Khandal Vipra Sewa Sansthan Vs CIT (Exemption) (ITAT Jaipur)
Section 12AB Registration Rejected: ITAT Upholds Findings on Wrong Application Route and State Trust Registration
The Income Tax Appellate Tribunal, Jaipur “A” Bench, in Shri Khandal Vipra Sewa Sansthan v. CIT (Exemption), ITA No. 663/JPR/2026, upheld the rejection of an application for registration under Section 12AB of the Income-tax Act, 1961. The Commissioner had rejected the application on grounds concerning the statutory route selected in Form 10AB and absence of registration under the Rajasthan Public Trust Act, 1959.
The order, pronounced on 22 October 2026, was delivered by Smt. Annapurna Gupta and Shri Kuldip Singh. The Tribunal found the Commissioner’s order well reasoned and noted that the appellant had not come forward to controvert its findings.
Background of the Registration Dispute
The appellant challenged the CIT(E), Jaipur’s order dated 7 February 2026, rejecting its application in Form No. 10AB.
The application had been submitted under Section 12A(1)(ac)(vi)(B) using section code 4A. The Commissioner considered that route inappropriate because the institution had already claimed exemptions in earlier years.
A separate objection concerned the institution’s failure to obtain registration under the Rajasthan Public Trust Act, 1959.
The appellant’s grounds challenged both reasons and sought registration under Section 12AB. It maintained that the application involved a correctable section-code error and that its existing registration under State society legislation satisfied the relevant requirements.
Conditions Attached to the Selected Application Route
The Commissioner examined the conditions of Section 12A(1)(ac)(vi)(B).
As reproduced in the order, the provision concerns institutions that have commenced activities and whose income has not previously been excluded through the specified provisions of Section 10(23C), Section 11 or Section 12.
The Commissioner issued a notice dated 20 January 2026, asking the applicant to explain its selection of this route despite earlier exemption claims.
Reference was made to returns for Assessment Years 2023–24, 2024–25 and 2025–26.
The Commissioner concluded that the institution had claimed exemption in earlier years and therefore fell outside the scope of the particular registration route under which it had applied.
Applicant Requested Treatment as a Renewal Application
The institution explained that its application should instead be considered under Section 12A(1)(ac)(ii), applicable to renewal of registration expiring after five years.
It argued that selection of an incorrect section code was a curable technical defect.
According to its response, registration should not be denied solely for such an error where the institution’s objects and genuineness were otherwise satisfactory. It requested correction of the mistake or treatment of the application under the appropriate provision.
The Commissioner nevertheless maintained that the application, as filed under section code 4A, was not maintainable in view of the earlier exemption claims.
Undertaking in Form 10AB Examined
The Commissioner also referred to the declaration accompanying Form 10AB.
That undertaking stated that the institution was applying under section code 4A, had commenced activities on 1 April 2024, and had not previously obtained exclusion of income under the specified exemption provisions.
The Commissioner compared this declaration with the institution’s income-tax returns and recorded findings concerning earlier exemption claims.
This comparison formed part of the reasoning for rejecting the chosen application route. The issue was therefore considered through the application particulars, undertaking and return records, rather than only the numerical code selected in isolation.
Rajasthan Public Trust Act Registration Questioned
The Commissioner separately sought an explanation regarding registration under the Rajasthan Public Trust Act, 1959.
The notices referred to Section 12AB(1)(b)(i)(B), Section 17 of the State enactment, and the Supreme Court’s decision in New Noble Educational Society.
The institution initially asserted that it was compliant and that no violation existed.
In its subsequent response, it stated that it was already registered under the Rajasthan Societies Registration Act, 1958, and submitted the relevant registration documents.
It further contended that registration under both State enactments could not be obtained and that its society registration was sufficient.
Commissioner Rejects State-Law Explanation
The Commissioner did not accept that explanation.
The impugned order recorded that the institution was not registered under the Rajasthan Public Trust Act, 1959 and treated that absence as an additional reason for holding it ineligible for Section 12AB registration.
Before the Tribunal, the appellant did not present submissions rebutting these findings at the final hearing.
The Tribunal consequently evaluated the Commissioner’s reasoning on the available record, with assistance from the Departmental Representative.
Tribunal Upholds the Rejection
The appeal was heard on 12 October 2026, when nobody appeared for the institution. A representative who had earlier obtained an adjournment stated that he had no instructions.
The Tribunal proceeded to decide the matter on the record rather than dismissing it solely for absence.
It held that the CIT(E) had passed a well-reasoned order and that no basis for interference had been established. The rejection was confirmed, and the appeal was dismissed.
The ruling sustains the findings in this application; it does not separately formulate a universal rule that every incorrect section code necessarily defeats registration.
Cases Discussed
- New Noble Educational Society Vs The Chief Commissioner of Income Tax 1 And Anr. (Supreme Court of India) — Civil Appeal No. 3795 of 2014; decided on 19.10.2022. The CIT(E)’s notices referred to this Supreme Court decision while examining compliance with requirements of other applicable laws.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
The Appellants, Shri Khandal Vipra Sewa Sansthan by filing the present appeal, sought to set aside the impugned order dated 07.02.2026 passed by the Commissioner of Income Tax (Exemption), Jaipur [hereinafter referred to as the ‘CIT(E)’] on the ground that:-
“1. The learned CIT(E) has erred on facts and in law in rejecting the application filed by the assessee u/s 12A(1)(ac)vi) in form 10AB seeking registration u/s 12AB of the IT Act, 1961 on the ground that (i) application filed in form 10AB is filed in wrong section code and taking benefit of section 10,11, &12(ii) assessee is not registered under Rajasthan Public Trust Act, 1959.
2. The appellant craves to alter, amend and modify any ground of appeal.
3. Necessary cost be awarded to the assessee.”
2. Briefly stated, facts necessary for consideration and adjudication of the issues at hand are : Appellant’s application moved in Form No. 10AB, seeking registration u/s 12A(1)(ac)(vi)(B) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) was rejected on ground of non maintainability and for want of non-registration under Rajasthan Public Trust Act, 1959 (hereinafter referred to as the “RPT Act, 1959”)
3. Being aggrieved with the impugned order passed by the Ld. CIT(E), appellant has come up before the Tribunal by way of filing the present appeal.
4. We have heard Ld. DR for the Revenue and perused the record available on file.
5. The present appeal was filed by the appellant on 20.03.2026. thereafter notice was sent to the appellant. On one date i.e. 24.06.2026 the Bench did not function and case was adjourned to 23.09.2026, on which date Shri P.C. Parwal, C.A. appeared and made an oral request for adjournment, which was granted for 12.10.2026. Today on 12.10.2026 none appeared on behalf of the appellant. Shri P.C. Parwal, C.A. present in the court was asked to assist the court in this the matter, but he has feigned ignorance and pleaded no instruction on behalf of the appellant. It appears that the appellant is not interested in prosecuting the present appeal. So the Bench has decided to dispose off this appeal with the assistance of the Ld. DR for the Revenue on the basis of material on record.
6. We have perused the impugned order passed by the Ld. CIT(E), who has rejected the application on two grounds one maintainability and another non registration under RPT Act, 1959 by returning following findings as under:-
“02. The applicant taking benefit of section 10, 11 & 12:-
2.1. Since applicant filed its application in form 10AB and verification of same says that applicant is applying for registration/ approval under the section code 4A relevant to section 12A(1)(ac) (vi) (B). The provision of section 12A(1)(ac)(vi)(B) are as under:-
“(vi) (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”.
From the plain reading of this section, it is evident that in this section, the applicant can apply only if, it has commenced activities and not taken benefit of section 10, 11 & 12 in earlier years. Thus, to verify taking of benefit of section 11 & 12, the applicant was asked vide notice dated 20.01.2026:-
“Since you have filed application in form 10AB for registration/ approval under the section code 4A relevant to section 12A(1)(ac) (vi)(B). It is evident that in this section, the applicant can apply only if it has commenced activities and not taken benefit of section 10, 11 & 12 in earlier years. But according to your reply it is seen that it has taken benefit of section 11, 12 or clause (iv), (v), (vi) & (via) of section 10(23C) in earlier years which is also evident from ITR filed for Α.Υ. 2023-24 to 2025-26. In view of the present application filed in Form No. 10AB is liable to be rejected as non-maintainable.”
In response to above, the applicant furnished reply that :- “With regard to selection of section 12A(1)(ac) (vi) in filing the form we would like to submit that our application should be considered under section 12A(1)(ac)(ii) i.e. ): Used for the renewal of registration of trusts or institutions that are expiring after five years. Further Yes. Income Tax Appellate Tribunal (ITAT) rulings consistently state that 12A/12AA registration shouldn’t be denied solely for technical errors like choosing the wrong section code; it’s a curable defect, and the Commissioner (CIT-E) should allow rectification or treat the application as filed under the correct provision if the trust’s genuineness and objects are sound, emphasizing substance over form. Denials are generally overturned if the core facts are clear and no material prejudice to the Revenue occurs, allowing for fresh consideration or allowing the assessee to correct the mistake. Key Findings on Form 10AB and Wrong Section Codes.”
The reply placed on record. On perusal of the Income tax returns filed by the applicant, it is seen that the applicant filed ITR-7 for the A.Y. 2023-24, 2024-25 and 2025-26. Hence, it is clear that the applicant is taking benefit of section 10, 11 & 12 during the A.Y. -24, 2024-25 and 2025-26 and earlier years since the date of incorporation in 08.07.1994.
Hence, it is transpired that the society has claimed the exemption under section 11 & 12 in earlier years.
Further, the applicant alongwith Form 10AB, given verification/ undertaken, relevant portion of verification/undertaking in form 10AB reproduced as under:
“I GOPAL LAL SHARMA, son of Rameshwar Lal Sharma, hereby declare that the details given in the form are true and correct to the best of my knowledge and belief.
I undertake to communicate forth with any alteration in the Non-profit Company, or in the rules governing the Institution, made at any time hereafter.
I further declare that I am filling this form in my capacity as Member (designation) having Permanent Account Number (PAN) ACZPS7207E and that I am competent to file this form and verify it.
I further undertake that I am applying for registration/approval under the section code 4A having commenced activities on 01.04.2024, and also that no income or part thereof of the SHRI KHANDAL VIPRA SEWA SANSTHAN having Permanent Account Number (PAN) AAEAS5240Bhas 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 12 for any previous year ending on or before the date of making this application on 31.03.2025, at any time after the commencement of such activities.”
From the above, the applicant itself stated that it has taken benefit of section 11, 12 or clause (iv), (v), (vi) & (via) of section 10(23C) in earlier years. Thus, thus falls out of the scope of registration u/s 12A of the Act under which the applicant has applied.
In view of the above, the present application filed in Form No.10AB is liable to be rejected as non-maintainable.
…………
………..
3.6 Assessee vide letter dated 14.11.2025 was required to submit documents/explanation by 01.12.2025, the relevant portion of which is reproduced as under: –
“Whether the institution is registered under Rajasthan Public Trust Act, 1959. If not, please give explanation that why the same should not be considered as violation of section 12AB(1)(b)(i) (B) of the Income Tax Act read with sec 17 of the Rajasthan Public Trust Act, 1959 and decision of Hon’ble Apex Court in the case of New Noble Education Society Civil Appeal No. 3795 of 2014 dated 19-10-2022 and why the application filed by you should not be rejected.”
In response, the applicant has furnished that: The Trust is fully compliant and there is no violation of section 12AB read with Rajasthan Public Trust Act.”
Thus, it is clear from the above, that institution is not registered under RPT Act, 1959. Before passing any adverse order, applicant was again asked vide show cause noticed dated 20.01.2026, relevant query is as under:
“It is seen that your institution is not registered under Rajasthan Public Trust Act, 1959, please give explanation that why the same should not be considered as violation of section 12AB(1)(b)(i) (B) of the Income Tax Act read with sec 17 of the Rajasthan Public Trust Act, 1959 and decision of Hon’ble Apex Court in the case of New Noble Education Society Civil Appeal No. 3795 of 2014 dated 19-10-2022 and why the application filed by you should not be rejected.
In response, the applicant has furnished that: “The Assessee Shri khandal vipra sewa sansthan is a cooperative society allready registered under the state act under Rajasthan state society registration act 1958 Copy of which is enclosed at P.B. No 1-8 thus satisfying the condition of registration of state act, further registration under Rajasthan Public trust act(Devasthan Vibhag) cannot be done as only one registration is done under the state act the assesse cannot be granted registration under both the act as the society act govern the registration done in Rajasthan Society act”.
Thus, it is clear that society is not registered under Rajasthan Public Trust Act, 1959. Therefore, in light of above discussion and in the absence of registration under Rajasthan Public Trust Act, 1959, assessee is not eligible for registration u/s 12AB.”
7. We are of the considered view that the Ld. CIT(E) has passed well reasoned order. The appellant has not come forward to controvert the findings returned by the Ld. CIT(E). We find no ground to interfere into the impugned order, hence confirmed and appeal filed by the appellant is hereby dismissed.
Order pronounced in the open court on 22-10-2026 .
