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Facts
The assessee filed an application for registration under Section 12AB of the Income-tax Act, 1961, which was rejected by the CIT(E) due to incomplete documentation. The assessee filed a fresh application, which was also rejected. The assessee then filed an appeal against the latest rejection.
Held
The Tribunal condoned the delay in filing the appeal, finding it to be bonafide. The Tribunal set aside the order of the CIT(E) and directed the CIT(E) to decide the application afresh after providing the assessee an opportunity for compliance.
Key Issues
Whether the CIT(E) erred in rejecting the application for registration under Section 12AB solely on procedural grounds without affording adequate opportunity to the assessee.
Sections Cited
12AB, 143(3)
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Before: SMT. BEENA PILLAI & SMT. RENU JAUHRI
स िवाई की िारीख / Date of Hearing 26.06.2025 घोर्णा की िारीख/Date of Pronouncement 30.06.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Exemptions), Mumbai [hereinafter referred to as “CIT(E)”] dated 21.03.2023 for rejecting the registration u/s. 12AB of the Income-tax Act, 1961 [hereinafter referred to as “Act”].
A.Y. 2024-25 IEEE Mumbai Section Welfare Association 2. The assessee has raised the following grounds of appeal:
1. That the Learned Commissioner of Income Tax (Exemptions) (hereinafter referred to as "Ld. CIT(E)"] erred in law and on facts in rejecting the application for regularization of registration of the Appellant Trust under the Income-tax Act, 1961 (hereinafter referred to as "the Act").
2. That the Ld. CIT(E) erred in rejecting the application on the ground that the Appellant Trust had earlier filed an application in Form 10AB, which was rejected on account of alleged non-compliance with the Act, without appreciating that the rejection was not due to a delay in filing or incorrect section code.
3. That the Ld. CIT(E) failed to consider that the rejection of the previous application was not on substantive grounds affecting eligibility but merely procedural, and hence, the Trust should not be made ineligible for re- application.
4. That the Ld. CIT(E) wrongly applied Circular No. 07/2024 dated 25.04.2024 to reject the fresh application, despite the fact that the said Circular does not explicitly bar re-application in cases where the initial rejection was due to non-compliance rather than incorrect filing under the wrong section or belated submission.
5. That the rejection order is bad in law and against the principles of natural justice, as the Appellant Trust was not given a fair opportunity to rectify any procedural deficiencies in the earlier application.
6. That the Ld. CIT(E) erred in not appreciating that the purpose of Section 12AB is to grant registration to genuine charitable trusts, and a purely procedural rejection should not lead to permanent ineligibility for re- application.
7. That the rejection of the application is arbitrary and defeats the very objective of the Income-tax Act, which seeks to promote charitable activities by granting exemption to genuine trusts.
8. That the Appellant Trust reserves the right to add, alter, amend, or withdraw any grounds of appeal before or at the time of the hearing.”
3. Brief facts of the case are that the assessee had filed an application in Form 10AB seeking registration u/s 12AB of the Act, which was rejected by the Ld. CIT(E) vide his order dated 21.03.2023 merely on the ground that the application was incomplete and not accompanied by the requisite documents.
A.Y. 2024-25 IEEE Mumbai Section Welfare Association However, instead of challenging the order dated 21.03.2023, the assessee filed another application u/s 12AB, which was also dismissed vide order dated 22.05.2024.
The assessee had preferred an appeal against the rejection order dated 22.05.2024 before the Tribunal, which vide order dated 30.05.2025, was dismissed as withdrawn for the reason that the assessee was required to challenge the original order dated 21.03.2023. Accordingly, the assessee has filed the present appeal before the Tribunal, along with a request for condonation of delay in filing the appeal.
In view of above facts and circumstances explained by the assessee, we are of the view that the delay was not intentional or deliberate, but was caused due to a misunderstanding created due to the advice received with regard to the grievance raised by the assessee on the Income Tax Department’s Portal. In accordance thereof, the assessee filed a fresh application, which was also rejected, whereas he should have filed an appeal against the order dated 21.03.2023. In view of the above, we hereby condone the Bonafide delay in filing the present appeal.
On merits, it is seen that in response to the notices issued by the Ld. CIT(E), submissions were filed by the assessee on 15.02.2023. However, in response to the next show cause notice issued on 13.03.23, the assessee could A.Y. 2024-25 IEEE Mumbai Section Welfare Association not make the requisite compliance within the short time available and the application was rejected by Ld. CIT(E) vide order dated 21.03.2023 in view of the statutory limitation to decide the same on or before 31.03.2023.
In the interest of justice, we hereby set aside the order of Ld. CIT(E) with the directions to decide the application afresh after giving due opportunity to the assessee to make the requisite compliance.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 30.06.2025.