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Facts
Karthika Nair Smarak Samithi, holding provisional registrations under Section 12A and 80G, applied for regular registration/approval in Form 10AB. The CIT(E) rejected these applications due to a technical error, as the assessee applied under clauses meant for renewal of regular registration, which were not applicable for a provisionally registered trust. The assessee contended that this was an inadvertent human error and a violation of natural justice as no opportunity for rectification was given.
Held
The Tribunal found that the CIT(E) rejected the applications solely on a technical ground arising from a bonafide human error in selecting the wrong sub-clause. It held that such an error should not be a ground for denying registration/approval. The Tribunal set aside the CIT(E)'s orders and remanded the cases, directing the CIT(E) to allow the assessee to rectify the application forms and then decide the applications on their merits after providing an opportunity of hearing.
Key Issues
Whether applications for registration/approval under sections 12AB and 80G can be rejected solely due to a technical error in citing the wrong sub-clause of the relevant provision, and if an opportunity for rectification should be provided.
Sections Cited
12AB, 80G, 12A, 12A(1)(ac)(ii), 12A(1)(ac)(iii), 80G(5)
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Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR
Date of Hearing 30.07.2025 Date of Pronouncement 10.09.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The above captioned appeals have been filed by the assessee against the orders of even date as passed by the Learned Commissioner of Income- tax (Exemptions), Mumbai [hereinafter referred to as “CIT(E)”] pertaining to the orders passed u/s. 12AB and 80G of the Income-tax Act, 1961 [hereinafter referred to as “Act”]for the Assessment Year [A.Y.] 2025-26.
A.Y. 2025-26 Karthika Nair Smarak Samithi, Mumbai Since the issues are interlinked and also the fact that appeals were heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity.
2. The grounds of appeal are as under:-
(A.Y. 2025-26) 1. On the facts and circumstances of the case and the law, the impugned order issued in Form 10AD denying registration u/s 12AB is arbitrary and bad in law.
2. The order of the CIT (E) was unreasonable and against the principles of natural justice considering the fact that no reasonable opportunity was given to the assessee in the matter due to technical error.
3. The Order of the Commissioner of Income-Tax (Exemption) was not correct in rejecting the application filed for renewal of registration due to inadvertent human error in submitting the application form.
4. For these and other grounds to be adduced at the time of hearing, it is prayed that the Hon. Tribunal may be pleased to quash the order denying registration under Section 12AB of the Act to appellant Trust, and direct grant of such registration with effect from the date of such provisional registration of the appellant Trust.
According to the order, the assessee applicant filed application in Form 10AB seeking registration under section 12AB of the Act. It was found that it had been granted Provisional Registration under section 12A of the Act in Form 10AC valid from AYs 2023-24 to AY 2025-26. As the trust was registered, provisions of section 12A(1)(ac)(iii) were A.Y. 2025-26 Karthika Nair Smarak Samithi, Mumbai applicable to it. The ld.CIT observed that on perusal of the Form 10AB filed, it was observed that it had applied under section 12A(1)(ac)(ii) which was valid only for trusts already having regular registration for five years and seeking renewal of regular registration which was due to expire. The applicant, having provisional registration for three years, did not qualify to make the application u/s 12A(1)(ac)(ii).Thus, the application for registration in Form 10AB filed by the applicant was not allowable on the ground of application filed under wrong section and the application was rejected.
In this regard, the ld.AR has contented that the ld.CIT was not justified in rejecting the application for registration on technical deficiency and that too without according any opportunity of hearing to the assessee, thus violating the principles of natural justice. The ld.DR relied on the impugned order.
On the facts and circumstances of the case and the law, the impugned order issued in Form 10AD denying registration u/s 80G is arbitrary and bad in law.
The order of the CIT (E) was unreasonable and against the principles of natural justice considering the fact that no reasonable opportunity was given to the assessee in the matter due to technical error.
A.Y. 2025-26 Karthika Nair Smarak Samithi, Mumbai 3. The Order of the Commissioner of Income-Tax (Exemption) was not correct in rejecting the application filed for renewal of registration due to inadvertent human error in submitting the application form.
4. For these and other grounds to be adduced at the time of hearing, it is prayed that the Hon. Tribunal may be pleased to quash the order denying registration under Section 80G of the Act to appellant Trust, and direct grant of such registration with effect from the date of such provisional registration of the appellant Trust.
According to the order, the assessee applicant filed application in Form 10AB under clause (ii) of 1st proviso to 80G(5) seeking approval under section 80G of the Act. It was found that the applicant had been granted provisional approval under Section 80G of the Act in Form 10AC valid from 12.05.2022 to A.Y. 2025-26. As the trust was provisionally registered, clause (iii) of 1st Proviso to section 80G(5) were applicable to it. On perusal of the Form 10AB filed, it was observed that it had applied under Clause(ii) of first proviso to sub-section (5) of section 80G which was valid only for trusts already having regular approval for five years and is seeking renewal of regular approval which is due to expire. The applicant, having provisional registration for three years, did not qualify to make the application under clause (ii) of 1st proviso to 80G(5).Thus, the application for registration in Form 10AB filed by the applicant was not allowable on the ground of application A.Y. 2025-26 Karthika Nair Smarak Samithi, Mumbai filed under wrong section. Accordingly, the application in Form 10AB was rejected.
On careful consideration of all relevant facts, we find that the ld.CIT (E) has not doubted or questioned the other requirements and conditions satisfied by the assessee but the application of the assessee was dismissed only on a technical ground.Having heard the parties and perused the material available on record and rival submissions, it is apparent that the ld.CIT has rejected the application filed u/s 12A and 80G of the Act, simply on mentioning the wrong sub clause of relevant provision applicable to the case. We are of the considered opinion that a bonafide mistake cannot be a ground for denial of registration u/s 12AB as well as approval u/s 80G(5) of the Act. Hence, we set aside the impugned orders of the CIT (E) and matters are remanded to him with the direction to permit the assessee to rectify the mistake in the application forms and then consider the applications of the assessee for grant of registration u/s 12AB and 80G of the Act by passing an order on merits of the matter after giving an opportunity of hearing to the assessee.
Before parting, we may make it clear that our decision to restore the matter back to the file of the ld. CIT(E) shall in no way be A.Y. 2025-26 Karthika Nair Smarak Samithi, Mumbai construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by the ld. CIT(E) independently in accordance with law.
In the result, both the appeals are allowed for statistical purposes. Order pronounced in the open court on 10/09/2025.