Subhadra Foundation Vs CIT (Exemption) (ITAT Pune)
Summary: The Income Tax Appellate Tribunal (ITAT), Pune Bench, in Subhadra Foundation Vs CIT (Exemption), held that the inadvertent selection of an incorrect statutory sub-clause while applying for registration under Section 12A of the Income-tax Act, 1961, cannot by itself justify rejection of a charitable trust’s registration application. The Tribunal observed that such a procedural mistake was not sufficiently serious to render an otherwise eligible charitable institution ineligible for registration. Accordingly, the Tribunal set aside the orders of the Commissioner of Income Tax (Exemption), Pune, rejecting the trust’s applications for registration under Section 12A and approval under Section 80G, and restored both matters for fresh adjudication.
Subhadra Foundation, a charitable trust established on 1 September 2018, was engaged in educational activities through Galaxy Kids Pre Primary School. The trust had also applied to the Government of Maharashtra for permission to establish a school offering education from Standard I to Standard XII. The State Government issued a conditional letter of intent dated 15 October 2024. According to the assessee, it had obtained registration in Form No. 10AC through an order dated 27 October 2021, valid up to Assessment Year 2026-27. However, while applying for the earlier registration, the trust had inadvertently selected Section 12A(1)(ac)(i), despite not having been registered under Section 12A or Section 12AA before 1 April 2021.
Subsequently, the assessee filed Form No. 10AB on 23 December 2024 seeking registration under Section 12A(1)(ac)(iii). The CIT(Exemption), Pune, rejected the application through an order dated 21 May 2025. The Commissioner observed that although the assessee had furnished a copy of its regular registration under Section 12AB read with Section 12A(1)(ac)(i), it had admitted that no registration under Section 12A or Section 12AA existed before 1 April 2021. On this basis, the Commissioner alleged that the earlier registration had been obtained through misrepresentation of facts and could not be treated as valid. Consequently, the application for registration was rejected.
Before the Tribunal, the assessee’s authorised representative, Ms. Shweta Joshi, submitted a 176-page paper book containing relevant registration documents and information concerning the trust’s charitable activities. She explained that the incorrect selection of the statutory clause was an inadvertent procedural error and not a deliberate misrepresentation. The assessee maintained that it had furnished the necessary information during the proceedings before the CIT(Exemption), but the Commissioner failed to appreciate the explanation and supporting documents. Reliance was placed on the Pune Tribunal’s decision in National Association for the Blind Vs CIT (Exemption), concerning a comparable error in selecting the applicable clause for registration.
The Departmental Representative submitted that the matter could be restored to the CIT(Exemption) for re-verification. After examining the records, the Tribunal observed that the Commissioner had alleged misrepresentation without substantiating the allegation. It further found that the CIT(Exemption) had failed to consider the detailed submissions furnished by the assessee to establish the genuineness of its charitable activities. The Tribunal specifically held that selecting an incorrect sub-clause while submitting the application could not be regarded as a grave mistake rendering the assessee ineligible for registration under Section 12A.
The Tribunal relied on its earlier decision in National Association for the Blind Vs CIT (Exemption), Pune, which had followed the decision in Raj Krishan Jain Charitable Trust. In those proceedings, the Tribunal recognised that an inadvertent error in selecting the statutory clause in an application could be corrected and that the Commissioner should examine the application under the appropriate provision rather than reject it solely for a technical defect. Applying the same reasoning, the Tribunal set aside the rejection of Subhadra Foundation’s registration application and directed the CIT(Exemption) to reconsider the matter after providing an opportunity of hearing and allowing the assessee to furnish necessary documents.
Regarding approval under Section 80G, the Tribunal noted that the application had been rejected solely because the assessee had not furnished a copy of regular registration under Section 12AB. Since the rejection of the underlying registration application had already been set aside for fresh adjudication, the Tribunal held that the Section 80G application also required reconsideration. Accordingly, ITA No. 1744/PUN/2025 and ITA No. 1745/PUN/2025 were both allowed for statistical purposes. The Tribunal did not grant registration or approval outright; it directed the CIT(Exemption) to undertake fresh adjudication in accordance with law after granting the assessee an opportunity of hearing.
Cases Discussed
1. National Association for the Blind Vs CIT (Exemption), Pune (ITAT Pune); ITA No. 2389/PUN/2024 — The Tribunal relied on this coordinate-bench decision holding that an inadvertent error in selecting the applicable clause under Section 12A(1)(ac) could be rectified and the registration application reconsidered under the correct provision. The present order also mentions ITA No. 2389/PUN/2022 in its record of the assessee’s submissions.
2. Raj Krishan Jain Charitable Trust (ITAT; citation not specified in the supplied order) — The decision was reproduced within the National Association for the Blind precedent and recognised that an application erroneously filed under Section 12A(1)(ac)(ii), instead of Section 12A(1)(ac)(iii), could be corrected and reconsidered by the CIT(Exemption).
FULL TEXT OF THE ORDER OF ITAT PUNE
These two appeals filed by the assessee are directed against the separate orders of ld.Commissioner of Income Tax(Exemption), Pune rejecting the application for grant of registration u/s.12A and 80G of the Income Tax Act, 1961(hereinafter referred to as ‘the Act’) both dated 21.05.2025 respectively. For the sake of convenience, these two appeals were heard together and are being disposed of by this common order. We treat the appeal in ITA No.1745/PUN/2025 as lead case. The Grounds of appeal raised by the Assessee are as under :
“1. That the learned Commissioner of Income Tax (Exemptions) erred in law and on facts in rejecting the application under Section 12A of the Act merely on the ground of wrong selection of clause/sub-section while filing the Form 10A.
2. That the learned Commissioner of Income Tax (Exemptions) failed to appreciate that the error was inadvertent and procedural, and that all other requirements for grant of registration under Section 12A were duly satisfied by the Appellant.
3. The learned Commissioner of Income Tax (Exemptions) presumed the inapplicability of clause (iii) of section 12A(1)(ac) and consequently rejected the application without giving the opportunity to rectify or resubmit under the relevant clause, as the Act nowhere empowers rejection solely on the basis of an alleged wrong clause selection is unjustified, unlawful and bad in Law
4. The learned Commissioner of Income Tax (Exemptions) erroneously stated that the Appellant obtained the said registration by mis-representation of facts without considering the inadvertent error in selection of the clause/section.
5. The Assessing Officer failed to consider the bona fide intent and compliance demonstrated by the Appellant, including timely replies to notices and willingness to cooperate.
6. The Appellant craves leave to add/modify/delete/amend all/any of the grounds of appeal.”
Submission of ld.AR :
2. Ms.Shweta Joshi – Chartered Accountant appeared for the hearing on behalf of the assessee. She filed a paper book containing 176 pages. Ld.AR submitted that Assessee Trust had received provisional registration on 21.10.2021 which was valid till A.Y.2025-26. Ld.AR further submitted that Assessee had filed an application in Form No.10AB for registration u/s.12A of the Act on 23.12.2024. Ld.AR further submitted that Assessee had filed necessary details as called by ld.CIT(E). Ld.AR submitted that ld.CIT(E) has erred in rejecting the application of the Assessee. Ld.AR relied on the order of the ITAT Pune in the case of National Association for the Blind Vs. CIT(Exemption) ITA No.2389/PUN/2022. Ld.AR filed copies of the said order.
Submission of ld.DR :
3. Ld.Departmental Representative(ld.DR) for the Revenue submitted that it may set-aside to ld.CIT(E) for re-verification.
Findings & Analysis :
4. We have heard both the parties and perused the records. In this case, Assessee had filed application for registration u/s.12A(1)(ac)(iii) of the Act, in Form No.10AB on 23.12.2024.
The ld.CIT(E) rejected Assessee’s application vide order dated 21.05.2025. On perusal of the ld.CIT(E)’s order, it is noted that Assessee had filed required details during the proceedings. In paragraph 6, ld.CIT(E) has stated that copy of order of provisional approval under section 12AB of the Act, was not submitted by assessee. In paragraph 6.1, ld.CIT(E) has stated as under :
“6.1 Further, the assessee has furnished the copy of regular registration under section 12AB of the Act read with clause (i) of section 12A(1)(ac) of the Act. However, in its submission the assessee itself mentioned that the trust was not registered under section 12A/12AA of the Act prior to 01/04/2021. Therefore, it seems that the assessee has obtained the said registration by mis-representation of facts and the said registration is not a valid registration. Therefore, the prerequisite for of section 12A(1)(ac) of the Act is not fulfilled application under clause in this case.
7. In view of the above, the application filed by the assessee is hereby rejected.”
4.1 Thus, ld.CIT(E) has stated that Assessee has furnished copy of regular registration u/s.12AB of the Act. Ld.CIT(E) further alleged that Assessee had obtained said registration by mis-representation of facts.
5. We have perused the copy of the order of registration issued by Principal Commissioner of Income Tax – Mr.Sibichen K Mathew, dated 27.10.2021 which is in the paper book at page no.32 to 34. The said order is in Form No.10AC. The order is valid upto A.Y.2026-27. It has been submitted by ld.AR that the order dated 27.10.2021 in Form No.10AC is a provisional registration. Ld.AR further submitted that Assessee had by mistake applied u/s.12A(1)(ac)(i) at the time of applying for provisional registration. Ld.AR further submitted that Trust was formed on 01.09.2018. The copy of the registration issued by the Competent Authority is at page no.35 of the paper book. The Trust had never applied for registration earlier.
6. On perusal of the paper book, it is observed that Assessee is running Galaxy Kids Pre Primary School. Assessee has also applied to Maharashtra State Government for starting a school from 1st Standard to 12th Standard. Accordingly, Maharashtra Government vide order dated 15.10.2024 issued letter of intent containing conditions to be fulfilled for starting the school.
7. The ld.CIT(E) has alleged mis-representation of facts, however, ld.CIT(E) failed to substantiate it. Ld.CIT(E) failed to consider the elaborate submission filed by Assessee to establish genuineness of charitable activities. It is an admitted fact by Assessee that while filing the Form, the incorrect sub-clause was selected. However, this cannot be a grave mistake to make the Assessee ineligible for registration u/s.12A of the Act. ITAT Pune Bench in the case of National Association for the Blind Vs. CIT(Exemption)-Pune in ITA No.2389/PUN/2024 has held as under:
“6. We have heard Ld. Counsels from both the sides and perused the material available on record and also copy of case laws relied on by the assessee. We find that admittedly, the assessee trust was required to file application under clause (iii) of section 12A(1)(ac) of the IT Act but due to inadvertent error the application was filed under clause (vi) of section 12A(1)(ac) of the IT Act and for this reason alone Ld. CIT, Exemption, Pune rejected its application for registration. We find that under identical situations, a Co-ordinate Bench of this Tribunal in the case of Raj Krishan Jain Charitable Trust (supra) allowed the appeal of the assessee by observing as under :-
“9. As contended the appellant has committed a technical mistake in making the application under Section 12A(1)(ac)(ii) instead of clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. As pointed out the appellant has filed revised form 10AB for seeking registration under the correct provision i.e. Section 12A(1)(ac)(iii) which can also be considered.
10. In consonance with the decision rendered by the co-ordinate Bench, the typographical error deserves to be corrected. Accordingly, the appeal deserves to be allowed and impugned order dated 15.03.2024 of Ld. CIT (E) is liable to be set aside. Hence, the appeal is allowed and we set aside the order of Ld.CIT(E) dated 15-03-2024 and remand the matter back to the file of the CIT(E) for fresh adjudication by considering amended application of the appellant under Section 12A(1)(ac)(iii) of the Act, or he can call for amended application from the appellant.
11. In the result, the appeal filed by the assessee is allowed for statistical purpose.”
7. Respectfully following the above decision passed by the Coordinate Bench of this Tribunal (supra), & considering the totality of facts of the case & in the interest of justice, we deem it proper to set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction to treat the application already filed by the assessee as under clause (iii) of section 12A(1)(ac) of the IT Act instead of under clause (vi) of section 12A(1)(ac) of the IT Act and decide the same as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT, Exemption, Pune in this regard and produce supporting documents/evidences in support of application for registration without taking any adjournment under any pretext, otherwise, Ld. CIT, Exemption, Pune shall be at liberty to pass appropriate order as per law. Thus, the grounds of appeal filed by the assessee are partly allowed.
8. The facts of the present case and National Association for the Blind are identical, therefore, respectfully following the Co-ordinate Bench’s Decision(supra), we set-aside the order of ld.CIT(E) for denovo adjudication. Ld.CIT(E) shall provide opportunity of hearing. The Assessee shall file necessary documents before the ld.CIT(E). Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
9. In the result, appeal of the assessee ITA No.1745/PUN/2025 is allowed for statistical purpose.
ITA No.1744/PUN/2025 – 80G
10. The ITA No.1744/PUN/2025 is regarding rejection of registration u/s.80G of the Act, by ld.CIT(E). The registration u/s.80G was rejected only because Assessee has not filed copy of regular registration u/s.12AB of the Act. We have already set-aside assessee’s appeal in ITA No.1745/PUN/2025 for denovo adjudication. Therefore, accordingly ITA No.1744/PUN/2025 is also set-aside for denovo adjudication. The ld.CIT(E) shall provide the opportunity of hearing to the Assessee. The Assessee shall file necessary documents before the ld.CIT(E). Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
11. In the result, appeal of the assessee in ITA No.1744/PUN/2025 is allowed for statistical purpose.
12. To sum up, both appeals of the assessee are allowed for statistical purpose.
Order pronounced in the open Court on 09 September, 2025.
