Zarina Foundation Vs CIT (Exemption) (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT) Mumbai Bench has remanded the case of Zarina Foundation back to the Commissioner of Income-tax (Exemption) [CIT(E)], Mumbai, after the trust’s application for regularization of registration under Section 12A and subsequent application for 80G(5) exemption were rejected. The ITAT’s decision, delivered on May 21, 2025, highlighted a procedural error by the assessee attributed to a technical glitch in the income tax portal and a critical lapse by the CIT(E) in not issuing a show-cause notice (SCN) regarding the discrepancy.
Zarina Foundation, a charitable trust engaged in educational, social, cultural, economic, and medical relief activities, initially obtained provisional registration on June 22, 2022, valid for Assessment Years 2023-24 to 2025-26. The trust subsequently filed its Income Tax Return (ITR-7) for A.Y. 2023-24, claiming exemption, before applying for regularisation of registration in Form 10AB.
The core of the dispute arose when the assessee attempted to file its application for permanent registration. The trust aimed to apply under Section 12A(1)(ac)(iii) of the Income-tax Act, 1961. However, due to what the assessee described as a technical constraint in the online system, this specific section was not accepted. Consequently, the assessee filed the application by inadvertently selecting Section 12A(1)(ac)(vi)(B) of the Act, a provision not applicable to its activities. The trust had reportedly informed the income-tax authorities and sent letters to the Centralized Processing Centre (CPC), Bengaluru, detailing the error caused by the application system, but received no assistance or reply.
