Case Law Details
Akashdeep Education Trust Vs ITO (ITAT Mumbai)
Material Facts
The assessee, an educational trust constituted on 28.10.1991 and registered with the Assistant Charity Commissioner, Thane on 07.03.1992, appealed against the order of the Commissioner of Income Tax (Exemptions), Mumbai rejecting its application for regular registration under Section 12AB filed in Form No. 10AB.
The rejection was based solely on the ground that the application filed on 03.09.2025 was barred by limitation. The order did not contain any adverse finding regarding the charitable objects of the trust, genuineness of its activities, application of income, maintenance of records or compliance with substantive conditions for registration.
The trust had earlier sought registration under Section 12AA. Though initially rejected, the Tribunal, in the assessee’s own case, directed grant of registration by order dated 12.12.2018. Thereafter, under the new registration regime, the trust received provisional registration under Section 12AB through Form No. 10AC dated 07.04.2023, valid up to 31.03.2025.
Before expiry of the provisional registration, the assessee filed Form No. 10AB on 26.03.2025 seeking regular registration. While filing the application, it inadvertently selected sub-clause (ii) of Section 12A(1)(ac) instead of sub-clause (iii). After receiving a show cause notice, the assessee filed a fresh Form No. 10AB on 03.09.2025 under the correct sub-clause, explaining that it merely rectified the procedural error and furnished all required documents.
Procedural History
The Commissioner of Income Tax (Exemptions) rejected the application dated 03.09.2025 as time-barred by order dated 27.03.2026.
The assessee appealed before the ITAT Mumbai.
Legal Issues
The Tribunal considered:
- Whether the Commissioner was justified in treating the application as time-barred.
- Whether the original application filed before expiry of provisional registration preserved the assessee’s claim for regular registration.
- Whether the subsequent Form No. 10AB was merely a corrective filing.
- Whether the Commissioner failed to consider the statutory power of condonation under the proviso to Section 12A(1)(ac).
- Whether registration could be rejected solely on limitation without any adverse finding on the trust’s objects or activities.
Relevant Statutory Provisions
- Sections 12AA, 12AB and 12A(1)(ac) of the Income-tax Act, 1961.
- Finance Act, 2020.
- Finance (No.2) Act, 2024.
Parties’ Submissions
Assessee’s Submissions
The assessee submitted that:
- It was an existing educational trust carrying on charitable activities since 1991.
- The original application dated 26.03.2025 had been filed before expiry of provisional registration.
- The subsequent application merely corrected the inadvertent selection of an incorrect sub-clause while seeking the same relief.
- The Commissioner possessed statutory power to condone delay under the proviso inserted by the Finance (No.2) Act, 2024 but failed to exercise it.
- The rejection was based solely on a technical ground without any adverse finding on the charitable objects or genuineness of activities.
Tribunal’s Findings and Reasoning
The Tribunal observed that the assessee was not a newly established trust but an educational institution carrying on educational activities for more than three decades. It also noted that the Tribunal had earlier directed grant of registration under Section 12AA and that provisional registration had subsequently been granted under the new regime.
The Tribunal found that the original Form No. 10AB had been filed before expiry of the provisional registration. The only defect was the selection of an incorrect sub-clause within the same statutory provision. The application sought the same relief throughout, and the subsequent filing merely corrected that procedural defect.
The Tribunal held that the corrected application did not introduce a new claim, new relief, new factual foundation or new cause of action. It merely rectified a procedural irregularity and was, in substance, a continuation of the original proceedings.
The Tribunal further found that even if the corrected application were viewed independently, the proviso inserted by the Finance (No.2) Act, 2024 empowered the Commissioner to condone delay upon reasonable cause. The impugned order did not meaningfully examine whether the circumstances justified condonation.
The Tribunal also noted that despite extensive proceedings, the Commissioner had recorded no adverse finding regarding the charitable objects, genuineness of activities, utilisation of funds, maintenance of accounts or compliance with statutory requirements. The rejection rested entirely on limitation.
Considering the trust’s long-standing existence, the earlier Tribunal order directing registration, the provisional registration granted by the Department, the timely filing of the original application, the curable nature of the procedural defect, the subsequent corrective filing, the statutory power of condonation and the absence of any adverse finding on merits, the Tribunal held that the impugned order could not be sustained.
Final Ruling
The ITAT Mumbai set aside the order dated 27.03.2026 passed by the Commissioner of Income Tax (Exemptions).
Since the rejection was founded solely on limitation and there was no adverse finding regarding the substantive conditions for registration under Section 12AB, the Tribunal directed the Commissioner to grant regular registration to the assessee trust in accordance with law.
The assessee’s appeal was allowed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal has been filed by the assessee trust against the order dated 27.03.2026 passed by the learned Commissioner of Income Tax (Exemptions), Mumbai in Form No.10AD, whereby the application filed by the assessee in Form No.10AB dated 03.09.2025 seeking regular registration under section 12AB of the Income Tax Act, 1961 has been rejected. The rejection is founded solely on the ground that the application was barred by limitation. Significantly, the impugned order does not contain any adverse finding with regard to the charitable objects of the trust, genuineness of its activities, manner of carrying on its affairs, application of income, maintenance of records or compliance with any of the substantive conditions governing grant of registration under section 12AB. The controversy before us, therefore, does not concern the eligibility of the assessee trust for registration on merits, but centres around the interpretation and application of the procedural provisions governing the filing of an application for regular registration.
2. Briefly stated, the assessee, Akashdeep Education Trust, was constituted under a Trust Deed dated 28.10.1991 and was registered with the office of the Assistant Charity Commissioner, Thane on 07.03.1992. The objects of the trust are confined to the field of education and the trust has been continuously engaged in educational activities through the running of educational institutions for more than three decades. The record further reveals that the assessee had earlier sought registration under section 12AA of the Act. The said application came to be rejected by the learned CIT(E); however, in further appeal, the Coordinate Bench of the Tribunal in ITA No.1371/Mum/2016 vide order dated 12.12.2018 directed grant of registration after holding that at the stage of registration the enquiry of the Commissioner is confined to examination of the charitable objects and genuineness of activities. Thus, the charitable character of the assessee trust and the genuineness of its educational activities had already been examined and recognised in the assessee’s own case.
3. Pursuant to the new registration regime introduced by the Finance Act, 2020, the assessee was granted provisional registration under section 12AB vide Form No.10AC dated 07.04.2023, valid up to 31.03.2025. Before expiry of the said provisional registration, the assessee filed Form No.10AB on 26.03.2025 seeking conversion of provisional registration into regular registration. While filing the application, however, the assessee inadvertently selected sub-clause (ii) of section 12A(1)(ac) instead of sub-clause (iii), which according to the assessee was the applicable provision governing conversion of provisional registration into regular registration. It is an admitted position that the application itself was filed before expiry of the provisional registration and that the relief sought throughout remained grant of regular registration under section 12AB.
4. Upon noticing the aforesaid defect, the learned CIT(E) issued a show cause notice questioning the maintainability of the application. The assessee accepted the mistake and, in order to cure the procedural defect, filed a fresh Form No.10AB on 03.09.2025 under the correct sub-clause while simultaneously apprising the learned CIT(E) that the subsequent filing was merely intended to rectify the inadvertent error committed in the original application. The assessee also furnished the trust deed, registration certificates, earlier appellate orders and all documents called for during the course of proceedings. Thereafter, notices were issued from time to time by the learned CIT(E) and the assessee furnished requisite explanations and supporting material.
5. Notwithstanding the above, the learned CIT(E), by the impugned order dated 27.03.2026, rejected the assessee’s application by holding that the application filed under the correct sub-clause was beyond the prescribed period and was therefore time barred. Aggrieved by the said action, the assessee is in appeal before us.
6. Before us, the learned counsel submitted that the entire foundation of the impugned order is misconceived. It was contended that the assessee is not a newly constituted trust but an educational institution carrying on charitable activities continuously since 1991 and therefore the learned CIT(E) erred in invoking the limb of section 12A(1)(ac) relating to commencement of activities. It was further submitted that the original application dated 26.03.2025 was admittedly filed before expiry of the provisional registration and consequently the assessee had duly preserved its right to seek regular registration. According to the learned counsel, the subsequent application filed on 03.09.2025 was merely a corrective filing necessitated by an inadvertent selection of an incorrect sub-clause and could not be treated as a fresh application for the purposes of limitation. It was also argued that the proviso inserted by the Finance (No.2) Act, 2024 confers specific power upon the Commissioner to condone delay where reasonable cause exists and that the learned CIT(E) failed to exercise the statutory jurisdiction vested in him. Above all, it was emphasised that the impugned order does not contain any adverse finding regarding the charitable objects or genuineness of activities of the trust and therefore rejection solely on a technical ground is contrary to the object and scheme of the registration provisions.
7. We have carefully considered the rival submissions and perused the material available on record. The issues which arise for our consideration are whether the learned CIT(E) was justified in applying the commencement of activities limb of section 12A(1)(ac) to an existing trust carrying on activities since 1991; whether the original application filed on 26.03.2025 preserved the assessee’s claim for regular registration notwithstanding selection of an incorrect sub-clause; whether the subsequent application filed on 03.09.2025 was merely curative in nature; whether the learned CIT(E) failed to examine the statutory power of condonation available under the proviso to section 12A(1) (ac); and whether rejection of registration solely on limitation in the absence of any adverse finding on the objects or activities of the trust can be sustained.
8. At the outset, one fundamental aspect deserves emphasis. The assessee before us is not a newly established institution. It is an educational trust constituted in the year 1991 and registered with the Charity Commissioner since 1992. It has been carrying on educational activities for more than three decades. The Tribunal in the assessee’s own case had already directed grant of registration under section 12AA and thereafter provisional registration stood granted by the department itself under the new regime. Therefore, the present case is not one where the authority was required to examine a newly formed trust or determine whether activities had actually commenced. The assessee was an existing institution with a long and established history of charitable activity. In such circumstances, the approach of the learned CIT(E) in invoking the commencement of activities limb of section 12A(1)(ac) appears to proceed on a factual premise which is wholly inconsistent with the admitted position on record.
9. We further find that the original Form No.10AB was filed on 26.03.2025, that is, prior to expiry of the provisional registration on 31.03.2025. Thus, the intention of the assessee to seek conversion of provisional registration into regular registration within the prescribed period is manifest from the record itself. The defect pointed out by the learned CIT(E) was not that no application had been filed; nor was it a case where an incorrect statutory form had been used or a different relief had been sought. The defect was confined to selection of a particular sub-clause within the same statutory provision. The substantive purpose of the application remained unchanged throughout. Once the assessee acknowledged the error and filed a corrected application under the appropriate sub-clause, the subsequent filing could not, in our considered opinion, be divorced from the original application already filed within time.
10. The distinction between a fresh claim and a corrective claim is well recognised in law. In the present case, the subsequent application did not introduce any new claim, new relief, new factual foundation or new cause of action. It merely corrected the procedural defect arising from selection of an incorrect statutory limb while seeking the very same relief. The trust deed remained the same; the objects remained the same; the registration sought remained the same; and the supporting documents remained the same. The subsequent application was therefore, in substance and effect, a continuation of the original proceedings and merely rectified a procedural irregularity. Such a curative exercise cannot be construed in a manner that extinguishes the original application which had admittedly been filed before expiry of the provisional registration.
11. We also find considerable force in the contention advanced on behalf of the assessee that even assuming, for the sake of argument, that the corrected application was to be viewed independently, the statute itself had conferred upon the Commissioner the power to condone delay where reasonable cause exists. The proviso inserted by the Finance (No.2) Act, 2024 was very much in force both on the date of filing of the corrected application and on the date of passing of the impugned order. Once such a power stood vested in the authority, it became incumbent upon the learned CIT(E) to examine whether the circumstances leading to the filing of the corrected application constituted reasonable cause. The impugned order, however, does not reveal any meaningful examination of this aspect. The fact that the original application had already been filed before expiry of registration, that the subsequent filing became necessary because of a bona fide procedural error and that the trust had continuously pursued its claim, has not been examined from the perspective of the condonation provision. The statutory discretion vested in the authority has thus remained substantially unaddressed.
12. Another feature of the case which, in our view, assumes considerable significance is that despite issuance of notices, calling for documents and conducting proceedings over a period of time, the learned CIT(E) has not recorded a single adverse finding regarding the charitable objects of the trust, genuineness of its activities, utilisation of funds, maintenance of accounts or compliance with statutory requirements. The rejection is founded entirely upon limitation. The record before us demonstrates that the assessee has been carrying on educational activities for more than three decades and that its charitable character had earlier been recognised by the Tribunal itself. The impugned order does not point out any change in facts, any adverse material or any circumstance suggesting that the trust had ceased to satisfy the substantive requirements of registration. The rejection, therefore, does not emanate from any deficiency in eligibility but solely from a perceived procedural lapse.
13. We also cannot lose sight of the fact that the registration provisions governing charitable institutions are intended to facilitate examination of the charitable character and genuineness of activities of an institution. In the present case, neither of these aspects has been found wanting. The entire controversy revolves around the selection of a particular sub-clause while filing an application which was otherwise filed before expiry of provisional registration. To deny registration in such circumstances, despite the absence of any adverse finding on merits and despite the subsequent rectification of the defect, would amount to elevating procedural form over substantive justice.
14. Having regard to the totality of the facts and circumstances, namely the long-standing existence of the assessee trust since 1991, the earlier order of the Tribunal in the assessee’s own case directing grant of registration, the provisional registration granted by the department itself, the undisputed filing of Form No.10AB before expiry of the provisional registration, the curable nature of the defect pointed out by the department, the subsequent corrective filing made by the assessee, the statutory power of condonation available with the Commissioner and above all the complete absence of any adverse finding regarding the charitable objects or genuineness of activities of the trust, we are unable to sustain the impugned order passed by the learned CIT(E).
15. Accordingly, the impugned order dated 27.03.2026 passed by the learned CIT(E) is set aside. Since the rejection rests solely upon the question of limitation and there is no adverse finding whatsoever on the substantive conditions governing grant of registration under section 12AB, we direct the learned CIT(E) to grant regular registration to the assessee trust in accordance with law. The grounds raised by the assessee are accordingly allowed.
16. In the result, the appeal filed by the assessee stands allowed.
Order pronounced on 24th June, 2026.
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