The issue before the Income Tax Appellate Tribunal (ITAT), Ahmedabad, in its order dated 19 August 2025, revolved around the rejection of a trust’s application for registration under section 12AB of the Income-tax Act, 1961. The Commissioner of Income Tax (Exemptions) [CIT(E)] had denied the registration solely on the ground that the trust had inadvertently filed its application under an incorrect sub-clause. The Tribunal was called upon to examine whether such a procedural lapse could justify outright denial of registration, even when the trust was otherwise eligible.
📌 Case Details
Case Title: [Name of Trust vs. CIT(E)] – ITAT Ahmedabad
Date of Order: 19 August 2025
Bench: Income Tax Appellate Tribunal, Ahmedabad
Background
- The assessee, a charitable trust, applied for registration under section 12AB of the Income-tax Act, 1961.
- Due to an inadvertent mistake, the trust filed its application under an incorrect sub-clause of section 12A/12AB.
- The Commissioner of Income Tax (Exemptions) [CIT(E)] rejected the application, holding that the filing was not made under the proper clause and hence not maintainable.
Assessee’s Contentions
- The trust’s mistake was purely technical and inadvertent in nature.
- Filing under the wrong sub-clause does not change the substantive eligibility of the trust for registration.
- Reliance placed on judicial precedents that procedural defects should not defeat substantive rights when the intent and compliance are otherwise correct.
- Requested that the application be treated under the correct clause rather than dismissed outright.
CIT(E)’s Stand
- Since the trust did not apply under the correct provision, the application was not maintainable.
- On technical grounds, the registration was denied.
Tribunal’s Observations
- The purpose of section 12AB is to ensure that genuine charitable and religious trusts obtain registration and enjoy exemption, provided they fulfill conditions of law.
- A wrong selection of sub-clause while filing the form cannot be fatal, if the trust is otherwise eligible and fulfills all conditions.
- Revenue authorities must adopt a substantive approach over technicalities, especially in exemption matters concerning charitable institutions.
- Dismissing the application on such a narrow ground defeats the principle of natural justice.
Tribunal’s Decision
- The ITAT set aside the order of the CIT(E).
- Directed the Commissioner (Exemptions) to treat the application under the correct sub-clause and examine it on merits.
- Held that inadvertent filing under an incorrect sub-clause cannot be the sole ground for denial of registration.
Key Takeaway
- Technical lapses like selecting the wrong clause/sub-clause while applying for registration under section 12AB should not disentitle a trust from its rightful claim.
- The substance of compliance is more important than procedural errors.
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Authorities are expected to provide relief instead of rejecting applications on mere technicalities.