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Facts
The assessee, a public charitable trust, applied for final registration under Section 12A after obtaining provisional registration. The application was rejected by the CIT(E) on the grounds that the assessee had claimed exemption under Section 11 prior to obtaining final registration and that the application was filed beyond the stipulated time.
Held
The Tribunal held that the rejection was based on a procedural lapse which was condoned by CBDT Circular No. 7/2024. The circular provided relief for applications rejected due to delayed filing or incorrect section code, allowing them to be refiled within an extended period. The assessee's application was filed within this extended period.
Key Issues
Whether rejection of final registration under Section 12A solely on procedural grounds, when a subsequent CBDT circular provides for condonation, is sustainable? Whether the assessee's claim of exemption under Section 11 prior to final registration can be a bar to registration given the circular's intent?
Sections Cited
12AA, 12A(1)(ac)(vi), 80G(5)(iv)(A), 12A(1)(ac)(iii), 11, 119
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
This appeal by the assessee is directed against the order dated 02.12.2024 passed by the Ld. Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”] under section 12AA of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], whereby the application of the assessee for final registration in Form No. 10AB was rejected.
Brief Facts of the Case 2. As per the statement of facts submitted by the assessee, the assessee is a public charitable trust duly registered with the office of 2 the Charity Commissioner, Vadodara. The trust had applied for provisional registration under section 12A(1)(ac)(vi) of the Act and under section 80G(5)(iv)(A) on 09.03.2022. The same was granted by the Department on 16.03.2022 and 25.03.2022 respectively. The primary objective of the trust, as per the trust deed, is to undertake charitable activities including medical assistance, educational support, and aid to persons affected by natural calamities and other forms of distress. The assessee commenced its charitable activities on 10.05.2022. The application for final registration in Form 10AB was subsequently filed on 11.06.2024. The CIT(E) issued notices on 10.10.2024 and 07.11.2024 for compliance and clarification. The assessee submitted a detailed reply on 22.11.2024. However, by an order dated 02.12.2024, the CIT(E) rejected the application for final registration on the ground that the assessee had claimed exemption under section 11 in the returns of income for A.Ys. 2022–23, 2023– 24 and 2024–25, thereby violating the conditions laid down under item (B) of sub-clause (vi) of clause (ac) of section 12A(1) of the Act.
3. Aggrieved by the order of CIT(E), the assessee has preferred this appeal raising following grounds:
1. Bonafide Intention and Inadvertent Non-Compliance of Changing Regulatory Framework: The appellant has at all times acted in good faith and has demonstrated a consistent commitment to compliance with the applicable statutory provisions governing trust registration and tax exemptions. Pursuant to Section 12A(1)(ac)(iii) of the Income-tax Act, 1961, the statutory time limit for filing an application for final registration is the earlier of: (a) At least six months prior to the expiry of the provisional registration or approval; or (b) Within six months from the date of commencement of activities. The appellant commenced its activities on May 10, 2022. The delay in filing the final registration application under Form 10AB was neither intentional nor wilful but resulted from an unintentional oversight regarding the evolving regulatory framework governing trust registrations. However, the appellant has since taken corrective steps and has duly filed Form 10AB on June 11, 2024, in compliance with statutory requirements.
Given the bonafide nature of the appellant’s actions and the absence of any malafide intent, it is submitted that the procedural lapse should not serve as a ground for denying the appellant's rightful claim to final registration under Section 12A.
Genuineness of Activities Not Questioned:
The Commissioner of Income Tax (Exemption) has not questioned the genuineness of the appellant's activities. The trust has provided all required documents and responded diligently to the inquiries raised by the department, demonstrating transparency in its functioning.
Procedural Delay Should Not Result in Denial of Exemption:
The delay in filing Form 10AB was purely procedural and was not indicative of any failure in meeting the substantive requirements of registration. Procedural lapses should not be allowed to override the true charitable nature of the trust.
4. Had the Form Been Filed Earlier, Registration Would Have Been Granted:
The trust had already obtained provisional registration under Sections 12A(1)(ac)(vi) and 80G(5)(iv)(A), which signifies that it met the eligibility criteria. If the final Form 10AB had been filed within the stipulated time, the trust would have been granted final registration under section 12A(1)(ac)(iii) from the first assessment year from which it was provisionally registered i.e A.Y. 2022-23. The appellant submits that such procedural technicalities should not lead to the denial of exemption.
5. Substance Over Form – Doctrine of Equity:
In tax jurisprudence, substance should prevail over form. The trust has consistently acted in furtherance of its charitable objectives as specified in its trust deed. The denial of registration and exemption purely on procedural grounds goes against the principles of equity and justice.
6. PRAYER:
In light of the foregoing, the appellant prays that: a) The rejection of the final registration application in Form 10AB be set aside. b) The appellant be granted the opportunity to file the final Form 10AB for registration. c) The registration of the trust not to be cancelled, considering its bonafide intentions and adherence to charitable objectives.
4 d) The trust be granted exemption under Section 11 for the relevant assessment years.
During the course of hearing, the learned Authorised Representative (AR) of the assessee reiterated the factual background and submitted that the rejection was solely on procedural grounds, despite there being no adverse finding regarding the genuineness of activities or compliance with substantive conditions. It was emphasised that the assessee had already been granted provisional registration, and the delay in filing final Form No. 10AB was rectified by filing the application on 11.06.2024, within the extended time limit prescribed under CBDT Circular No. 7/2024 dated 25.04.2024. The AR also invoked the principle of equity and justice, contending that denial of registration for a procedural lapse would amount to unjust exclusion from exemption under section 11, despite the trust’s genuine charitable operations.
The learned DR supported the impugned order and submitted that the rejection of Form 10AB was based on admitted facts, namely that the assessee had already claimed exemption under section 11 prior to obtaining final registration and the application under item (B) of sub-clause (vi) of clause (ac) of section 12A(1) is legally not maintainable where any benefit under section 11 has already been claimed.
We have carefully considered the rival submissions and perused the material available on record, including the impugned order passed by the CIT(Exemption), the statement of facts filed by the assessee, the grounds of appeal, and more particularly, the contents of CBDT Circular No. 7/2024 dated 25.04.2024. The CIT(Exemption) has rejected the assessee’s application filed in Form No. 10AB under 5 section 12A(1)(ac)(vi) [item (B)] on the ground that the assessee had already claimed exemption under section 11 in its income-tax returns for Assessment Years 2022–23 to 2024–25, thereby failing to satisfy the condition that “no income shall have been excluded from the total income under section 11” in any preceding year, as required under the said clause. However, it is material to note that CBDT Circular No. 7/2024, issued in exercise of powers under section 119 of the Act, has extended the due date for filing Form No. 10AB under section 12A(1)(ac)(iii) up to 30.06.2024. Importantly, paragraph 4.1 of the said Circular provides that in cases where an application has been rejected prior to the issuance of the Circular solely on the ground of delayed filing or incorrect section code, the applicant may furnish a fresh application within the extended period, and such application shall be treated as valid.
In the present case, it is undisputed that the assessee filed Form No. 10AB on 11.06.2024, which falls well within the extended due date of 30.06.2024. The only technical defect in the application was that it was filed under item (B) of sub-clause (vi) instead of under the correct provision, section 12A(1)(ac)(iii). This falls squarely within the remedial framework contemplated by the Circular. Accordingly, the basis of rejection, being purely procedural in nature, stands neutralised by the operation of the Circular, which is binding on the revenue authorities. It is also pertinent to note that the genuineness of the trust’s activities was never questioned by the CIT(Exemption). The assessee had earlier been granted provisional registration, and there is no adverse observation in the order impugned as to the charitable character or the authenticity of the trust’s operations. In our view, the spirit and intent of CBDT Circular No. 7/2024 is to 6 mitigate genuine hardship caused by procedural lapses in an evolving compliance environment and to ensure that trusts and institutions acting bona fide are not deprived of their legitimate right to registration. The Circular must be construed liberally and purposively, so as to advance the cause of substantive justice rather than defeat it by technical interpretation. It is a well-settled principle of law that procedural lapses should not defeat substantive entitlements, particularly in matters involving public charitable trusts. The doctrine of substance over form, consistently upheld by Courts, enjoins that the real character and conduct of the assessee must prevail over mere form or coding errors in applications.
In view of the above, we are of the considered opinion that the rejection of the assessee’s application for registration in Form No. 10AB is unsustainable in law, having been rendered infructuous in light of the express relief granted under CBDT Circular No. 7/2024 and the assessee’s undisputed compliance with its terms.
In view of the foregoing discussion, we set aside the impugned order passed by the Ld. CIT(Exemption), Ahmedabad, rejecting the application for registration under section 12AB, and restore the matter to his file for fresh consideration.
The CIT(Exemption) is directed to treat the Form No. 10AB filed by the assessee on 11.06.2024 as a valid application under section 12A(1)(ac)(iii) of the Act, in light of the relief granted under CBDT Circular No. 7/2024 dated 25.04.2024., which extended the due date for filing such application up to 30.06.2024. The CIT(Exemption) shall
7 dispose of the said application on merits and in accordance with law, after affording reasonable opportunity of being heard to the assessee.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the Court on 4th June, 2025 at Ahmedabad.