approval under section 80G.
20. Therefore, the absence of an express irrevocability or dissolution clause, without any finding that the constitutional document contains an express power of revocation, re-transfer of assets or re-assumption of control by the settlor, cannot be sustained as an independent ground for rejecting the assessee’s application. Similarly, the answer “Yes” furnished in point No. 6 of Form No. 10AB cannot be treated as false or incorrect information merely because the deed does not contain an express clause declaring the assessee to be irrevocable.
21. Since the learned CIT(E) has not examined the application on merits and the learned Departmental Representative has also expressed no objection to restoration of the matter, we consider it appropriate, in the interests of justice, to set aside the impugned order and restore the application to the file of the learned CIT(E) for fresh adjudication.
22. Accordingly, the impugned order dated 31.12.2025 is set aside and the matter is restored to the file of the learned CIT(E) with the following directions:
i. The delay in filing Form No. 10AB shall be treated as condoned.
ii. The learned CIT(E) shall examine the application for regular approval under section 80G on merits and in accordance with law.
iii. The application shall not be rejected merely because the trust deed or memorandum of association does not contain an express irrevocability or dissolution clause. The learned CIT(E) may, however, verify whether the constitutional document contains any express provision permitting revocation, re-transfer of the income or assets, or reassumption of control by the settlor or any other person.
iv. The answer “Yes” furnished by the assessee in point No. 6 of Form No. 10AB shall not, merely in the absence of an express irrevocability clause, be treated as false or incorrect information or as a specified violation under Explanation (g) to section 12AB(4).
v. The learned CIT(E) shall verify the charitable objects, genuineness of the activities and compliance with the statutory conditions prescribed under section 80G(5) and the applicable Rules.
vi. The assessee shall be afforded a reasonable and effective opportunity of being heard and of furnishing the requisite documents and explanations.
vii. The learned CIT(E) shall thereafter pass a reasoned and speaking order in accordance with law. All issues relating to the assessee’s substantive eligibility for approval under section 80G are left open for adjudication.
23. In view of the above directions, the appeal filed by the assessee is allowed for statistical purposes.