Akanksha Charitable Trust Vs CIT (Exemptions) (ITAT Mumbai)
Summary: ITAT Mumbai restored Akanksha Charitable Trust’s application for registration under Section 12AB to the CIT (Exemptions) after holding that an application should not be rejected merely because Form No. 10AB was inadvertently filed under Section 12A(1)(ac)(iii) instead of Section 12A(1)(ac)(ii). The CIT(E) had rejected the application solely because it was made under the incorrect statutory clause, without examining the objects of the Trust or genuineness of its activities.
The assessee submitted that selection of Section 12A(1)(ac)(iii) instead of Section 12A(1)(ac)(ii) was an inadvertent and bona fide mistake of a purely technical nature. It argued that before rejecting the application, the CIT(E) should have permitted correction of the defect or filing under the appropriate clause. It was further submitted that the substantive considerations for registration under Section 12AB were the objects of the Trust and genuineness of its activities, neither of which had been examined.
The Tribunal observed that there was no adverse finding regarding either the objects of the Trust or genuineness of its activities. The application had been rejected exclusively because Form No. 10AB was filed under the wrong clause. ITAT held that procedural and technical lapses should not prevent adjudication of substantive rights, particularly where the defect is capable of rectification. An inadvertent selection of an incorrect clause could not, by itself, justify outright rejection without providing an opportunity to correct the mistake.
ITAT further held that the principles of natural justice require a reasonable opportunity to be given where a defect is curable. Since no effective opportunity had been granted to the assessee to correct the mistake and pursue its registration application under the appropriate provision, rejection of the application on that technical ground could not be sustained.
Accordingly, the Tribunal set aside the CIT(E)’s order and restored the matter for fresh adjudication. The CIT(E) was directed to give the Trust adequate opportunity to rectify the defect, consider its application under the appropriate provision and decide the matter afresh in accordance with law after examining all relevant facts, including the Trust’s objects and genuineness of its activities. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Present appeal is filed by assessee arises out of the order passed by Ld. Commissioner of Income Tax (Exemptions), Mumbai [hereinafter referred to as “the Ld.CIT(E)”], dated 05/03/2026, on the following grounds of appeal:-
“1) On the facts and in the circumstances of the case and in law, the learned CIT (Exemptions) erred in rejecting the application for registration of the Trust under section 12AB of the Income Tax Act, 1961 merely on the ground that the application in Form 10AB of the Income Tax Rules, was made under section 12A(1)(ac)(iii) instead of section 12A(1)(ac)(ii) of the Income Tax Act, 1961
2) On the facts and in the circumstances of the case, and in law, the learned CIT(Exemptions) failed to appreciate that the same was an inadvertent error on the part of the appellant and he ought to have provided an opportunity to the appellant to correct the said mistake rather than rejecting the application and thereby rendering the Trust as an unregistered entity.
3) On the facts and in the circumstances of the case, and in law, the learned CIT(Exemptions) erred in rejecting the application on a purely technical ground that the application was filed under wrong section/clause (which is just a typographical error) without examining the genuineness of activities and objects of the trust/institution, which is the primary requirement under the Act.
4) The appellant craves leave to add, amend, alter and/OR vary any of the grounds of appeal before OR at the time of hearing.”
2. The brief facts as emanating from the record are that the assessee-trust filed an application in Form No.10AB seeking registration u/s 12AB of the Act. The application, however, came to be filed under section 12A(1)(ac)(iii) instead of section 12A(1)(ac)(ii) of the Act. The Ld. CIT(E), noticing the said defect, rejected the application holding that the assessee had filed the application under an incorrect clause of the Act and, therefore, was not eligible for the relief sought.
Aggrieved by the aforesaid action of the Ld.CIT(E), the assessee is in appeal before us.
3. The Ld. AR submitted that the filing of the application under section 12A(1)(ac)(iii) instead of section 12A(1)(ac)(ii) was purely an inadvertent and bona fide mistake. It was contended that the error was technical in nature and did not affect the merits of the application. The Ld. AR submitted that before rejecting the application, the Ld. CIT(E) ought to have afforded an opportunity to the assessee to rectify the defect or file the application under the correct clause. It was further submitted that the Ld. CIT(E) rejected the application solely on technical grounds without examining the objects of the trust and the genuineness of its activities, which are the primary considerations for grant of registration u/s 12AB of the Act.
4. Per contra, the Ld. DR relied upon the order passed by the Ld. CIT(E).
We have perused the submissions advanced by both sides in light of the records placed before this Tribunal.
5. We note that the application filed by the assessee came to be rejected solely on the ground that Form No.10AB was filed under section 12A(1)(ac)(iii) instead of section 12A(1)(ac)(ii) of the Act. There is no dispute regarding the fact that the rejection has not been made on account of any adverse finding regarding the objects of the trust or the genuineness of its activities. The impugned order reveals that the application has been rejected on account of a technical defect relating to the clause under which the application was filed.
5.1. In our considered opinion, procedural and technical lapses should not come in the way of adjudicating substantive rights, particularly where such lapses are capable of being rectified. The object of the proceedings for grant of registration u/s 12AB is to examine the objects of the trust/institution and the genuineness of its activities. Merely because the application was filed under an incorrect clause due to an apparent inadvertent error, the same, by itself, could not have been a reason to reject the application without granting an opportunity to the assessee to rectify the defect.
5.2. The principles of natural justice require that where a defect is curable in nature, a reasonable opportunity ought to be afforded to the applicant before an adverse decision is taken. In the present case, no such effective opportunity appears to have been granted to the assessee for correcting the mistake and pursuing its application under the appropriate provision.
5.3. Considering the entirety of the facts and circumstances of the case, and in the interest of justice, we deem it fit and proper to set aside the impugned order and restore the matter to the file of the Ld. CIT(E) for fresh adjudication. The Ld. CIT(E) is directed to provide adequate opportunity to the assessee to rectify the defect, consider the application under the appropriate provision of law and thereafter decide the issue afresh in accordance with law after examining all relevant facts, including the objects of the trust and the genuineness of its activities.
Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 11/06/2026
