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Facts
Two trusts, previously registered under Section 12A and 80G, filed applications for permanent registration under the new regime but mistakenly selected an incorrect sub-clause, leading to rejection by the CIT(E) without opportunity for rectification. The delay in filing the appeals was 85 days.
Held
The Tribunal condoned the delay, holding that the mistake in selecting the sub-clause was a bona fide technical error. It was decided that such procedural errors should not defeat the substantive rights of genuine charitable trusts, especially when their activities are undisputed.
Key Issues
Whether a bona fide technical error in selecting a sub-clause for registration applications can lead to outright rejection without opportunity for rectification.
Sections Cited
12A, 12AB, 10(23C), 80G
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: MS.SUCHITRA RAGHUNATH KAMBLE & MAKARAND V.MAHADEOKARShri Kripalu Samadhi Mandir Trust Shri Nishit Shah, AR Shri Rignesh Das, CIT-DR
आदेश आदेश/O R D E R आदेश आदेश
PER MAKARAND V.MAHADEOKAR, AM: These two appeals filed by the assessees are directed against separate orders of the learned Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”], both dated 17.03.2025, passed in Form 10AD under section 12AB of the Income Tax Act, 1961 [hereinafter referred to as “the Act”]. Since the issues involved and the facts are identical in both the cases, these appeals were heard together and are disposed of by this consolidated order for the sake of convenience and brevity.
2. Condonation of Delay:
1. 2.1 At the outset, it is noticed that both the appeals have been filed belatedly. In the case of both the appeals the delay in filing the appeal is of 85 days. The trustee of the assessee filed petitions for condonation of delay along with an affidavit reproducing the reasons that the delay in filing the appeal was neither intentional nor deliberate but occurred due to the following bona fide and unavoidable circumstances. It was stated that upon receipt of the rejection order, the Trust and its advisors required a significant amount of time to thoroughly review the order, understand the grounds for rejection, and gather all the necessary documents and legal precedents to formulate a comprehensive and effective appeal. It was also stated that the rejection of the application was based on a technicality of misfiling and a prior claim of exemption under a different section. The trustee in the affidavit stated that this necessitated a careful and detailed analysis to prepare a strong case that correctly explains the Trust’s consistent charitable intent and its bona fide mistakes in the application process and this preparatory work, including professional consultations and the drafting of the appeal, took a considerable amount of time. IT was also stated that the time taken to review the complex procedural aspects of the new registration regime and to prepare the detailed grounds of appeal and the accompanying authority letter and challan led to the unavoidable delay. It was argued that the delay is attributable to a genuine and diligent effort to prepare a proper and well-supported appeal, rather than any negligence or inaction on the part of the Appellant. It was also argued that the assessee trusts have strong prima facie case on merits, as elaborated in the accompanying Memorandum of Appeal, and if the delay is not condoned, both the assessees will suffer irreparable loss and injustice.
2.2 Since the delay was neither deliberate nor contumacious and the Departmental Representative raised no objection to condonation, the delay of 85 days in both appeals is hereby condoned.
Facts of the Cases:
3.1 Both the assessees, namely Kripalu Muni Mandal Trust and Shri Kripalu Samadhi Mandir Trust, are long-standing charitable institutions registered under section 12A of the Act, since 2004, and engaged in charitable and religious activities. Consequent to the amendment, requiring all existing trusts and institutions to migrate to the new registration regime prescribed under section 12A(1)(ac), both the assessees had filed their applications in Form No. 10A, pursuant to which provisional registrations under section 12A(1)(ac)(vi) and provisional approvals under section 80G(5)(iv) were duly granted for a period of three years, covering Assessment Years 2023–24 to 2025–26.
3.2 Subsequently, when the time arose to seek permanent registration, the assessees were required to file Form No. 10AB under the correct clause of section 12A(1)(ac), depending upon the stage of their registration. However, due to an inadvertent and bona fide technical mistake, both the assessees selected the incorrect sub-clause in the electronic form, filing the applications under clause (B) of the first proviso to section 10(23C) instead of the appropriate clause (i) or (iii) under section 12A(1)(ac).
3.3 The learned CIT(Exemption), Ahmedabad, took the view that since the assessees had themselves opted for the provisions of section 10(23C)(iv), they could not simultaneously claim registration under section 12A. Without affording any opportunity to rectify the defect or to explain the inadvertent error, both the applications were rejected vide separate orders dated 17.03.2025.
3.4 Aggrieved by the orders of the CIT(E), the assessee is in appeal before us raising following grounds of appeal:
Applications Filed Under Mistaken Sections and Clear Intent: The rejection order dated 17/03/2025 is based on an application that was mistakenly filed under Section 10(23C)(iv)(B). The Trust’s true and consistent intention was to apply for registration under Section 12A, specifically seeking final approval under Section 12A(1)(ac)(i) for 5 years, as opposed to the provisional approval already granted under Section 12A(1)(ac)(vi). Similarly, the provisional 80G approval was also obtained by a bona fide mistake in selecting the appropriate sub-clause, and a fresh application for 80G under the correct provisions has not yet been filed as not able to file. The previous claim of Section 11 exemption, which formed the basis of the rejection for the Section 10(23C)(iv)(B) application, is consistent with the Trust’s provisional registrations and ongoing charitable activities and should not be a disqualifying factor for its intended and correctly pursued applications under the Income Tax Act.
Established Status of the Trust Evidenced in First Application: Even in the application filed under the incorrect Section 10(23C)(iv)(B), the Trust had diligently uploaded and mentioned all requisite documents which clearly demonstrate that it is already a well-established entity. This substantiates the Trust’s genuine nature and operational history, which might have been considered despite the technical/clerical error in section filing.
3. Provisional 80G Approval and Consistency with Charitable Activities (Mistake in Section/Sub-clause Selection): The Trust has been granted provisional approval under Section 80G. While it is now acknowledged that a mistake was made in the section/sub-clause selection for this provisional 80G application, this approval itself, along with the detailed conditions, underscores the existing scrutiny and initial recognition of the Trust’s charitable work. This existing provisional approval, despite the technical error, should be seen as supporting evidence of the Trust’s charitable nature, which is consistent with its Section 11 claims and its pursuit of Section 12A registration. The same lenient view, as sought for the 10(23C) rejection, should be extended to the 80G provisional approval given the bona fide error in its original application.
4. Misinterpretation of Section 10(23C)(iv)(B) in Context of Overall Scheme and Provisional Registrations: Even if the application under Section 10(23C)(iv)(B) were to be strictly considered, the learned CIT(Exemption) has erred in interpreting its provisions. The Trust’s provisional approval under Section 12A and Section 80G, and its subsequent claims under Section 11, are part of its established operational history. The rejection appears to apply the conditions of Section 10(23C)(iv)(B) in isolation, without considering the comprehensive legislative framework for charitable trusts, including the provisions for provisional and final registration under Section 12A and provisional approval under Section 80G.
Charitable Nature of Activities and Intent for Final Approval: The Trust is engaged in genuine charitable activities, and its application of funds for these activities is clearly demonstrated by the figures provided. The current rejection, based on a technicality of misfiling and a prior valid exemption claim, overlooks the substantive charitable work of the Trust and its legitimate intent to secure final registration under Section 12A(1)(ac)(i) for a period of 5 years.
Prayer: In light of the above grounds, it is humbly prayed that the Hon’ble Commissioner of Income Tax (Appeals) may:
1. 1. Quash the rejection order dated 17/03/2025, passed against the application filed in Form 10AB under Section 10(23C)(iv)(B).
2. Direct the CIT(Exemption), Ahmedabad, to consider the Trust’s original application filed on 14th April 2022 as a bona fide application for registration under Section 12A(1)(ac)(i) for a final approval of 5 years. It is prayed that the application be considered on its merits, without being influenced by the subsequent rejection of any previously misfiled application.
3. Grant similar relief for the provisional approval under Section 80G, taking into account the bona fide mistake in its application, and allow the Trust to proceed with rectification or a fresh application for the correct 80G approval without prejudice.
4. Grant any other relief as deemed fit in the interest of justice.
3.5 These grounds and prayer are identical in both appeals and can therefore be treated as common for purposes of adjudication.
The learned Authorised Representative (AR) reiterated the factual matrix and submitted that both the trusts are long-standing charitable institutions duly registered under sections 12A and 80G since 2004. The provisional registrations granted under the faceless scheme were under the correct clause (vi), but the subsequent renewal applications were mistakenly filed under an incorrect sub-clause in Form 10AB. The AR submitted that the CIT(E) rejected the applications without considering that the error was purely technical and bona fide in nature. The AR thus urged that both matters be restored to the file of the CIT(E) to enable verification and decision on merits.
5. The learned DR fairly submitted that the facts on record clearly demonstrate that the rejection resulted from a technical and procedural error in the selection of the correct sub-clause. The learned DR therefore did not raise any objection to the restoration of both the matters to the file of the learned CIT(E), Ahmedabad, for reconsideration on merits in accordance with law.
We have heard the rival submissions, perused the material on record, and gone through the impugned orders of the CIT(E).
6.1 It is evident that both assessees were already enjoying registration under sections 12A and 80G and only sought renewal under the amended provisions of clause (ac) of sub-section (1) of section 12A. The CIT(E) rejected the applications solely due to the incorrect selection of the sub-clause in Form 10AB, treating the same as an ineligible claim under section 10(23C).
6.2 The statutory scheme of section 12A(1)(ac) read with Rule 17A makes it clear that the electronic form of application is a procedural tool intended to facilitate verification of the genuineness of charitable activities and compliance with statutory conditions. An inadvertent or clerical error in selecting an incorrect clause, particularly in the context of the recent transition to the new regime, cannot defeat an otherwise valid claim of a genuine charitable institution. In our considered view, such technical or procedural errors cannot override the substantive rights of the assessees, particularly when the genuineness of the trusts and their charitable activities are undisputed.
6.3 Since the error is admittedly bona fide and both the assessees have already filed fresh applications under the correct sub-clause (iii) of section 12A(1)(ac), we deem it appropriate to restore both matters to the file of the learned CIT(E), to be examined afresh and decided in accordance with law after providing adequate opportunity to the assessees. We also direct the learned CIT(E) to consider the original applications filed under the correct clause and code.
6.4 We make it clear that we have not expressed any opinion on the merits of the eligibility of the trusts for registration under section 12A, and all issues are left open for adjudication by the learned CIT(E) in accordance with law.
In the result, both the appeals filed by the assessees are allowed for statistical purposes.
Order pronounced in the Court on 16th October, 2025 at Ahmedabad.