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Facts
The assessee filed an application for registration under Section 12A of the Income Tax Act, 1961. The CIT(E) rejected the application on the grounds that it was filed under the wrong clause, despite the trust having commenced activities prior to the relevant period.
Held
The Tribunal held that rejection of an application solely for quoting an incorrect sub-clause in Form 10AB is unjustified, as Section 12AB provisions are benevolent and remedial, and minor procedural mistakes should not deprive a genuine charitable institution of registration.
Key Issues
Whether the rejection of a Section 12A registration application due to filing under a wrong clause is justified when the application is otherwise bonafide.
Sections Cited
12A, 12AB, 10AB
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Income Tax Appellate Tribunal, CHANDIGARH BENCH, ‘A’, CHANDIGARH
Before: SHRI LALIET KUMAR & SHRI KRINWANT SAHAY
Order Per Laliet Kumar, AM: Appeal in this case has been filed by the assessee against the order dated 12.03.2025 passed by the Ld. Commissioner of Income Tax (Exemptions) [‘CIT(E)’ for A.Y. 2017-18.
Grounds of appeal are as under:
1. 1. That the Ld. Commissioner of Income Tax (Exemptions) has erred in law rejecting the 580-Chd-2025 Barfani Sewa Mandal, Kaithal 2 approval sought under section 12A of the Act holding it to be not maintainable which is arbitrary and unjustified.
2. That the Ld. Commissioner of Income Tax (Exemptions) has erred in law as well as on facts in rejecting the approval sought under section 12A of the Act only on the basis that the application was not filed within the time limit prescribed in respect of application filed under clause (iii) of clause (ac) of sub section (1) of section 12A as the trust had commenced activities on 02.07.1996 which is arbitrary & unjustified.
3. That the Ld. Commissioner of Income Tax (Exemptions) has failed to consider the tenor of Circular 7 dated 25.04.2024 wherein CBDT has in order to mitigate genuine hardships extended the due dates and as such the application for registration ought to have been considered on merits.
4. That the appellant craves leave to add or amend the grounds of appeal
before the appeal is finally heard or disposed off.
5. That the order of the Ld. Commissioner of Income Tax is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.
During the proceedings before us, ld. Counsel for the Assessee submitted that the Ld. CIT(E) Chandigarh
580-Chd-2025 Barfani Sewa Mandal, Kaithal 3 rejected the application filed by the Assessee in Form 10AB of the Income Tax Act, 1961 (in short 'the Act') on 11.9.2024 merely on the ground that it had been filed under wrong clause - section 12A(1)(ac)(iii) instead of correct clause - section 12A(i)(ac(iv) of the Act.
Per contra, Ld. DR relied on the order of the Ld. CIT(A).
During rebuttal, the ld. Counsel for the Assessee brought out on record different orders passed by the Coordinate Chandigarh Bench of the ITAT and other authorities on this issue and argued that it has been held in various orders that merely by mentioned wrong sub section of section 12AB should not be sole criteria for rejection an application.
We have considered the findings given by the Ld. CIT(E) in her order and we have also considered the arguments and facts brought on record by the ld. Counsel for the Assessee. We find that the Coordinate Bench Chandigarh of ITAT has already decided the ratio in the 580-Chd-2025 Barfani Sewa Mandal, Kaithal 4 case of ‘Imame Rabbani Foundation vs CIT( E)’, wherein’ it has been clearly that that rejection of an application u/s 12AB solely for quoting an incorrect sub clause in form 10AB is unjustified. The provision of section 12AB are benevolent and remedial, minor procedural mistakes cannot deprive a genuine charitable institution of registration.
We have also considered following case laws on this issue brought on record by the ld. Counsel for the Assessee.
Annanya Education & Charitable Trust vs CIT(E), [2025] 177 taxmann.com 98 (Ahd.-Trib) 2. Shri Swaminarayan Gadi Trust vs CIT(E) 162 Taxman.com 772 (Surat-Trib,)
Keeping in view the aforesaid case laws of the ‘Imame Rabbabni Foundation vs CIT(E)’, Annanya Education & Charitable Trust vs CIT(E) and Shri Swaminarayan Gadi Trust vs CIT(E) (supra), Assessee’s appeal on this issue is remanded back to the file of the Ld. CIT(E) for issuing order afresh after giving due and adequate opportunity of 580-Chd-2025 Barfani Sewa Mandal, Kaithal 5 being heard to the Assessee as per law. The Assessee is also directed to present his case before the Ld. CIT(A) as and when called for and will not contribute in unnecessary delay in the hearing of the appeal.
In the result, the appeal of the Assessee stands allowed for statistical purposes.
Order pronounced on 29.10.2025.