DIVINE LIGHT FOUNDATION,PATNA vs. COMMISSIONER OF INCOME TAX, EXEMPTION, PATNA, PATNA

PDF · subscribers
ITA 520/PAT/2025Status: DisposedITAT Patna22 April 2026AY 2025-268 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the CIT(E) erred in rejecting the application based on an inconsistency in the Articles of Association, as the Memorandum of Association prevails in such cases. The Tribunal also noted that the winding-up clause in the Articles of Association had since been corrected.

What were the facts?

The assessee, Divine Light Foundation, filed an application for regular approval under Section 12AB of the Income Tax Act. The Commissioner of Income Tax (Exemption) rejected the application, citing inconsistency in the winding-up clause of the Memorandum of Association.

What were the issues?

Whether the rejection of an application for registration under Section 12AB was justified based on an inconsistency in the Articles of Association when the Memorandum of Association prevails and the inconsistency was subsequently rectified.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PATNA BENCH, PATNA

For Respondent: Smt. Rinku Singh, CIT(DR)
Hearing: 02.04.2026Pronounced: 22.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA (VIRTUAL HEARING AT KOLKATA) SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER SHRI SONJOY SARMA, JUDICIAL MEMBER

ITA Nos. 520 & 521/PAT/2025 Assessment Year : 2025-2026

Divine Light Foundation, Vs. Commissioner of Manorath, P-6, ITC Colony, Income Tax Vidyapuri, Kankarbagh, (Exemption), Patna, Patna - 800020 Bihar - 800001 [PAN: AAJCD2403J]

APPELLANT RESPONDENT

Assessee by : Sh. Deba Jyoti Roy, AR. Revenue by : Smt. Rinku Singh, CIT(DR)

Date of hearing : 02.04.2026 Date of Pronouncement : 22.04.2026

O R D E R PER LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

These appeals filed by the assessee against the separate order passed by the Ld. Commissioner of Income Tax (Exemption), Patna [hereinafter referred to as “the Ld. CIT(E)] all dated 24.09.2025, DIN & Notice No. ITBA/EXM/F/EXM45/2025-26/1081128563(1) and ITBA/EXM/F/EXM45/2025-26/1081128718(1). These appeals were

2 ITA Nos. 520 & 521/PAT/2025 Divine Light Foundation heard together and the issues are common, accordingly we are passing a common order, for the sake of convenience. we would first take up appeal ITA No. 520/PAT/2025. The decision will apply mutatis mutandis in other appeal too.

2.

The assessee has raised following grounds of appeal in ITA No. 520/Kol/2025:

“1. For that the grounds of appeal hereto are without prejudice to each other. 2. For that the order dated in Form 10AD passed under Section 12AB of the Income Tax Act, 1961(hereinafter called 'The Act') by the Commissioner of Income Tax, Exemption, Patna (hereinafter called the Adjudicating Authority), is bad both in law and on facts 3. For that the Appellant was not given sufficient opportunity to put forth their contentions. 4. For that order of the Id. Adjudicating Authority is based on presumption, surmises and conjectures. 5. For that order of the Id. Adjudicating Authority is wholly perverse in as much as the contrary to and in variance with generally established norms and procedures in reaching to decision of rejection of application u/s 12AB 6. For that the Id. Adjudicating Authority has erred in not serving a notice of hearing to the Appellant on grounds shown for rejection. 7. For that the Id. Adjudicating Authority has erred in rejecting the application filed for grant of regular approval under sub clause(iii) of clause (ac) of sub section (1) of Section 12A. 8. For that the facts show that the Id Adjudicating Authority has stated that in the current case the 'Winding up Clause in Memorandum of Association is not consistent with the objects of the Company'. 9. For that facts of Documents submitted with Department Show that the claim, about inconsistency in Memorandum of Association of the Company, is not true. 10. For that Documents submitted with the Department clearly shows that the Winding up Clause in Memorandum of Association is fully consistent with Object Clause of Memorandum of Association of the Company. Hence the claim is unfair.

3 ITA Nos. 520 & 521/PAT/2025 Divine Light Foundation 11. For that the Appellant found out that the Winding up Clause of Articles of Association of the Company was inconsistent with Object Clause of Memorandum of Association. 12. For that however, it is an established fact that whenever any provision in Articles of Association in inconsistent with the related provision of the Memorandum of Association, the provision set out in Memorandum of Association would prevail. Hence, rejection, of Form 10AB on ground of inconsistency in 'Winding up clause in Articles of Association', is unfair. 13. For that, the Id. Adjudicating Authority has erred in cancelling the provisional registration granted u/s 12(1)(ac) (vi) in Form 10AC dated 22-06- 2022 with URN-AAJCD2403JE20221 for AY 2023-24 ΤΟ 2025-26 14. For that, the Appellant hereby inform that the concerned Winding up Clause in the Articles of Association has since been corrected by the Share holders' approval as well as the Registrar of Companies, Ministry of Corporate Affairs has given the requisite approval on 10/10/2025. The approval copy has been enclosed. 15. For that the Appellant had informed the Department about the time being taken for effecting the necessary correction in Articles of Association and obtaining the approval from Ministry of Corporate Affairs, which was beyond Appellant's control. 16. For that the Id. Adjudicating Authority without giving any opportunity for hearing or without requisitioning the documentary evidence, rejected the application in Form 10AB and also cancelled the provisional registration granted by the Department through URN-AAJCD2403JE20221 dated 22-06- 2022. 17. For that Appellant shall place any other point/points at the time of hearing of the appeal.”

2.1 The assessee has raised following grounds of appeal in ITA No. 521/Kol/2025:

“1. For that the grounds of appeal hereto are without prejudice to each other. 2. For that the order dated in Form 10AD passed under Section 12AB of the Income Tax Act, 1961(hereinafter called 'The Act') by the Commissioner of Income Tax, Exemption, Patna (hereinafter called the Adjudicating Authority), is bad both in law and on facts 3. For that the Appellant was not given sufficient opportunity to put forth their contentions. 4. For that order of the Id. Adjudicating Authority is based on presumption, surmises and conjectures.

4 ITA Nos. 520 & 521/PAT/2025 Divine Light Foundation 5. For that order of the Id. Adjudicating Authority is wholly perverse in as much as the contrary to and in variance with generally established norms and procedures in reaching to decision of rejection of application u/s 12AB 6. For that the Id. Adjudicating Authority has erred in not serving a notice of hearing to the Appellant on grounds shown for rejection. 7. For that the Id. Adjudicating Authority has erred in rejecting the application filed for grant of regular approval under sub clause(iii) of clause (ac) of sub section (1) of Section 12A. 8. For that the facts show that the Id Adjudicating Authority has stated that in the current case the 'Winding up Clause in Memorandum of Association is not consistent with the objects of the Company'. 9. For that facts of Documents submitted with Department Show that the claim, about inconsistency in Memorandum of Association of the Company, is not true. 10. For that Documents submitted with the Department clearly shows that the Winding up Clause in Memorandum of Association is fully consistent with Object Clause of Memorandum of Association of the Company. Hence the claim is unfair. 11. For that the Appellant found out that the Winding up Clause of Articles of Association of the Company was inconsistent with Object Clause of Memorandum of Association. 12. For that however, it is an established fact that whenever any provision in Articles of Association in inconsistent with the related provision of the Memorandum of Association, the provision set out in Memorandum of Association would prevail. Hence, rejection, of Form 10AB on ground of inconsistency in 'Winding up clause in Articles of Association', is unfair. 13. For that, the Id. Adjudicating Authority has erred in cancelling the provisional registration granted u/s 12(1)(ac) (vi) in Form 10AC dated 22-06- 2022 with URN-AAJCD2403JE20221 for AY 2023-24 ΤΟ 2025-26 14. For that, the Appellant hereby inform that the concerned Winding up Clause in the Articles of Association has since been corrected by the Share holders' approval as well as the Registrar of Companies, Ministry of Corporate Affairs has given the requisite approval on 10/10/2025. The approval copy has been enclosed. 15. For that the Appellant had informed the Department about the time being taken for effecting the necessary correction in Articles of Association and obtaining the approval from Ministry of Corporate Affairs, which was beyond Appellant's control. 16. For that the Id. Adjudicating Authority without giving any opportunity for hearing or without requisitioning the documentary evidence, rejected the application in Form 10AB and also cancelled the provisional registration granted by the Department through URN-AAJCD2403JE20221 dated 22-06- 2022.

5 ITA Nos. 520 & 521/PAT/2025 Divine Light Foundation 17. For that Appellant shall place any other point/points at the time of hearing of the appeal.”

ITA No. 520/Kol/2025

3.

Brief facts of the case are that the ld. CIT(E) rejecting the application filed by the assessee for registration u/s 12A of the Act and rejected the provisional registration granted u/s 12AC(1)(ac)(vi) of the Act. During the course of proceedings before the Ld. CIT(E), the Ld. CIT(E) observed that there is inconsistency in binding clause in SERIAL No. (i) of 69 of Memorandum of Association clause contents is as under:

“Going through the clause “Winding Up in serial no. (i) of 69 of Memorandum of Association it says that if company shall be wound up, the liquidator may, with the sanction of a special resolution of the company and any other sanction required by the Act, divide amongst the members, in specie or kind, the whole or any part of the assets of the company, whether they shall consist of property of the same kind or not”. 4. In this regard, the assessee was asked to file correct MOA and further notice was issued to the assessee. In this regard, the assessee furnished reply on 04.09.2025 submitted as under:

“The applicant has submitted that the process of rectifying the inconsistencies in its Articles of Association has been undertaken and the corrected Articles have been submitted for approval before the Ministry of Corporate Affairs. It has further been stated that receipt of such approval will take some time, and accordingly, the applicant has requested for grant of further time.” 5. But till date of passing of order, the assessee could not furnish the revised Articles of Association approved by the ROC, Ministry of Corporate Affairs. Accordingly, the application filed by the assessee in Form No. 10AB dated 01.01.2025 was rejected.

6 ITA Nos. 520 & 521/PAT/2025 Divine Light Foundation 6. Aggrieved from the above order of Ld. CIT(E), the assessee filed appeal before the ITAT.

7.

The Ld. assessee counsel submitted that the amended Articles of Association has been approved by the Registrar of Company, Ministry of Corporate Affairs on 10.10.2025 and the Ld. CIT(E) passed the order on 24.09.2025 without waiting of the request as made by the assessee and the assessee had informed to the department about the time being taken for effective and the necessary correction inadequate of assessment and obtaining the approval from Ministry of Corporate Affairs which was beyond the control of the assessee and requested that the matter may be remanded back to the Ld. CIT(E) for fresh examination.

8.

The Ld. DR relied on the order of Ld. CIT(E).

9.

Considering the rival submissions and perusing the entire material available on record and the orders of authorities below. During the process of registration, the Ld. CIT(E) observed that serial number (i) of 69 of adequate assessment regarding binding of clause (noted supra) is not in accordance with the provision of section 11 of the Act and in this regard, assessee applied for amended adequate of assessment with the ROC, Ministry of Company Affairs and it was involved to the income tax department, the order was passed by the Ld. CIT(E) on 24.09.2025 and ROC, Ministry of Corporate Affairs have given the requisite approval on 10.10.2025 which is the later date for passing the rejection order.

7 ITA Nos. 520 & 521/PAT/2025 Divine Light Foundation Therefore, considering the facts of the case and interests of justice, we are remitting this issue back to the file of Ld. CIT(E) for denovo consideration and decide the issue as per law. Needless to say that reasonable opportunity of being heard to be given to the assessee and assessee is directed to co-operate with the department and not seek unnecessary adjournment s for early disposal of the case. In case of failure no second leniency shall be granted to the assessee.

ITA No. 521/Kol/2025

10.

Since the facts and issues involved in these appeals are identical, except difference in figures or calculations, therefore, our findings/decision given above in ITA No. 520/Kol/2025 will, mutatis mutandis, apply to ITA No.521/Kol/2025 as well and consequently the appeals are partly allowed for statistical purposes.

11.

In the result, both the appeals of the assessee are partly allowed for statistical purposes.

Order pronounced on 22.04.2026.

Sd/- Sd/- (Sonjoy Sarma) (Laxmi Prasad Sahu) Judicial Member Accountant Member Dated: 22.04.2026 AK, Sr. P.S.

8 ITA Nos. 520 & 521/PAT/2025 Divine Light Foundation Copy of the order forwarded to: 1. Appellant 2. Respondent 3. Pr. CIT 4. CIT(A) 5. CIT(DR)

//True copy// By order

Assistant Registrar, Kolkata Benches

More judgments on Section 12AB

All 5,972 judgments and leading authorities on Section 12AB →

Recent GST High Court judgments

Search GST case law →