Digamber Jain Aushdhalaya Vs CIT(E) (ITAT Jaipur)
Wrong Clause in Form 10AB Is a Curable Defect: ITAT Restores Section 12AB and 80G Applications
The Income Tax Appellate Tribunal (ITAT), Jaipur Bench, has held that selecting an incorrect sub-clause in Form 10AB is a curable defect and cannot, by itself, justify rejecting an application for registration under Section 12AB without examining its substance.
In Shri Digamber Jain Aushdhalaya v. CIT(E), Jaipur, the Tribunal set aside the rejection of applications for Section 12AB registration and Section 80G(5) approval, directing fresh consideration on merits. The order was pronounced on 5 November 2026 in ITA Nos. 1604 and 1605/JPR/2026 by Judicial Member Kuldip Singh and Accountant Member Prakash.
Background of the Applications
The assessee filed an application in Form 10AB on 30 September 2025, seeking registration under Section 12AB. While submitting the form, it selected Section 12A(1)(ac)(ii) as the provision governing its application.
The Commissioner of Income Tax (Exemption), Jaipur, issued a deficiency letter dated 26 January 2026 and a notice dated 1 March 2026. The assessee responded on 17 February 2026 and 6 March 2026, respectively.
The CIT(E) held that the selected sub-clause applied to a trust or institution already registered under Section 12AB. Finding that the assessee was not so registered, the authority rejected the application as deficient or ineligible through an order dated 20 March 2026.
On the same date, the CIT(E) also rejected the assessee’s application for approval under Section 80G(5). That rejection rested entirely on the rejection of the Section 12AB application.
Neither order examined the assessee’s objects, activities or genuineness.
Assessee’s Arguments Before ITAT
The assessee argued that mentioning the incorrect sub-clause was merely an error in selecting the applicable provision. It did not change the nature of the request, which remained an application for registration under Section 12AB.
According to the assessee, the CIT(E) should have identified the correct sub-clause, treated the application accordingly and examined its eligibility on merits. Rejecting the entire application because of an incorrect selection in the form was therefore unjustified.
The assessee further submitted that the rejection of Section 80G approval, being consequential to the registration rejection, should also be set aside.
The Revenue defended the orders, emphasising that the assessee had selected the provision and received two opportunities to justify its claim. However, it did not dispute that the application had not been examined on merits.
Different Sub-Clauses Do Not Create Different Registrations
The Tribunal observed that the sole reason for rejection was the assessee’s selection of Section 12A(1)(ac)(ii) despite not already holding registration under Section 12AB.
It also noted that the rejection order did not record the assessee’s submissions or explain its actual registration status, although that status determined the applicable sub-clause.
The Tribunal clarified that the sub-clauses of Section 12A(1)(ac) describe different situations in which a trust or institution may apply. They do not create different kinds of registration.
Regardless of the sub-clause mentioned, the application remained one seeking registration under Section 12AB. Its substance therefore required examination.
Incorrect Selection Is a Curable Defect
The Tribunal explained that Section 12AB(1) requires the CIT(E) to obtain necessary documents or information, examine the genuineness of activities and compliance with other laws, and then decide whether registration should be granted.
A rejection must follow a reasonable opportunity of hearing.
Rejecting an application solely because the applicant selected an incorrect sub-clause, without considering its substance, did not constitute a proper exercise of that power.
The Tribunal expressly treated the incorrect selection as a curable defect. The appropriate course was to identify the correct sub-clause from the record and decide the application under that provision.
It further directed that, if the application was beyond the applicable time limit when considered under the correct clause, the authority should examine whether the delay deserved condonation under the proviso to Section 12A(1)(ac).
Applications Restored for Fresh Examination
The Tribunal set aside the Section 12AB rejection and restored the application to the CIT(E). The authority was directed to apply the correct sub-clause based on the assessee’s circumstances and decide the matter afresh on merits.
The CIT(E) remained free to examine all aspects of the application, seek documents, information and explanations, and conduct necessary enquiries. The assessee was directed to cooperate and furnish the material requested.
Since the Section 80G rejection depended solely on the registration rejection, that order was also set aside. The approval application must be reconsidered after or alongside the Section 12AB application, with a reasonable opportunity of hearing.
Outcome and Significance
Both appeals were allowed for statistical purposes, while the claim for costs was rejected.
The ruling establishes that an incorrect clause selection should be corrected before the application’s substantive eligibility is examined. The Tribunal did not grant registration or approval, and expressly left the merits open for fresh determination by the CIT(E).
FULL TEXT OF THE ORDER OF ITAT JAIPUR
1. These two appeals by the Assessee are directed against two separate orders of the learned Commissioner of Income Tax (Exemption), Jaipur [hereinafter referred to as “the learned CIT(E)”], both dated 20.03.2026, passed in Form No. 10AD, rejecting the applications of the Assessee in Form No. 10AB for registration under section 12AB of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) and for approval under section 80G(5) of the Act. Since the second order rests entirely on the first, both appeals are disposed of by this consolidated order.
2. The grounds of appeal raised by the Assessee before us in the memorandum of appeal in Form No. 36 in ITA No. 1604/JPR/2026 read as under:
1. The Ld. CIT(E) has erred on facts and in law in rejecting the application dt. 30.09.2025 filed by the assessee u/s 12A(1)(ac)(ii) in Form No.10AB seeking registration u/s 12AB of IT Act, 1961 on the ground that assessee is not already registered under clause (i) 0R (iii) of section 12A(1)(ac) of IT Act, 1961 and thus Form No.10AB submitted is deficient by not appreciating that in case application is made under the wrong clause, the Ld. CIT(E) should have granted the registration under the correct clause instead of rejecting the application in toto.
2. The appellant craves to alter, amend and modify any ground of appeal.
3. Necessary cost be awarded to the assessee.
3. The grounds in ITA No. 1605/JPR/2026 are identical, except that ground no. 1 challenges the rejection of the application for approval under clause (ii) of the first proviso to section 80G(5) of the Act on the ground that such approval cannot be granted without registration under section 12AB of the Act.
4. Briefly stated, the facts of the case are that the Assessee filed an application in Form No. 10AB on 30.09.2025 seeking registration under section 12AB of the Act, mentioning sub clause (ii) of clause (ac) of section 12A(1) of the Act as the provision under which it was made. After a deficiency letter dated 26.01.2026 and a notice dated 01.03.2026, which the Assessee answered on 17.02.2026 and 06.03.2026, the learned CIT(E) held that sub clause (ii) applies only to a trust or institution already registered under section 12AB of the Act, found that the Assessee was not so registered, and rejected the application as “deficient / not eligible”. On the same date, the application in Form No. 10AB filed on 30.09.2025 for approval under section 80G(5) of the Act was rejected for the only reason that the application for registration under section 12AB of the Act had been rejected. Neither order examines the objects, the activities or the genuineness of the Assessee.
5. The learned Authorised Representative (hereinafter referred to as “the learned AR”) submitted that the mention of sub clause (ii) in Form No. 10AB was at the highest a mistake in selecting the clause and did not alter the nature of the application, which was for registration under section 12AB of the Act. The learned CIT(E) ought to have treated it as an application under the correct sub clause and decided it on merits, instead of rejecting it altogether, and the rejection under section 80G(5) of the Act, being consequential, should also not survive. The learned Departmental Representative (hereinafter referred to as “the learned DR”) relied on the impugned orders and submitted that the Assessee itself chose the sub clause and had two opportunities to justify its claim, but did not dispute that the application was not examined on merits.
6. We have heard the rival submissions and perused the material on record. The only reason for rejecting the application under section 12AB of the Act is that the Assessee mentioned sub clause (ii) of section 12A(1)(ac) of the Act in Form No. 10AB when it was not already registered under section 12AB of the Act. The impugned order does not record the submissions of the Assessee or what its registration status actually is, although that status alone determines which sub clause applies to it.
7. The sub clauses of clause (ac) of section 12A(1) of the Act describe the situations in which a trust or institution may apply for registration; they do not create different kinds of registration. Whatever the sub clause mentioned, the application in Form No. 10AB is one for registration under section 12AB of the Act, and section 12AB(1) of the Act requires the learned CIT(E) to call for the documents or information he thinks necessary, to satisfy himself about the genuineness of the activities and the compliance with other laws, and then to register the trust or reject the application after a reasonable opportunity of being heard. Rejecting the application only because the applicant ticked a wrong sub clause, without reaching its substance, is not an exercise of that power. An error in selecting a clause in a prescribed form is a curable defect. The proper course was to ascertain the correct sub clause from the record, treat the application as one under that sub clause and decide it on merits, considering, if the application was then beyond time, whether the delay deserved to be condoned under the proviso to section 12A(1)(ac) of the Act.
8. The impugned order rejecting the application under section 12AB of the Act is, therefore, set aside and the application in Form No. 10AB dated 30.09.2025 is restored to the file of the learned CIT(E), who shall treat it as an application under the sub clause of section 12A(1)(ac) of the Act applicable to the Assessee on the facts and decide it afresh on merits in accordance with law, after giving the Assessee a reasonable opportunity of being heard. The learned CIT(E) shall be free to examine all aspects of the application, and to call for such documents, information and explanations and make such enquiries as he considers necessary. The Assessee shall cooperate and furnish whatever is called for. We express no opinion on the merits.
9. The rejection of the application under section 80G(5) of the Act rests solely on the rejection of the application under section 12AB of the Act. With that foundation gone, it cannot stand. The order is set aside and the application in Form No. 10AB dated 30.09.2025 for approval under section 80G(5) of the Act is restored to the file of the learned CIT(E), to be decided afresh on merits in accordance with law, after or along with the application under section 12AB of the Act, after giving the Assessee a reasonable opportunity of being heard.
10. Ground no. 2 in both appeals is general and needs no adjudication. Ground no. 3 in both appeals seeks costs; no case for costs has been made out and this ground is rejected.
11. In the result, both the appeals filed by the Assessee are allowed for statistical purposes.
Order pronounced in the open court on 05-11-2026
