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Facts
The assessee trust, which had provisional registration, filed an application for permanent registration under section 12A(1)(ac)(ii) instead of the correct section 12A(1)(ac)(iii). The CIT(E) rejected the application on two grounds: incorrect sub-clause selection and a delay of 249 days.
Held
The Tribunal held that the incorrect selection of the sub-clause was a technical and procedural error that should not defeat substantial rights. It also noted that the CIT(E) did not properly consider the proviso for condoning delay and the possibility of a reasonable cause for the delay.
Key Issues
Whether rejection of registration application on technical grounds like incorrect section and delay is sustainable without proper examination of cause for delay.
Sections Cited
12AB, 12A(1)(ac)(ii), 12A(1)(ac)(iii), 119
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA
आदेश /O R D E R
PER S.R.RAGHUNATHA, AM:
This appeal at the instance of the assessee trust is directed against the order of the Commissioner of Income Tax (Exemptions), Chennai dated 24.09.2025, rejecting assessee’s application seeking registration u/s.12AB of the Income Tax Act, 1961 (hereinafter called ‘the Act’).
The solitary ground of appeal raised by the assessee is that the ld.CIT(E) has rejected the application filed in Form 10AB dated 28.03.2025 seeking registration u/s.12A(1)(ac)(ii) of the Act without assigning proper reasons and justification.
:-2-: ITA. No:3196/Chny/2025
The brief facts of the case are that the assessee is a Trust had obtained provisional registration from A.Y.2022-23 to 2024-25 by filing an application in Form 10AC on 24.09.2021. Thereafter, the assessee filed an application dated 07.03.2025 in Form 10AB, seeking permanent registration u/s.12A(1)(ac)(ii) of the Act. The Ld.CIT(E) rejected the said application by passing an order dated 24.09.2025 on the ground that the assessee has filed the application under wrong section instead of u/s.12A(1)(ac)(iii) of the Act and also noted that the application has been filed with a delay of 249 days. Aggrieved by the order passed by the ld.CIT(E), the assessee is in appeal before us.
Ld.AR for the assessee submitted that assessee while applying for permanent registration u/s.12A had inadvertently applied under sub-clause (ii) of clause (ac) of sub-section (1) of Section 12A, i.e. it had applied for permanent registration as if the trust had a registration u/s.12AB of the Act. The assessee ought to have applied under sub-clause (iii) of clause (ac) of sub-section (1) of Section 12A, since the assessee was a new trust and was provisionally registered u/s.12AB of the Act. Further, the ld.AR submitted that the above error is a mere technical error and procedural lapse and the substance of the application cannot be disregarded solely on such ground. Further the ld.AR contended that a procedural mistake should not defeat substantial rights.
The ld.AR submitted that the assessee had misconstrued the timeline for the registration of the trust under the new scheme. Further, he submitted that the assessee had not filed any application u/s.119 of the Act by relying on the proviso to clause (ac) of sub-section (1) of section 12A of the Act, which reads as under :
“Provided that where the application is filed beyond the time allowed in sub- clauses (i) to (vi), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable cause for delay in filing the application, condone such delay and such application shall be deemed to have been filed within time;”
:-3-: ITA. No:3196/Chny/2025 6. In support of the above arguments, the ld.AR relied on the following decisions of the Tribunal, wherein the Tribunal has condoned the delay and also stated that the error in selecting the sub clause is only procedure lapse. - and 576/Chny/2023 dated 26.12.2023 - Chennai Tribunal - dated 05.02.2025 - Chennai Tribunal - dated 18.03.2025 - Chennai Tribunal
In light of the above arguments the ld.AR prayed for remit the matter back to the file of the ld.CIT(E) for adjudicating afresh for the issue of grant of registration u/s.12AB treating the application as having been filed with reference to section 12A(1)(ac)(iii) of the Act.
Per contra, the Ld.DR supported the views taken by the ld.CIT(E) and argued that the rejection is justified and thus prayed that the appeal of the assessee may be dismissed.
We have heard the rival submissions and perused the material available on record, including the impugned order passed by the ld.CIT(E) dated 24.09.2025. The undisputed facts are that the assessee was granted provisional registration u/s.12AB of the Act for A.Y.2022-23 to 2024-25 pursuant to application in Form 10AC dated 24.09.2021. Thereafter, the assessee filed application dated 07.03.2025 in Form 10AB seeking regular registration. However, the application was filed by invoking section 12A(1)(ac)(ii) instead of section 12A(1)(ac)(iii) of the Act. The ld. CIT(E) rejected the application on two grounds, namely (i) wrong selection of sub-clause, and (ii) delay of 249 days in filing the application.
The core issue for adjudication is whether such rejection on technical and procedural grounds, without examining the explanation of the assessee and without considering the statutory power of condonation, is legally sustainable. It is not in dispute that the assessee, being a provisionally registered trust, ought
:-4-: ITA. No:3196/Chny/2025 to have filed its application under section 12A(1)(ac)(iii) of the Act. The selection of section 12A(1)(ac)(ii) is clearly an inadvertent and technical error. The substance of the application, however, was for grant of regular registration consequent to provisional registration already granted. It is well-settled that quoting of a wrong provision or selecting an incorrect clause does not invalidate an otherwise maintainable claim, if the substantive requirements are fulfilled.
We find that this very issue has been considered by the Chennai Benches of the Tribunal in a series of decisions relied upon by the ld.AR. In & 576/Chny/2023 dated 26.12.2023; dated 05.02.2025; and dated 18.03.2025, the Tribunal has consistently held that selection of an incorrect sub-clause while filing Form 10AB is a procedural lapse and that such technical defect should not defeat substantive rights of the assessee. The Tribunal, in those cases, restored the matter to the file of the ld. CIT(E) with a direction to treat the application under the appropriate clause and to consider the same on merits.
Further, with regard to delay, the proviso to section 12A(1)(ac) expressly empowers the PCIT or CIT to condone delay, if satisfied that there exists reasonable cause. The language of the proviso is enabling and confers discretionary jurisdiction which must be exercised judiciously. In the present case, we find that the ld. CIT(E) has merely noted the delay of 249 days and rejected the application without examining whether reasonable cause existed and without recording any finding on the explanation of the assessee.
The consistent view taken by the Chennai Benches of the Tribunal in the decisions referred supra is that where the delay is attributable to bona fide misunderstanding of the new registration regime and procedural requirements, the same constitutes reasonable cause and deserves to be considered liberally, particularly in matters relating to charitable registration where no adverse finding regarding the objects or genuineness of activities is recorded.
:-5-: ITA. No:3196/Chny/2025 14. In the present case also, the impugned order does not contain any adverse observation regarding the charitable objects of the trust or the genuineness of its activities. The rejection is purely on technical grounds. Following the ratio laid down in the aforesaid decisions of the Chennai Tribunal and applying the principle that procedural prescriptions are meant to advance justice and not to thwart it, we are of the considered opinion that the impugned order cannot be sustained. Accordingly, the order of the ld.CIT(E) is set aside and the matter is restored to his file by condoning the delay and directed to treat the application filed in Form 10AB as one u/s.12A(1)(ac)(iii) of the Act and to adjudicate the application afresh on merits in accordance with law, after affording adequate opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the court on 04th March, 2026 at Chennai.