MELITA CHARITABLE TRUST,WARANGAL vs. INCOME TAX OFFICER, EXEMPTION WARD 1(4), HYDERABAD

ITA 2463/HYD/2026Status: DisposedITAT Hyderabad23 September 2026AY 2025-202613 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the rejection of the assessee's applications for registration under Section 12AB and approval under Section 80G solely on the technical ground of selecting the incorrect item (Item A instead of Item B) was not justified. The Tribunal noted that the assessee had admitted the mistake was bona fide and inadvertent, stemming from a lack of technical/legal knowledge regarding the new registration regime. The Tribunal found that once the provisional registration was granted based on the same application, the CIT(E) should not have rejected the applications on this technicality. The assessee should have been granted an opportunity to rectify the mistake. Therefore, the Tribunal set aside the impugned orders of the CIT(E) and remanded the matters back to the CIT(E) to reconsider the applications after allowing the assessee to rectify the errors in Form-10AB and decide them on merits, after providing a proper opportunity of hearing. The assessee was also directed to file correct applications. The ratio is that genuine charitable institutions should be given an opportunity to rectify bona fide procedural errors rather than facing outright rejection, especially when the error is admitted and the core charitable activity is not in doubt.

What were the facts?

The assessee, Melita Charitable Trust, filed applications in Form-10AB for registration under Section 12AB and approval under Section 80G of the Income Tax Act, 1961. The applications were rejected by the learned Commissioner of Income Tax (Exemption) [CIT(E)] on the grounds that they were filed under the incorrect item (Item A instead of Item B) of the relevant sub-clauses, indicating that the trust's activities had commenced prior to the application date. The assessee admitted these were inadvertent and bona fide errors due to a lack of technical/legal knowledge regarding the new registration regime. The assessee had previously claimed exemption under Section 11 for Assessment Years 2022-23 and 2023-24 without valid registration. The appeals are against the orders dated 25.06.2026 and 26.06.2026 of the CIT(E).

What were the issues?

1. Whether the rejection of the assessee's application for registration under Section 12AB (and provisional registration under Section 12A) is justified, considering the admitted inadvertent error in selecting the incorrect item (A instead of B) in Form-10AB, thereby contravening Section 12A(1)(ac)(vi)? - Assessee's contention: The error was bona fide and inadvertent due to lack of technical knowledge. The trust's charitable objects and activities are genuine, evidenced by its long existence, FCRA registration, and audited financials. The rejection is unduly harsh and disproportionate. Reliance is placed on ITAT Indore in Sirseth Sarupchand Hukam Chand Charitable Trust v. CIT(Exemption) and ITAT Mumbai in Mohanji Bharat Welfare Foundation v. CIT(Exemptions), which allowed rectification of such errors. - Revenue's contention: When an application is filed under the wrong section code, the CIT(E) has no option but to reject it. 2. Whether the rejection of the assessee's application for approval under Section 80G(5) is justified, considering the admitted inadvertent error in selecting the incorrect item (A instead of B) in Form-10AB, thereby contravening Section 80G(5)(iv)(B)? - Assessee's contention: Similar to the Section 12AB issue, the error was bona fide and inadvertent. The trust's genuineness is established. The rejection is unduly harsh. Reliance is placed on the Delhi High Court decision in DCIT(Exemption) v. Vishwa Jagriti Mission, which suggests liberal construction of cause for condoning procedural lapses for genuine charitable institutions. - Revenue's contention: Not explicitly recorded, but implied to be in line with the rejection of the Section 12AB application.

Which sections of the Income-tax Act were involved?

Section 12A,Section 12AB,Section 80G,Section 11

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G.

PER SHRI VIJAY PAL RAO, VICE PRESIDENT:

These two appeals by the assessee are directed against the two separate Orders dated 25.06.2026 and 26.06.2026 of the learned Commissioner of Income Tax- (Exemption) [in short “learned CIT(E)”], Hyderabad, whereby the application of the assessee in Form-10AB for registration u/sec.12AB as well as approval u/sec.80G of the Income Tax

The order continues below.

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