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Facts
The assessee trust applied for registration under Section 12AB of the Income Tax Act. While filing Form 10AB, the assessee mistakenly selected the wrong sub-section. Additionally, the Objects clause in the MoA intended to apply funds outside India, which was initially seen as a violation of Section 11 of the Act.
Held
The Tribunal held that the mistake in selecting the sub-section was inadvertent and that the CIT(E) should have allowed the assessee to rectify it. The Tribunal also noted that the MoA had been amended to exclude foreign dealings and application of funds outside India.
Key Issues
Whether the CIT(E) was justified in rejecting the application for registration on grounds of a minor clerical error in the form and an initial violation of Section 11, which was subsequently rectified.
Sections Cited
12AB, 12A(1)(ac)(ii), 12A(1)(ac)(iii), 11
AI-generated summary — verify with the full judgment below
Before: SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL & SMT. RENU JAUHRI
सुिवधई की िधरीख / Date of Hearing 30.04.2025 घोर्णध की िधरीख/Date of Pronouncement 21.05.2025 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 (Exemption), Mumbai [hereinafter referred to as “CIT(E)”] dated 16.01.2025 for rejecting the application filed in form 10AB for registration u/s 12 AB of the Income-tax Act, 1961 [hereinafter referred to as “Act”].
A.Y. 2025-26 Sadarsh Charitable Foundation 2. The assessee has raised the following grounds of appeal:
1. On the facts and circumstances of the case and law, the Ld. Commissioner of Income Tax-(Exemption), Mumbai erred in rejecting the application filed in form 10AB without issuing show cause notice which is against the principle of natural justice and bad in law.
2. On the facts and circumstances of the case and law, the Ld. Commissioner of Income Tax-(Exemption), Mumbai erred in rejecting the application of the appellant for registration under Section 12AB of the Income Tax Act, 1961 merely on the grounds that appellant has filed an application for regularization u/s 12A(1)(ac)(ii) instead of filing u/s 12A(1)(ac)(iii) of the Income Tax Act, 1961 without considering the fact the CIT(E) has inherited power to rectify the typo error in filling application.
3. On the facts and circumstances of the case and law, the Ld. Commissioner of Income Tax-(Exemption), Mumbai erred in rejecting the application of the appellant for registration under Section 12AB of the Income Tax Act, 1961 for the reason that as per the object of the MOA, the appellant intends to apply funds outside India which is in violation of section 11 of the Income Tax Act, 1961. However, the appellant has made amendment in its memorandum of association before the Registrar of Companies and no funds will be utilized outside India.”
3. Brief facts of the case are that the assessee trust was registered on 06.12.2023 under the Companies Act. An application for provisional registration was filed on 10.06.2024, in response to which the provisional registration was granted on 17.06.2024 for the period from AY 2025-26 to AY 2027-28. Subsequently, vide application in Form 10AB dated 30.07.2024, the assessee applied for regular registration. However, while filing Form 10AB, the assessee wrongly selected the section as 12A(1)(ac)(ii) instead of the correct section viz. 12A(1)(ac)(iii) of the Act. Thereafter, a notice was issued by Ld. CIT(E) on 16.12.2024, calling for voluminous details, to which compliance was made on 30.07.2024. However, vide order dated 16.01.2025, Ld. CIT(E) rejected the assessee’s application on the following grounds: a. The assessee had mentioned the wrong section in Form 10AB.
A.Y. 2025-26 Sadarsh Charitable Foundation b. The Objects clause in the MoA which intended to apply funds ‘outside India’ was in violation of section 11 of the Act.
Aggrieved with the order of Ld. CIT(E), the assessee has filed an appeal before the Tribunal. During the course of hearing, it has been submitted by Ld. AR that mentioning the wrong sub-section was an inadvertent mistake, for which Ld. CIT(E) should have allowed the assessee to rectify the same. Further, the Objects clause of the MoA has been amended to exclude reference to international/foreign dealings and the application for funds outside India in certain clauses. In support of his claim, Ld. AR has submitted a certified copy of the resolution passed at the meeting of the Board of directors held on 23.01.2025 at its registered office. A copy of the application for the alteration of the clauses of the MoA filed by the assessee before Registrar of Companies has also been submitted.
In view of the above, Ld. AR has requested that the assessee may be given an opportunity to rectify the application, and the amended Objects clause should be taken into consideration for deciding the application afresh. Ld. DR has not objected to the said proposition.
We have heard the rival submissions and perused the material placed before us. In the interest of justice, we deem it appropriate to set aside the order of Ld. CIT(E) for a fresh decision. He is directed to allow the assessee to rectify the mistake in Form 10AB and take an amended application, if required, in the A.Y. 2025-26 Sadarsh Charitable Foundation physical mode. Further, the amended MoA should be considered while deciding the application for registration afresh after giving due opportunity to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 21.05.2025.