Narmada Navnirman Abhiyan Vs CIT Exemptions (ITAT Mumbai)
Wrong Clause in Form 10AB Cannot End a Trust’s Case: ITAT Restores 12AB and 80G Applications
The issue
A trust seeking renewal of its regular registration selected the provision meant for converting provisional registration into regular registration. The CIT(E) rejected its Form 10AB application on that ground and then rejected its Section 80G application as a consequence. Could a curable error in selecting the clause bring both applications to an end without an opportunity to correct it?
The Mumbai ITAT answered that question in favour of a fresh examination in Narmada Navnirman Abhiyan v. CIT(E). It held that the trust should have been allowed to rectify the mistake and pursue its registration application under the appropriate provision. Since the 80G rejection depended on the registration rejection, that application was restored too.
How the error arose
Narmada Navnirman Abhiyan had been granted regular registration on 24 September 2021. The order records that this registration covered assessment years 2022–23 to 2026–27. On 30 September 2025, the trust filed Form 10AB seeking its continued registration.
In the form, however, the trust applied under Section 12A(1)(ac)(iii). That clause concerns a trust holding provisional registration and seeking regular registration. As the trust already held regular registration, the CIT(E) considered Section 12A(1)(ac)(ii), the provision for renewal, to be the applicable clause.
The CIT(E) initially called for documents that had not accompanied the application. The trust responded by letter dated 13 January 2026 and furnished details. Nevertheless, by an order dated 23 March 2026, the CIT(E) rejected the registration application as not maintainable because it had been filed under the wrong clause.
The trust explained before the Tribunal that selecting clause (iii) instead of clause (ii) was an inadvertent, bona fide mistake. It submitted that it should have been given a chance to correct the form, particularly when the CIT(E) acknowledged that it already possessed regular registration. The rejection was not based on an adverse finding about its objects or activities.
Tribunal’s ruling on registration
The ITAT noted that the incorrect clause was the sole ground of rejection. There was no finding that the trust’s objects were unacceptable or that its activities were not genuine. In the Tribunal’s view, a rectifiable procedural lapse should not prevent a decision on substantive rights without giving the applicant a reasonable opportunity to cure it.
The Tribunal followed its earlier decision in Akanksha Charitable Trust v. CIT(E), where a matter involving an identical error had been restored for consideration under the correct provision. It accordingly sent Narmada Navnirman Abhiyan’s application back to the CIT(E).
On remand, the CIT(E) must give the trust an adequate opportunity to rectify the defect, consider the application under the appropriate provision and decide it according to law. That fresh decision will include examination of relevant facts, such as the trust’s objects and the genuineness of its activities. The ITAT did not itself grant renewal.
Why the 80G rejection also fell
The trust had filed its Section 80G(5) application on the same date as its registration application. The CIT(E) rejected 80G approval because he had rejected the Section 12AB application. In other words, the 80G decision rested on the outcome of the registration proceeding.
Once the Tribunal restored the registration application, it found it appropriate to restore the 80G application as well. The CIT(E) must consider it on merits in light of the fresh decision on registration and give the trust an opportunity of being heard.
The Tribunal expressly stated that it had not expressed an opinion on whether 80G approval should ultimately be granted. Both appeals were allowed for statistical purposes.
Author’s comments
This ruling offers relief where the applicant’s intended statutory route is clear from its existing registration, but a wrong clause is selected in Form 10AB. The important feature is that the CIT(E)’s rejection rested solely on that selection. The trust had regular registration; it was seeking renewal; and the authority had made no adverse finding on its objects or genuine activities.
At the same time, the ruling is a remand, not an automatic approval. The trust must correct the defect and establish its entitlement in the fresh proceedings. Nor does the order decide whether every error in a Form 10AB application can be cured in the same manner. Its reasoning addresses a mistake the Tribunal regarded as rectifiable on the facts before it.
The linked 80G appeal shows the wider effect of a technical rejection. A mistake in the 12AB renewal route had led to the refusal of donor deduction approval without a decision on the trust’s substantive eligibility. The remand gives the CIT(E) an opportunity to examine both applications on their merits, while keeping the final outcome open.
Cases Discussed/Relied Upon
- Akanksha Charitable Trust v. CIT(E) — ITA No. 3036/Mum/2026, dated 11/06/2026
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The captioned appeals by the assesse arise out of two separate orders, both dated 23/03/2026, by the Ld. Commissioner of Income-tax (Exemption) [in short, CIT(E] rejecting the assessee’s application for registration under Section 12AB of the Income-tax Act, 1961 (in short, ‘the Act’) and also application for approval under Section 80G of the Act. Since the rejection of the assessee’s application for approval u/s. 80G of the Act was in consequence of rejection of the application for registration under 12AB of the Act, both these appeals are taken up together for the purpose of convenience.
ITA No. 6117/MUM/2026
2. The brief facts of the case are that the assessee filed application in Form 10AB on 30/09/2025 seeking regularization of provisional registration under Section 12A(1)(ac)(iii) of the Act. On verification of the said application, the Ld. CIT(E) noted that the application was incomplete and that all documents required to be furnished with the application had not been enclosed. Notice was issued to the assessee for furnishing complete set of documents as required under Rule 17A(2), whereupon the assessee made due submission vide letter dated 13/01/2026 and furnished relevant details. However, on perusal of the above submission, together with details and documents attached with Form 10AB and data available on ITBA/CPC portal, it was observed that the assessee had been granted regular registration in Form 10AC on 24/09/2021 u/s. 12A of the Act, which was valid from A.Y. 2022-2023 to A.Y. 2016-27. As the assessee Trust had already been granted regular registration, the application for renewal of regular registration ought to have been filed u/s. 12A(1)(ac)(ii) and not u/s. 12A(1)(ac)(iii). The Ld. CIT(E) noted that the assessee had made application u/s. 12A(1)(ac)(iii) of the Act which is valid only for a trust/institution having provisional registration for three years and seeking regularization of provisional registration which is due to expire. Hence, the assessee, having regular registration for five years, does not qualify to make the application u/s. 12A(1)(ac)(iii) of the Act. In view of the above, considering that the application had been filed under a wrong section, the Ld. CIT(E) rejected the application, holding that for statistical purposes the same was not maintainable.
3. Aggrieved with the rejection of application by the Ld. CIT(E), the assessee is in appeal before this Tribunal, on the following grounds of appeal:-
i. “On the facts and in the circumstances of the case, and in law, the Hon’ble Commissioner Of Income Tax (Exemptions) erred in rejecting the application filed by the Appellant in Form No.10AB merely on the ground that the application was filed under an incorrect clause/sub-section of section 12A(1 )(ac)(iii) of the Income tax Act, 1961. On the facts and in the circumstances Of the case, the Hon’ble Commissioner of Income Tax (Exemptions) failed to appreciate that the application filed by the Appellant was otherwise bona fide, within the prescribed time and substantially compliant with the provisions of the Act and also having registration granted u/s 12AB since 24.09.2021 and having duly complied with notices issued in respect of proceedings for registration u/s 12A and therefore, the same ought to have been considered on merits instead of being rejected on technical and procedural grounds. The Appellant submits that Hon’ble Commissioner of Income Tax (Exemptions) be directed to grant registration u/s 12AB of the Act to the Appellant, or for such other relief, as the Hon’ble Tribunal may deem fit in the circumstances of the case.
ii. The Appellant crave; leave to reserve to itself the right to add, after, amend or annul any of the grounds of appeal at or before the time of hearing and to produce such further evidences, documents and papers as may be necessary.”
4. The Ld. AR for the assessee submitted that the filing of the application u/s. 12A1(ac)(iii) instead of Section 12A(1)(ac)(ii) was entirely an inadvertent and bona-fide mistake. He contended that the error was technical in nature and did not affect the merits of the application. He argued that the Ld. CIT(E) ought not to have rejected the application solely on this technical ground of wrong clause, without affording an opportunity to the assessee to rectify the defect or file an application under the correct clause. It was his contention that the Ld. CIT(E) was wrong in holding the application “not maintainable” without examining the Trust’s objects or genuineness of its activities, although in his own order he had acknowledged the existing regular registration, stating that the same would continue to remain valid from A.Y. 2022-23 to A.Y. 2026-27.
5. Per contra, the Ld. CIT DR relied upon the order passed by the Ld. CIT(E).
6. We have perused the submissions advanced by both the parties in the light of the material placed on record.
7. Admittedly, the application filed by the assessee came to be rejected solely on the ground that the Form No. 10AB was filed u/s. 12A(1)(ac)(iii) instead of section 12A(1)(ac)(ii) of the Act. There is no dispute regarding the fact that the rejection was not made on account of any adverse filing regarding the objects of the Trust or the genuineness of its activities. In our considered opinion, procedural and technical lapses should not come in the way of adjudicating substantive rights, especially where such lapses are capable of being rectified. The principles of natural justice require that where a defect is curable in nature, a reasonable opportunity should be afforded to the assessee before taking an adverse decision against it. In the instance case, no such opportunity appears to have been granted to the assessee for correcting the mistake and pursuing its application under appropriate provisions of law. The Ld. AR has cited the decision of the Mumbai Bench of the ITAT in Akanksha Charitable Trust v. CIT(E) (ITA No. 3036/Mum/2026 dated 11/06/2026) where, on identical facts, the matter was set aside and restored to the Ld. CIT(E) for fresh adjudication under the correct provision of law. We have no hesitation in following the above order and remanding the matter to the file of the Ld. CIT(E) for fresh adjudication on merits. The Ld. CIT(E) is directed to provide adequate opportunity to the assessee to rectify the impugned defect, consider the application under appropriate provisions, and thereafter decide the issue in accordance with law after examining all relevant facts, including the objects of the Trust and the genuineness of its activities.
8. With this, the grounds raised by the assessee in ITA No. 6117/Mum/2026 are allowed for statistical purposes.
ITA No. 6075/MUM/2026
9. Brief facts are that on 30/09/2025, when the assessee Trust applied for registration u/s 12AB of the Income-tax Act, 1961, it also filed an application in Form 10AB u/s. 80G(5) of the Act seeking registration u/s. 80G. The Ld. CIT(E), while considering the approval so sought u/s 80G, noted the provisions of section 80G(5)(i) which stipulates the condition that the benefits of this section are only available for an institution or fund for which sections 11, 12 or 10(23AA) or 10(23C) of the Act apply. The Ld. CIT(E) held that since the assessee fails to fulfil any of the above criteria in view of the rejection of its application for registration u/s. 12AB of the Act, its application for approval u/s. 80G also becomes untenable. In view of this, the Ld. CIT(E) rejected the assessee’s application for approval u/s. 80G.
10. Against the rejection as above, the assessee filed the following grounds of appeal –
i. “On the facts and in the circumstances of the case and in law, the Hon’ble Commissioner of Income Tax (Exemptions), Mumbai erred in rejecting the application for approval u/s 80G(5) of the Income-tax Act, 1961 filed in Form No. 10AB, without properly appreciating the facts and material available on record.
ii. On the facts and in the circumstances of the case and in law, the Hon’ble Commissioner of Income Tax (Exemptions), Mumbai erred in holding that the Appellant was not eligible for approval u/s 80G merely on the ground that the application for registration u/s 12AB was rejected, without independently examining the conditions prescribed under section 80G(5) of the Act.
iii. On the facts and in the circumstances of the case and in law, the Hon’ble Commissioner of Income Tax (Exemptions), Mumbai failed to appreciate that the rejection of registration u/s 12AB, being separately contested by the Appellant, could not be the sole basis for rejection of approval u/s 80G of the Act.
iv. The Appellant submits that the impugned order passed by the Hon’ble Commissioner of Income Tax (Exemptions) be quashed and the approval sought u/s 80G(5) of the Act be granted to the Appellant.
v. The Appellant craves leave to reserve to itself the right to add, after, amend or annul any of the grounds of appeal at or before the time of hearing and to produce such further evidences, documents and papers as may be necessary.”
11. The reason for summary rejection of the assessee’s application for approval u/s. 80G is that the assessee’s application for registration under 12AB of the Act has been rejected, albeit on technical grounds. Since we have remitted the assessee’s application for registration u/s. 12AB of the Act to the file of the Ld. CIT(E) for fresh adjudication on merits, we deem it appropriate to also remit the instant application for approval u/s. 80G of the Act to the Ld. CIT(E). The Ld. CIT(E) shall consider the section 80G application on merits pursuant to decision taken in respect of the assessee’s application for registration u/s 12AB of the Act. Needless to state, the assessee should be given adequate opportunity of being heard. We, however, make it clear that we have not expressed any opinion on the merits of the application u/s 80G – that issue is kept open for consideration by the Ld. CIT(E).
12. In the net result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 25/09/2026
