Agrawal Samaj Karnataka Regd Vs CIT (ITAT Bangalore)
Wrong Section in Form 10AB Is a Rectifiable Technical Defect; U/s 12AB Registration Cannot Be Denied Without Opportunity to Correct Application – ITAT Bangalore
The Bangalore ITAT held that registration under section 12AB cannot be denied merely because the assessee filed Form 10AB under an incorrect statutory clause, where the defect is only technical or clerical and the genuineness of the trust’s activities is not in dispute. The Tribunal observed that such an error is rectifiable, and the Commissioner (Exemptions) ought to have afforded the assessee an opportunity to substitute the correct code instead of treating the application as withdrawn.
The Tribunal first condoned the 102-day delay in filing the appeal, accepting the assessee’s explanation that the delay arose from a bona fide mistaken belief that the procedural defect could be cured administratively and from the failure of its chartered accountant to file the appeal despite assuring the trustees that it would be done. The Tribunal held that where the explanation is reasonable and free from mala fides, the assessee should not be denied the opportunity to pursue its remedy.
On merits, the Tribunal noted that the CIT(E) had himself examined the trust’s activities, documents, donation records and earlier registration, and had not doubted the genuineness of its charitable activities. The only objection was that the assessee had sought provisional registration under an incorrect statutory code applicable to institutions yet to commence activities, whereas its activities had already commenced. The assessee subsequently requested withdrawal of the application under the mistaken belief that a fresh application was necessary. The Tribunal held that this technical mistake could not justify rejection of the application, as the assessee ought to have been permitted to correct the code and have its application considered on merits.
Accordingly, the Tribunal set aside the order of the CIT(E) and restored the matter with a direction to permit the assessee to substitute the application by mentioning the correct statutory code, explain the issues relating to donations sought by the CIT(E), and thereafter decide the application afresh on merits after conducting any necessary inquiry and granting a reasonable opportunity of hearing. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
1. This appeal has been filed by Agrawal Samaj Karnataka Regd. (“the assessee-trust” or “the appellant”) against the order dated 27 September 2025 passed by the Commissioner of Income Tax (Exemptions), Bangalore, whereby the assessee’s application in Form 10AB dated 10 March 2025 for registration under section 12AB of the Income-tax Act, 1961, was rejected as withdrawn.
2. The Assessee has raised the following grounds of appeal:
1. The order of the learned CIT(E), Bangalore rejecting the application filed for registration under section 80G of the Act, in so far as it is against the Appellant is opposed to law, weight of evidence, probabilities, facts and circumstances of the Appellant’s case.
2. The learned CIT(E) has erred in rejecting the application merely on the grounds of technical deficiency, on the facts and circumstances of the case.
3. The learned CIT(E) is not justified in rejecting the application when the genuineness of the activities is not doubted on the facts and circumstances of the case.
4. The learned CIT(E) is not justified in rejecting the application merely on the ground that the application is filed under wrong section, on the facts and circumstances of the case.
5. It is a settled proposition of law that “consent cannot confer jurisdiction”.
6. The Appellant craves to add, alter, modify, substitute, change and delete any or all of the grounds and to file a paper book at the time of hearing the appeal.
7. In view of the above and other grounds that may be urged at the time of the hearing of appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity.
3. Briefly stated, the facts show that the present appeal has been filed by the assessee-trust against the order dated 27 September 2025, whereby its application was rejected as withdrawn. In its condonation petition, the assessee stated that it had approached its chartered accountant for professional advice and was informed that the issue could be resolved administratively by filing a fresh application or seeking rectification, since the rejection was not on merits but only on procedural grounds. The chartered accountant, however, was preoccupied with several matters during Octoberand November, though the assessee was assured that the appeal would be filed before the due date, by the end of November 2025. Upon inquiry by the trustees in March, it was found that no appeal had been filed. Immediately thereafter, the documents sought by the chartered accountant and the present advocate were provided, and the appeal was filed on 12 March 2026. As the due date for filing the appeal was 30 November 2025, there was a delay of 102 days. In the condonation petition and affidavit, the assessee stated that the delay was unintentional and occurred under mistaken belief and due to lack of proper follow-up by its chartered accountant. It was therefore concluded that the assessee should not be penalised for these reasons and that the appeal should be accepted.
4. The learned authorised representative, Ms. Ema Bindu, supported the contents of the petition for condonation of delay and submitted that the 102- day delay was due to sufficient cause and, being not deliberate, deserved to be condoned. On the other hand, the learned CIT-DR, Mr. Somnath S. Ukkali, submitted that the assessee had failed to show sufficient cause for the delay.
5. We have carefully considered the rival submissions and the reasons stated in the petition for condonation of delay. The impugned order was passed on 27 September 2025, and the assessee ought to have filed the appeal before the Tribunal by 30 November 2025. However, the appeal was filed only on 12 March 2026, resulting in a delay of 102 days. The delay occurred because the assessee was under the mistaken belief that, since its application had been rejected by the learned CIT(E) as withdrawn on technical grounds and not on merits, the defect could be cured by filing fresh forms or by taking administrative steps. The assessee sought advice from its chartered accountant, who was also the auditor of the trust. Although the auditor assured the assessee that the appeal would be filed, he could not attend to the matter due to his busy schedule during October and November and failed to file the appeal. When the trustees later inquired about the status of the appeal, they came to know that it had not been filed. They then immediately contacted the present counsel, who advised filing the appeal, and the appeal was filed on 12 March 2026. Thus, the delay was caused by a bona fide mistaken belief and by the failure of the chartered accountant to take timely action, and not by any deliberate decision not to pursue the appeal. It is not necessary for the assessee to explain each day’s delay with strict evidence. If the explanation appears reasonable to a prudent person and does not indicate any mala fide intention, the delay deserves to be condoned. We therefore find that sufficient cause has been shown for the 102-day delay. Accordingly, the delay is condoned and the appeal is admitted.
6. The assessee filed Form 10AB dated 10 March 2025 seeking registration under section 12AB read with section 12A(1)(ac)(iii) of the Income-tax Act, 1961. On examining the application and after hearing the assessee, the learned CIT(E) noted that the trust had already been granted provisional registration under section 12AB for assessment years 2022-23 to 2026-27 by order dated 6 April 2022. That provisional registration was surrendered on 3 May 2024, after which the assessee obtained another provisional registration by filing an application under section 12A(1)(ac)(vi)(A) on 10 May 2025. The assessee then filed the present application. In substance, the learned CIT(E) held that the assessee ought first to have migrated to the new regime by applying for fresh registration under section 12A(1)(ac)(i) before seeking regular registration under section 12A(1)(ac)(iii). The learned CIT(E) also observed that the assessee had obtained two Form 10AC registrations under section 12AB: the first for assessment years 2022-23 to 2026-27 and the second for assessment years 2025-26 to 2027-28. The first provisional registration had not been regularised but was instead surrendered, and the assessee was now seeking regularisation of the second provisional registration. It was further noted that the second provisional registration was obtained under the wrong code, namely section 12A(1)(ac)(vi)(A), which applies to trusts or institutions whose activities are yet to commence, whereas the assessee’s activities had already commenced. Accordingly, notice was issued asking the assessee to explain why the application should not be rejected for procedural and technical deficiencies. In response, the assessee filed a letter dated 25 September 2025 admitting that the application had been filed under the wrong clause and requesting withdrawal of Form 10AB. In view of this withdrawal request, the application in Form 10AB dated 10 March 2025 for registration under section 12AB read with section 12A(1)(ac)(iii) was rejected as withdrawn.
7. Aggrieved by the order of the learned CIT(E), the assessee is in appeal before us. The learned authorised representative, Ms. Ema Bindu, Advocate, submitted that the assessee withdrew the application under the mistaken belief that, because an incorrect code had been mentioned, a fresh application was required. She argued that the assessee should have been allowed to correct the application by stating the proper code and, therefore, the order passed without giving such an opportunity is unsustainable. She further submitted that the application was dismissed only for a technical defect, although the genuineness of the assessee’s activities was not disputed. According to her, the application could not be rejected merely for mentioning an incorrect section. She also contended that the assessee’s consent to withdraw the application could not confer jurisdiction on the learned CIT(E) to dismiss it. Instead, the assessee ought to have been given an opportunity to state the correct code, after which the application should have been decided on merits.
8. The learned CIT-DR strongly supported the order of the learned CIT(E). He submitted that, once the assessee itself had withdrawn the application by letter dated 25 September 2025, as recorded in paragraph 11 of the learned CIT(E)’s order, no fault could be found with the order rejecting the application as withdrawn. He further submitted that the assessee had admittedly mentioned the wrong code and had not filed any application with the correct code. Therefore, there was no reason for the learned CIT(E) to permit the assessee to correct the application.
9. We have carefully considered the rival contentions and perused the orders of the lower authorities. In the present case, the assessee filed its application on 10 March 2025. The learned CIT(E) noted that the assessee was carrying on genuine activities, as reflected in paragraph 5 of his order, where sample invoices, donation receipts, earlier registration under section 12A, and Darpan portal registration were examined. The learned CIT(E) also required the assessee to produce Form 10BE in respect of donations of ₹12,60,000 made to another trust. He further observed that the assessee had obtained provisional registration by applying under an incorrect code applicable to trusts or institutions whose activities are yet to commence, whereas the assessee’s activities had already commenced. Even so, the learned CIT(E) ought to havepermitted the assessee to correct the application by mentioning the proper code. Rejection of the assessee’s application, merely because it was withdrawn under the mistaken belief that the wrong code made it unsustainable, was not justified. In fairness, the assessee should have been given an opportunity to rectify the code under which the application was filed. This view is supported by several decisions of coordinate benches, which have held that filing an application under a different sub-clause from the one applicable after provisional registration is a rectifiable mistake and not a ground to deny registration under section 12A. At most, it was a clerical error, since the assessee had substantially complied with the requirements and was otherwise eligible for registration.
10. In view of the above, we restore the matter to the file of the learned CIT(E) with a direction to permit the assessee to substitute the application by mentioning the correct code and to explain the issue relating to the donation, as called for by the learned CIT(E) in earlier notices. The learned CIT(E) may conduct any further inquiry considered necessary. If, upon such inquiry, he finds that the assessee is eligible for registration, the same shall be granted. If he finds that the assessee is not entitled to registration, the assessee shall be given an opportunity of hearing, and the issue shall thereafter be decided on merits. In the result, the appeal filed by the assessee is allowed for statistical purposes.
11. In the result, appeal filed by the Assessee is allowed for statistical purposes.
Order pronounced in the open court on 24.07.2026.
