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Facts
The assessee, Shri Alakh Sahiba Trust, applied for registration u/s 12A(1)(ac)(iii) and approval u/s 80G, which were rejected by the CIT(E). The rejection was based on the assessee having already commenced activities before applying for provisional registration and on procedural errors in filing the application form/sub-clause. The assessee argued these were technical errors and it already held prior registrations.
Held
The Tribunal, citing precedents, ruled that procedural deviations should not be fatal. It directed the CIT(E) to reconsider the applications on merits, allow rectification of technical mistakes in the application form or sub-clause, and grant the assessee an opportunity of hearing.
Key Issues
The key issues were the rejection of 12A and 80G applications based on pre-commencement of activities and procedural filing errors, and whether these applications should be considered on merits despite such technicalities.
Sections Cited
12A, 12A(1)(ac)(iii), 12AA, 12AB, 80G, 80G(5), 10(23C), 11, 12
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Income Tax Appellate Tribunal, AMRITSAR BENCH, ‘DB’: AMRITSAR
Before: SHRI UDAYAN DAS GUPTA & SHRI BRAJESH KUMAR SINGH
Date of Hearing 29.05.2025 Date of Pronouncement 26.08.2025 ORDER PER BRAJESH KUMAR SINGH, AM,
These two appeals by the assessee are directed against the two separate orders of learned Commissioner of Income Tax (Exemption), Chandigarh, (hereinafter referred to ‘ld. CIT(E)’) both dated 02.12.2024 rejecting the application for registration u/s 12A(1)(ac)(iii) of the Income Tax Act, 1961 (hereinafter referred as ‘the Act) and declining the approval for application of the assessee u/s 80G of the Act. Since, both the appeals are inter-related to each other and therefore, the same are decided by this common order for convenience.
Brief facts of the case:- An application for registration u/s 12A(1)(ac)(iii) of the Act was filed by the assessee on 29.06.2024 in Form No.10AB. During the course of hearing proceedings, the Ld. CIT(E) noted that the assessee had started its activities on 02.04.2022 in FY 2022-23 and observed that the assessee had long back commenced its activity when it had applied for provisional approval which was granted to it by CPC on 06.04.2024. The ld. CIT(E) also observed that as per the Income Tax Act, post 01.10.2023 provisional registration can be granted/sought by a trust or institution which has not yet commenced its activity. Thereafter, the Ld. CIT(E) quoted the provisions of section 12A of the Act, as under (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely.— ------------------------------------------------------------------------- (ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution,— ------------------------------------------------------------------------- (iv) in any other case, where activities of the institution or fund have (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought; (B) commenced and no income or part thereof of the said institution or fund has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10 or section 11 or section 12 for any previous year ending on or before the date of such application, at any time after the commencement of such activities:] and such trust or institution is registered under section 12AB.
In view of the above position of law, the Ld. CIT(E) held that it is evident that the provisional approval could not have been granted in the case as the assessee had already commenced its activities on 02.04.2022 (wrongly mentioned as 02.04.2024 by the Ld. CIT(E) in her order). In view of this fact, the ld. CIT(E) held that the present application of the assessee filed in Form 10AB u/s 12A(ac)(iii) of the Act was not maintainable since the provisional registration granted was bad in law and hence rejected the said application. The ld. CIT(E) further held that this rejection will also supersede any registration granted u/s 12AB by any authority at any earlier time.
4. Aggrieved with the said order, the assessee is in appeal before us by raising the following grounds of appeal:-
1) The order of worthy CIT (E) is bad in law and on facts of the case. 2) The worthy CIT (E) has rejected the application U/s 12AA of the Income Tax Act, 1961 on account of following reasons :-. a) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought; b) commenced and no income or part thereof of the said trust or institution has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, or section 11 or section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities,] 3) The Appellant had applied for grant of provisional registration on 31.03.2024 and same was granted having URN No. AAGTS6334PE2023101 effective from 06.04.2024. The Appellant, thereafter, applied for final registration vide acknowledgment no. 532376070290624 dated: 29.06.2024 u/s 12A (1) (ac) (iii) of the Income Tax Act, 1961. The CBDT had issued a circular no. 07/2024 dated: 25.04.2024, extending the due date for filing of Form 10A/10AB upto 30.06.2024. Accordingly, the appellant had filed Form no. 10AB for seeking final registration The rejection is therefore arbitrary and unjustified and accordingly the rejection order needs to be set aside.
5. During the course of hearing before us, the assessee filed a written submission along with a paper book containing pages 1 to 11. The relevant extract of the written submission is reproduced as under:-
1.Background of the Appellant The Appellant was established on December 12,1933 at Srinagar and thereafter a society was created and registered with the Registrar of Societies having registration No. 52 of 1961 dated October 03,1961. Due to disturbed conditions in the valley in 1990, the office bearers as well as the members left the valley and got settled in different parts of the country. So, a need was felt to create a trust and the Trust Deed was executed on August 01, 2002. The Trust Deed at Page No. 1 clearly mentions the above referred facts. The activities of the trust had started since the year 1933. However, due to inadvertence the date of commencement of activity was shown as 22.04.2002. The Appellant applied to the Income Tax Department for grant of registration U/s 12AA of the income Tax Act, 1961, which was duly granted having approval reference no. 3227 dated 23.09.2003. The Appellant also applied for exemption U/s 80G of the Income Tax Act, 1961, which was also granted having approval no. 80G/AAGT56334P/1588 and effective from Assessment Year 2018-19 and onwards. Copy of acknowledgment of return showing 12A Registration No. and the copy of approval U/s 80G are enclosed at Page No. 6-A and Page No. 7-A & Page No. 8-A respectively.
2. New procedures for registration Section 12AB w.e.f. 01.04.2021 (Refer CBDT Notification No. 19/2021 dated 26.03.2021). which made mandatory for all the trusts/ societies/ institutions register under section 12A and 80G to obtain fresh registration within three months from the 1st day of April, 2021.
The table hereunder shows the procedure along with the line for society registration U/s 12A of the Income Tax Act, 1961.
3.4 It is pertinent to mention that at the time of grant of rejection of application made in Form No. 10AB no show cause notice was issued. The CIT (E) did not make any adverse findings and rejected the application on technical grounds.
The CBDT from time to time extended the date of filing of Forn No. 10A/10AB and the latest by Circular No. 7 of 2024. Under this circular, the date of filing of Form No. 10A was extended from September 30, 2023 to June 30, 2024 and similarly Form No. 10AB in case of an application under clause iii) of the first proviso till June 30,2024. 4.1 It is further submitted that the Appellant had not filed Form No. 10A within the extended period of September 30, 2023, made on application on March 30, 2024 and the department provided Unique No. AAGTS6334PE20231. As mentioned earlier, the CBDT thereafter extended the date upto June 30, 2024 wide Circular No. 7 dated April 04, 2024. 4.2 The Appellant was entitled to file 10A and seek registration for five years, as the appellant was already holding registration U/s 12AA of the Income Tax Act, 1961 and there was a procedural mistake while making an application for grant of registration u/s 12A of the Income Tax Act, 1961.
The Hon'ble ITAT Bench, Surat in case of Shree Swaminarayan Gadi Trust VS CIT (2024) 162 Taxman.com 772 held that incorrect clause in the application for section 12A/80G will not deprive the Appellant to 12A registration & 80G Exemption and directed the CIT to treat the application under appropriate clause.
5.1 There are some other case laws which deal with the procedural issues for grant of registration u/s 12A and have gone in favour of the appellant as decided in various forums: a) Raj Krishan Jain Charitable Trust vs CIT (ITAT, Delhi). b) Kimiya Ashram Charitable Trust vs CIT (ITAT, Pune).
6. A humble submission is made to the Hon'ble Bench that the procedural deviation, if any, on behalf of the appellant seeking registration U/s 12A may please be condoned and the worthy CIT (E) may please be asked to reconsider the application afresh made in Form No. 10A for grant of registration u/s 12A of the Income Tax Act, 1961 after quoting the appropriate clause in the application i.e. 12A(1)(ac)(i) by the appellant and grant registration for a period of 5 years as the appellant already enjoyed registration u/s 12A & 80G at the time of change of procedure (CBDT Notification No. 19/2021 dt. 26.03.2021.
We have heard both the parties and perused the material available on record. The assessee had applied to the Department in Form No. 10A on March 30, 2024 and Provisional Registration was granted on April 06, 2024. Thereafter, the assessee applied for final registration in Form No. 10AB on June 29, 2024 to the Department for registration u/s 12A(1)(ac)(iii) on 29.06.2024, whereas, the correct form for the said application was Form 10A. On similar facts, the Co-ordinate Bench of the Tribunal Surat in the case of Shree Swaminarayan Gadi Trust vs CIT (2024) 162 taxman.com 772 relied upon by the assessee directed the ld. CIT(E) to consider the application of the assessee afresh on merits and not to reject the same on technical grounds like filing the application in a wrong Form or applying under the wrong sub-clause of section 12A of the Act. The relevant extract of the order is reproduced as under:-
“We have considered the submissions of both the parties and perused the record carefully. There is no dispute that the assessee applied for registration under Section 12A/12AB of the Act under Form 10AB on 28.09.2023. The ld. CIT(E) while considering the application of assessee noted that the application filed by assessee is not maintainable and accordingly, a show cause notice dated 02/11/2023 was issued for seeking clarification. The assessee responded to the show cause notice of ld CIT(E) vide their reply dated 15.12.2023. The contents of show cause notice and the reply thereof is not recorded by ld CIT(E) in his order. We find that the assessee vide their reply dated 15/12/2023 prayed to consider the application in appropriate sub-clause of section 12A(1). The ld CIT(E) held that he has no power to change/ amend or rectify Form-10AB. We find that it was an inadvertent mistake and the assessee has already explained the facts and prayed for correction before the ld. CIT(E). In our view the mistake in filing entry was not fetal and could be considered in appropriate sub-clause or clause of section 12A(1). Otherwise, the assessee has provided all the details and information in Form-10AB, while applying for registration under section 12A/12AB. Being first appellate authority, the plea of assessee for correction in Form-10AB is accepted and the order of ld CIT(E) is set-aside. The registry official of ld CIT(E) maintaining record of ITBA portal about the registration of trust under section 12A/12AB is directed either to correct such mistake or allow the assessee to rectify or amend the relevant clause/ sub-clause of section 12A(1). Considering the fact that the application of assessee was not considered on merit, therefore, we deem it appropriate to direct the ld. CIT(E) to treat the application of assessee under Section 12A(1)(ac)(iii) in place of Section 12A(1)(ac)(iv) of the Act and to consider the case on merit and pass the order in accordance with law. Needless to direct that before passing the order, the ld CIT(E) shall grant opportunity of hearing to the assessee. The assessee is also directed to furnish complete details to prove its object and activity and make all compliances as desired by the ld. CIT(E). In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes only.
6. In the result, the appeal of assessee in is allowed for statistical purpose.
Similar view has also been expressed in the following orders of the Co- ordinate Bench of the Tribunal:- a) Raj Krishan Jain Charitable Trust vs CIT (ITAT, Delhi). b) Kimiya Ashram Charitable Trust vs CIT (ITAT, Pune).
In this case also, the Ld. CIT(E) rejected the application of the assessee only on the technical ground as discussed in para no.2 and 3 of this order. Further, no show-cause was issued by the Ld. CIT(A) before rejecting the application of the assessee. The assessee had applied in Form No.10AB, which the assessee claims to have filed on 29.06.2024 within the extended period upto 30.06.2024 as per CBDT Circular No.07/2024 dated 25.04.2024 extending the time to file such application upto 30.06.2024, whereas, the correct form for making the said application was Form 10A, which was only a technical mistake.
8.1. We, therefore, considering the facts of the present case and relying upon the order of the Co-ordinate Bench of the Tribunal in the case Shree Swaminarayan Gadi Trust VS CIT (2024) 162 Taxman.com 772, direct the registry official of ld. CIT(E) maintaining record of ITBA portal about the registration of trust under section 12A/12AB either to correct such mistake or allow the assessee to rectify or amend the relevant clause/ sub-clause of section 12A(1) so as to make the application of the assessee technically correct to be considered for valid registration. Considering the fact that the application of assessee was not considered on merit, therefore, we deem it appropriate to direct the ld. CIT(E) to treat the application of assessee and to consider the case on merit and pass the order in accordance with law. Needless to direct that before passing the order, the ld. CIT(E) shall grant opportunity of hearing to the assessee. The assessee is also directed to furnish complete details to prove its object and activity and make all compliances as desired by the ld. CIT(E).
In the result, the appeal of the assessee is allowed for statistical purposes.
This appeal is filed by the assessee against rejection of approval. The application for approval u/s 80G of the Act 1961 has been e-filed by the assessee on 29.06.2024 in Form 10 AB, which has been rejected by the Ld. CIT(E) on the ground that the assessee does not have registration u/s 12AB of the Act.
10.1 The order of the ld. CIT(E) rejecting the application of the assessee u/s 80G is reproduced as under:-
“An application under Form No. 10AB was e-filed on 29.06.2024 for approval u/s 80G.
2. In the present case, an application for registration u/s 12AB was also filed on 29.06.2024. The application had been rejected vide ITBA/EXM/F/EXM45/2024- 25/1070794101(1) DATED 02.12.2024.
3. The present application, in absence of any registration under section 12AB doesn't meet the requirement for approval as mandated by section 80G(5) of the I.T. Act, 1961. Accordingly, the request for grant of approval u/s 80G cannot be decided on the merits of the case and, therefore, declined.”
10.2. The assessee made similar submission in respect of this appeal as in the case of ITA No.26/Asr/2025.
We have already remanded the matter back to the ld. CIT(E) in ITA 24/Asr/2025 and we, therefore, also remand this matter back to the file of the ld. CIT(E) for adjudication afresh. Our observation in the above appeal shall apply mutatis mutandis to this appeal also, and we remand this appeal for fresh consideration in coordination with the application for registration u/s 12AB, and for disposal of the same accordingly. This appeal is also allowed for statistical purposes.
In the result, both the appeals of the assessee bearing & 27/Asr/2025 are allowed for statistical purposes.
Order pronounced as per Rule 34(4) of the ITAT Rules, 1963 on 26th August, 2025.