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Facts
The assessee, an educational trust, applied for permanent registration under section 12AB of the Income Tax Act. Their application in Form 10AB was rejected by the CIT(Exemptions) because the assessee mistakenly mentioned section 12A(1)(ac)(ii) instead of 12A(1)(ac)(iii).
Held
The Tribunal held that the wrong mention of the section code was a bonafide mistake. The CIT(Exemptions) should have provided an opportunity for rectification and personal hearing before rejecting the application, especially since the trust's genuineness and activities were not in doubt.
Key Issues
Whether rejection of registration application for a bonafide mistake in mentioning a section code, without affording an opportunity for rectification or hearing, is justified.
Sections Cited
12AB, 12A(1)(ac)(ii), 12A(1)(ac)(iii), 12A(1)(ac)(i), 12AB(1)(a)
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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K.
Assessment year : 2025-26 Shree Durga Parameshwari The Commissioner of Educational Trust, Income Tax (Exemptions), 198, Balagangadhar Nagar, Vs. Bengaluru. Kengunte, Mallathahalli, Bangalore – 560 056. PAN: AAYTS 0074L APPELLANT RESPONDENT Appellant by : Shri G. Venkatesh, CA Respondent by : Shri Muthu Shankar, CIT(DR)(ITAT), Bengaluru. Date of hearing : 05.08.2025 Date of Pronouncement : 20.08.2025 O R D E R
Per Soundararajan K, Judicial Member
This appeal filed by the assessee is challenging the order dated 28.11.2024 of the ld. CIT(Exemptions) in which the registration sought for u/s. 12AB of the Income Tax Act, 1961 was rejected on the following grounds:-
“1. The impugned order of the Commissioner of Income Tax (Exemptions) Bengaluru in Form No. 10AD dated 28.11.2024 rejecting the application in Form 10AB dated 29.06.2024 is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant's case.
The learned Commissioner of Income Tax (Exemptions) is not justified in passing the impugned order in gross violation of principles of natural justice without affording the appellant-Trust opportunity of being heard and also in not affording the opportunity of rectifying the Bonafide defect / mistake in the e-filing of the application or for re-filing of the application for re-registration on the facts and circumstances of the case.
The learned Commissioner of Income Tax (Exemptions) erred in arbitrarily rejecting of the application of the appellant Trust for re- registration/renewal u/s 12AB of the Act on the facts and circumstances of the case.
The learned Commissioner of Income Tax (Exemptions) failed to appreciate that the appellant-Trust being granted registration u/s 12A of the Act after the insertion of section 12AB w.e.f 01.06.2020, the appellant-Trust has bonafide entertained the belief that it is only required to apply for renewal on lapse of 5 years of its registration.
5. The learned Commissioner of Income Tax (Exemptions) has completely disregarded the fact that the appellant is eligible for automatic re-registration for five years u/s 12AB(1)(a) r.w.s 12A(1)(ac)(1) of the Act on the facts and circumstances of the case.
6. The learned Commissioner of Income Tax (Exemptions) ought to have appreciated that the appellant-Trust does not gain anything by making mistake in selecting the application or in filling the application. Thus, it is only a bonafide mistake and the application having been made by the appellant within the extended time for making applications by the Trusts for re-registration under the new regime, the same requires to be considered on merits on the facts and circumstances of the case.
7. That, seen from any angle, the appellant-Trust is entitled for grant of re-registration u/s 12AB(1)(a) r.w.s 12A(1)(ac)(i) of the Act which may kindly be granted to the appellant-Trust for advancement of substantial cause of justice on the facts and circumstances of the case.
The appellant craves leave of this Hon'ble Tribunal, to add, alter, delete, amend or substitute any or all of the above grounds of appeal
as may be necessary at the time of hearing.
9. For these and other grounds that may be urged at the time of hearing of appeal, the appellant prays that the appeal may be allowed for the advancement of substantial cause of justice and equity.”
2. The brief facts of the case are that assessee is an educational trust originally got its provisional registration and subsequently the assessee sought for permanent registration u/s. 12AB of the Income Tax Act, 1961 [the Act]. The assessee filed application in Form 10AB on 29.6.2024 in which in sl.no.2, the assessee had mentioned the section code as 12A(1)(ac)(ii) of the Act instead of 12A(1)(ac)(iii). The ld. CIT(Exemptions) rejected such application by stating that assessee has selected a wrong section code while applying in Form 10AB for registration u/s. 12AB of the Act. As against this order, the assessee is in appeal before this Tribunal.
3. At the time of hearing, the ld. AR submitted that the wrong mentioning of the section code is a bonafide mistake and therefore prayed that the application may be considered by the ld. CIT(Exemptions) afresh after treating the said application filed under the correct provision of the Act. The ld. AR also further submitted that the assessee trust is otherwise entitled for the registration.
4. The ld. DR relied on the order of the ld. CIT(Exemptions) and prayed that the appeal may be dismissed.
We have considered the arguments of both the sides and perused the material available on record. We have perused the order of the ld. CIT(Exemptions) in which the only defect pointed out is that the assessee had selected the wrong section code. We have also considered the statement made by the ld. AR that it is a mistake and if the CIT(Exemptions) was of the view that the assessee had selected a wrong section code, he could have called the assessee for rectification of the said defect before rejecting the said application. Further, we have also seen that the ld. CIT(Exemptions) has not granted any personal hearing before rejecting the said application, even though the statute requires that personal hearing should be granted.
It is not the case of the Revenue that the assessee is not a charitable institution to get registration under the provisions of the Act. Further the activities of the trust are also towards achieving the objects of the trust. The genuineness of the trust are also not in doubt by the authorities. In such circumstance, the wrong quoting of the section in the application in Form 10AB could not be a reason for rejection, when there is no violations pointed out by the authorities. Before rejecting, the ld. CIT(Exemptions) could have also granted an opportunity to rectify the said mistake. Admittedly no such opportunity was also granted to the assessee. In such circumstances, we set aside the order of the ld. CIT(Exemptions) with a direction to treat the application filed by the assessee on 29.6.2024 as one filed under the correct provision of the Act and thereafter decide the same on merits in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes. Pronounced in the open court on this 20th day of August, 2025.