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Facts
The assessee, a registered trust, applied for renewal of its registration under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961. After an initial application was mistakenly filed under a wrong sub-clause and rejected, a fresh application was filed under the correct sub-clause within the extended time limit allowed by CBDT Circular No. 07/2024. However, the CIT(Exemption) rejected this fresh application as non-maintainable.
Held
The Tribunal held that the CIT(Exemption)'s rejection of the assessee's applications as non-maintainable was not legally sustainable. It directed the CIT(Exemption) to treat the applications as valid and maintainable, filed within the extended period, and dispose of them on merits.
Key Issues
Whether the CIT(Exemption) can reject an application for renewal of trust registration as non-maintainable when filed under the correct section within an extended time limit, despite prior incorrect filings.
Sections Cited
12AB(1)(b)(ii), 12A(1)(ac)(iii), 12A(1)(ac), 11
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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & SHRI DINESH MOHAN SINHA
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकरअपीलसं./ITA No. 92/RJT/2025 (�नधा�रणवष� / Assessment Year: (NA) (Hybrid Hearing) Motiben Jadvjibhai Malani Vs. CIT(Exemption) Education and Charitable Trust Room No. 609, Floor No. 6, ayakar Khamata Bhavan (Vejalpur), Prahalad nagar, C/o. Sarda & Sarda (CA), Sakar 1st Road, Ahmedabad - 380015 floor, Dr. Radha Krishna Road, Opp. Rajkumar College, Rajkot-360001 �थायीलेखासं./जीआइआरसं./PAN/GIR No.: AAATM2847B (Appellant) (Respondent) Appellant by : Shri Vimal Desai, Ld. AR Respondent by : Shri Sanjay Punglia, Ld. CIT(DR) Date of Hearing : 30/04/2025 Date of Pronouncement : 03/07/2025 आदेश / O R D E R PER DINESH MOHAN SINHA, JM:
Captioned appeal filed by the assessee, is directed against the order passed by the Learned Commissioner of Income Tax(Exemption), wherein the Ld. CIT(E) rejected the assessee’s application in Form 10AD for approval u/s. 12AB(I)(b)(ii) of the Act and also rejected provisional approval, and also cancel the provision of the assessee.
Grounds of appeal
raised by the assessee are as follows:
1. The order passed under Section 12AB(1)(b)(ii) of the Act is bad in law.
2. The learned CIT (Exemption) has erred in law as well as on facts in rejecting the application for registration u/s 12A(1)(ac)(iii) by considering it as non- maintainable.
ITA No.92/Rjt/2025 Motiben J. Malani ….
Brief facts of the case that the appellant is a trust registered with the office of the Charity Commissioner with effect from 25.09.1997. The appellant trust is carrying on charitable activities in terms of objects contained in the trust deed. A copy of trust deed is enclosed herewith. The appellant is also provisionally registered under section 12A(1)(ac) of the Income-tax Act, 1961 in accordance with the provisions of Section 12AB of the Income-tax Act, 1961. A copy of registration certificate u/s. 12A(1)(ac) (vi) of the Act issued to the appellant on 23.09.2021 in Form No. 10AC having validity period from A.Y. 2022-23 to 2024-25 is enclosed herewith. The income of the appellant is eligible for exemption u/s. 11 of the Income-tax Act, 1961. A copy of acknowledgement of last return of income filed by the appellant for A.Υ. 2024-25 is enclosed herewith. The appellant has duly get its books of account audited and has regularly filed its return of income from time to time reporting therein the details of activities, income and its application. A copy of audit report in Form No. 10BB for the latest A.Y. 2024-25 furnished online is enclosed herewith. The appellant had thereafter applied for renewal of its aforesaid registration which was under wrong sub clause (vi) of Section 12A(1)(ac) vide online application in Form No. 10AB dated 21.03.2024. On becoming aware about the mistake in quoting the correct section in the application for renewal of registration, the appellant filed fresh application for renewal of its registration under correct sub clause (iii) of Section 12A(1)(ac) vide online application in Form No. 10AB on 01/06/2024 which is within the extended time limit i.e. 30/06/2024 allowed by the CBDT vide its Circular No. 7 dated 25/04/2024. The learned CIT(Exemption), Ahmedabad rejected the first application dated 21.03.2024 vide order dated 02.09.2024, on the ground of non-compliance as it was filed under wrong clause. The second application dated 01.06.2024 has also been rejected by the learned CIT (Exemption) vide order dated 19.12.2024 by considering it as non-maintainable by misreading of the correct facts. The ITA No.92/Rjt/2025 Motiben J. Malani ….
learned CIT (Exemption) has failed to consider the fact that the application dated 01.06.2024 was a fresh application which was filed within the extended time limit and it was not filed against the rejection order of the first application.
Aggrieved by the order of the Ld. CIT(E), the assessee is in appeal before us.
During the course of argument, the Ld. AR of the assessee submitted that earlier applications were mistakenly filed under incorrect clauses on 21.03.2024. The subsequent application filed on 01.06.2024. That the Ld. CIT(E) has to be examined the application on merit.
On the other hand, the Ld. DR for the revenue relied on the order of the Ld. CIT(E), and not objected to the prayer of the Ld. AR.
We have carefully considered the rival contentions and perused the materials available on record. The controversy in the appeal revolves around the rejection of the assessee’s applications dated 01.06.2024 filed under the correct statutory provisions, which were treated by the CIT(Exemption) as non- maintainable, without adjudication on merits. • Section 12A(1)(ac)(iii) of the Act.
That the applications were intended to rectify the procedural defect in the for application in 10AB sub clause (vi) of sec. 12A(1)(ac) of the Act.
The approach adopted by the CIT(Exemption) in treating the said applications as non-maintainable on the basis that the earlier applications were rejected, is not tenable in the facts and circumstances of the present case. The assessee had not filed a revision or appeal against the earlier orders. The second applications were made under the correct provisions within the prescribed extended window allowed for filing as specified in the ITA No.92/Rjt/2025 Motiben J. Malani ….
CBDT Circular No. 07/2024 dated 25.04.2024. The principle of fairness and natural justice required the authority to consider the substance of the matter rather than rejecting application on the beyond of non maintainable. We find merit in the submission of the assessee that since the second applications were filed under the correct provisions and were within the extended compliance period stipulated by the CBDT, they ought to have been examined as if filed within time. The assessee is entitled for fair adjudication on merits.
We hold that the orders dated 19.12.2024 passed by the CIT(Exemption), Ahmedabad, rejecting the assessee’s applications under section 12A(1)(ac)(iii) of the Income- tax Act, 1961, as non-maintainable is not legally sustainable and deserve to be set aside, and the matters are restored to his file with following directions: i. The CIT(Exemption) shall treat the assessee’s applications dated 01.06.2024 in Form No. 10AD under section 12A(1)(ac)(iii) as valid, and maintainable, and proceed to dispose of them on merits in accordance with law. ii. The said applications shall be treated as having been filed within the period prescribed under the Act, taking into account the extended deadline allowed vide CBDT Circular No. 07/2024 dated 25.04.2024.
The assessee is directed to fully cooperate in the proceedings before the CIT(Exemption) and to furnish all requisite information and documents as may be required to facilitate timely adjudication.
In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 03-07-2025
Sd/- Sd/- (Dr. A. L. SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot �दनांक/ Date: 03/07/2025 ITA No.92/Rjt/2025 Motiben J. Malani ….