ITAT Remands Rejections Of Trust Registrations And Section 80G

ITAT Remands Rejections Of Trust Registrations And Section 80G Approvals For Fresh Adjudication

Issue

Whether Section 12A/12AB registration or Section 80G approval can be rejected solely due to technical errors, such as selecting the wrong clause in online forms.
Whether rejection of trust applications due to non-compliance with notices without granting an effective hearing or passing a speaking order on merits is sustainable.
Whether an old Section 12A application setting-aside proceeding left undecided by the Revenue for over 12 years is deemed allowed under limitation provisions.
Whether the CIT(E) ought to condone delays in filing Form 10AB and examine applications on merits.
Whether trusts alleging mixed religious/social objects or specific marketing expenses must be afforded a hearing to explain their objectives and expenditure.

Facts

Technical Form Errors: Multiple charitable trusts had their registration/approval applications rejected by the CIT(E) solely for selecting an incorrect clause/sub-clause in online forms without an opportunity to rectify.
Ex-Parte Rejections: Applications were rejected due to non-compliance with notices without granting an effective final hearing, leading to cancellation of provisional registrations and consequential Section 80G rejections.
12-Year Undecided Remand: An assessee’s Section 12A application, remanded by the Tribunal in 2013 for fresh decision, was left pending by the Revenue for over 12 years despite reminders.
Delay in Form 10AB: Form 10AB was rejected for delay without the CIT(E) giving reasons for refusing condonation.
Religious Objects & Marketing Expense Grounds: Applications were rejected on grounds that objects were religious (Nath Sampradaya/Vedic philosophy) or that expenses were limited to marketing/consultation, without allowing the assessees to explain their public utility nature or expenditure correlation.

Decision

Technical Selection Errors: Matter remanded. Rejection on purely technical form errors is unsustainable; assessees must be allowed to rectify defects or file under correct provisions for fresh evaluation on merits.
Lack of Effective Hearing: Matter remanded. Rejections for non-compliance without addressing the merits violate natural justice. One final opportunity must be granted to pass speaking orders on the genuineness of activities.
Decades-Old Pending Proceedings: Matter remanded (Deemed Allowed). Un-adjudicated set-aside proceedings pending beyond statutory timelines u/s 153 result in the old Section 12A application being deemed allowed, with directions to evaluate current status under present law.
Condonation of Delay: Matter remanded. The CIT(E) was directed to condone the delay in filing Form 10AB and decide the registration request on merits.
Explanation of Objects and Expenses: Matter remanded. Matters were remitted to allow the assessees to explain their charitable nature, societal welfare activities, and the direct relation of expenditures to trust objects.

Key Takeaways

Substance Over Technical Defects: Inadvertent clerical mistakes or incorrect clause selections in online forms cannot form the sole basis for denying statutory tax exemptions to trusts.
Deemed Regulatory Approvals: Failure by tax authorities to adjudicate remanded assessment or registration proceedings within prescribed limitation periods u/s 153 operates in favor of the taxpayer as deemed allowed.
Obligation of Speaking Orders: Rejections under Sections 12AB and 80G require a full examination of genuine trust activities, requiring tax authorities to issue reasoned orders after granting effective natural justice.

IN THE ITAT INDORE BENCH ‘DB’

Aatma Prakash Mental Health Foundation

Commissioner of Income-tax (Exemption)

Paresh M. Joshi, Judicial Member
and Narendra Prasad Sinha, Accountant Member

IT Appeal Nos. 545 (IND) of 2025 & 58, 59, 583, 637, 639, 672, 680, 700 & 723 (Ind) of 2026 and Others
[Assessment years 2021-22 TO 2026-27 ]

AUGUST 10, 2026

Apurva Mehta and Rajesh Mehta, CAs for the Appellant. Anup Singh, CIT-DR for the Respondent.

ORDER

1. This batch of 50 appeals are preferred by different Assesses (Charitable Trust and Institutions) as their respective application filed for seeking registration/renewal of registration under Section 12A/12AB of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] and/or approval under Section 80G(5) of the Act, was rejected by the Learned Commissioner of Income-Tax (Exemption) [hereinafter referred to as ‘the CIT(E)’]. Since similar grounds arising from similar factual matrix were raised in the present appeals, all the matters were listed and heard together; and are, therefore, being disposed off by way of this common order.

2. There has been delay in filing of the appeals in ITA Nos. 545/Ind/2026, 58/Ind/2026 and 59/Ind/2026. The respective assessee has filed a condonation application explaining the reason for delay. Considering the reasons as explained in the condonation application and also the fact that the assesses are engaged in charitable activities, the delay in filing of the appeals is condoned.

3. The issue involved in these appeals and the reason of rejection is briefly summarized in the table below.

Sr. No.	Appeal No. (ITA No.)	Name of the Assessee	Section involved	Reason for rejection
1	583/Ind/2026	Aatma Prakash Mental Health Foundation	80G	No valid registration u/s 12A
2	672/Ind/2026	AIC-Prestige Inspire Foundation	12A	Non-compliance. As per assessee documents furnished.
3	700/Ind/2026	Alliance Francaise de Bhopal	12A	Wrong selection of clause
4	723/Ind/2026	Arka Educational and Cultural Society	12A	Wrong selection of clause
5-6	637 & 639/Ahd/2026	Aspi Foundation	12A/ 80G	Wrong selection of clause and non-compliance
7	545/Ind/2026	Babu Bhagwati Prasad Kedia Foundation	12A	Wrong selection of clause No opportunity provided.
8	682/Ind/2026	Baghel Khand Sanskritik Bhawan Trust	12A	Wrong selection of clause
9	750/Ahd/2026	Bharat Val Vinay Mandir	12A	Wrong selection of sub-clause. Reply not considered.
10	696/Ind/2026	Confederation of Real Estate Developers Association of India Indore Chapter	12A	No valid registration under old regime and set aside proceeding not decided.
11-12	58 & 59/Ind/2026	Deshgaon Media Foundation	12A/ 80G	Non-compliance
13	729/Ind/2026	Dr. Sonal Devi Amin Public Charitable Trust	12A	Non-compliance. Reply sent by Speed-post
14	680/Ind/2026	Govindpura Audyogik Skchetra Pradushan Nivaran Kendra Pvt Ltd.	12A	Non-compliance. Reply sent by post
15	806/Ind/2026	GR Minocha Charitable trust	12A	Non-compliance Reply furnished
16	1024/Ind/2026	Guruweshvar Shani Foundation	12A	Non-compliance
17	461/Ind/2026	I Moms Welfare Society	80G(5)	Non-compliance
18	748/Ind/2026	Indian Pharmaceutical Association	12A	Non-compliance Wrong selection of sub-clause
19-20	448 & 457/Ind/2026	Indore Chai Vyapari Parmarthik Trust	12A/ 80G	Non-compliance. Wrong selection of clause
21	652/Ind/2026	Indore Paraspar Parmarthik Nyas	12A	Wrong selection of clause
22-23	352 & 353/Ind/2026	Jazba Charitable Trust	12A	Delay and Non-compliance No valid registration u/s. 12A
24-25	733 & 763/Ind/2026	Maa Kankeshwari Devi Dharmik Avam Paramarthik Nyas Trust	12A & 80G	Non-compliance & No valid registration u/s. 12A
26	857/Ind/2026	Maa Narmada Social Welfare Society	12A	Wrong selection of clause
27-28	851 & 852/Ind/2026	Maitri Education and Social Welfare Society	12A & 80G	Non-compliance & wrong Selection of clause. No valid registration u/s. 12A
29	698/Ind/2026	Mrig Trishna Jankalyankari Samaj Sevi Sansthan	12A	Non-compliance
30-31	475 & 476/Ind/2026	Narayan Bansal Charitable Trust	12A	Non-compliance
32	842/Ind/2026	Ojal Welfare & Education Society	12A	Wrong selection of clause
33	755/Ind/2026	Pujya Seva Mandli Dharamshala Trust	12A	Non-compliance
34-35	743 & 744/Ind/2026	Sahyog Kushtha Nivaran Sangh	12A & 80G	Non-compliance. No valid registration u/s. 12A
36	718/Ind/2026	Shishu Shiksha Samiti	80G	Partial Compliance. All documents not provided.
37	779/Ind/2026	Shivoma Trust	12A	Non-compliance. Wrong selection of clause
38	749/Ind/2026	Shri Bedi Satsang Sabha	12A	Wrong selection of clause
39	746/Ind/2026	Shri Devnaryan Mandir Dharmik & Parmathik Trust	12A	Wrong selection of clause
40-41	649 & 650/Ind/2026	Shri Digambar Jain Parwar Sabha	12A & 80G	Wrong selection of clause. No valid registration u/s. 12A
42	778/Ind/2026	Shrinath Mandir Public trust	80G	Objects for religious purpose. Rejected on merits.
43-44	659 & 660/Ind/2026	Shubham Shiksha & Swasthya Lok Kalyan Sansthan	80G & 12A	No valid registration u/s. 12A Wrong selection of clause
45	767/Ind/2026	Shuthi Bai Sharda Devi Parmathik Evam Dharmik trust	12A	Non-compliance. As per assessee reply filed
46	597/Ind/2026	Trivedi Charitable Foundation	12A	Non-compliance
47	437/Ind/2026	Utkrishtha Shiksha Samiti Indore	12A	Activities not charitable and no expense for charitable purpose.
48	830/Ind/2026	Vidhya Abhinav Shiksha Samiti Betul	12A	Wrong selection of clause
49	819/Ind/2026	Vishnu Geeta Bindal Charitable Trust	80G(5)	Wrong selection of clause
50	721/Ind/2026	Young Womens Education Society	12A	Wrong selection of clause

4. We have heard the Learned Authorized Representatives (AR’s) of the respective assessee as well as the Learned Departmental Representative appearing before us physically or in virtual mode. We have perused the impugned order and the grounds raised in each appeal. We have also given thoughtful consideration to the contentions raised on behalf of the assessee as well as the submissions advanced by the Learned Departmental Representative appearing before us.

5. A perusal of the provisions contained in Section 12AB of the Act shows that the scheme of registration and renewal of registration contained in Section 12AB of Act provide for the registration and periodic renewal of registration of charitable trust and institutions desirous of claiming benefit of Section 11/12 [income of charitable/religious trusts] and/or Section 80G [Donations] of the Act. The registration process requires, inter alia, verification of activities, compliance checks, and linkage with permanent account number to ensure transparency. For effective operation of the scheme contained in Section 12AB of the Act, both, the assessee as well as the Concerned Tax Authority (i.e. The Principal Commissioner or Commissioner), have been assigned distinct responsibilities to balance compliance with fairness in the registration/renewal process. The Assessee, being a charitable or religious trust or institution, must apply for registration/approval in the prescribed form; furnish the founding documents, and demonstrate that its activities are genuine and aligned with its stated charitable objects. It is clear that all the supporting documents and details are required to be furnished by the Assessee upfront along with the application in prescribed form. On the other hand, the Concerned Tax Authority is required to examine the application; call for further documents/clarification; verify the genuineness of activities; and pass a reasoned order within the prescribed period (not exceeding six month). It has been specified that before refusing or cancelling the registration, the Concerned Tax Authority is required to provide to the applicant ‘a reasonable opportunity of being heard’.

6. Having considered the rival submissions and on perusal of the materials on record, we find that the common feature in the appeals before us is that one or both the parties before us have failed to discharge their respective responsibilities/obligations. Bare perusal of the impugned order(s) shows the application(s) filed by the assessee(s) were not accompanied by the relevant supporting documents and/or were filed under a wrong sub-clause. At the same time, many of the application(s) were rejected by the Concerned Tax Authority without granting ‘a reasonable opportunity of being heard’ to the assessee.

7. The stand taken by the assessees’ is that they were was not confronted with the defect or deficiency in the application. Whereas, the Revenue has taken a position that the notice(s) were issued and the assessee(s) had failed to respond to the same and had, resultantly, failed to establish that their activities were genuine charitable activities. Therefore, as per the Learned Departmental Representatives the rejection was warranted. Conversely, the Learned Authorized Representatives defended their respective positions by broadly contending (a) non-service of notice, or (b) lack of sufficient time to respond to notice, (c) lack of knowledge of service of notice on e-mail or (d) the reply sent/uploaded by them not being considered. The common contention being that, in effect, the assessee was denied an effective opportunity of being heard.

8. It would be pertinent to note that perusal of record shows that since the applications were required to be disposed off in a time bound manner within the specified period (not exceeding 6 months), in some cases the Tax Authorities did not have time to await compliance from the assessee(s). Therefore, the application(s) were rejected without granting any further notice/opportunity to the assessee. The aforesaid rejection resulted in cancellation of the provisional registrations, if any, and also rejection of application for approval under Section 80G(5) of the Act (since holding a valid registration under Section 12A/12AB of the Act was a condition precedent to grant of such approval).

Rejection due to wrong selection of sub-clause:

9. In many of the cases, the application was rejected for the reason of selection of wrong sub-clause in the application. The learned ARs have submitted that the rejection in such cases was solely on account of an inadvertent technical error committed while selecting the applicable sub-clause in the electronic application. It was contended that the assessee had at all times intended to seek registration under the appropriate statutory provision and that the incorrect selection of the sub-clause was a curable procedural defect. It was further submitted that no opportunity was granted to the assessee to rectify the defect or file a corrected application before rejecting the application. The Ld. CIT-DR, on the other hand, has defended the action of the CIT (Exemption) in rejecting the application for registration/approval in such cases.

10. We have considered the rival submissions. It is well settled that procedural provisions are intended to facilitate the cause of justice and not to defeat substantive rights. A bona fide technical or clerical mistake, unless prohibited by statute, should ordinarily be permitted to be rectified, particularly when no prejudice is caused to the revenue. The object of the registration provisions is to examine the eligibility of the trust on the parameters prescribed by law and not to deny consideration merely because of an inadvertent error in selecting the appropriate option in the online form. The application in such cases was rejected solely because of selection of incorrect sub-clause while filing the online application and there is nothing on record to suggest that the Ld. CIT (E) had examined the objects of the trust, genuineness of its activities or any other statutory requirement governing grant of registration. The rejection in such cases is exclusively on account of a technical defect in the electronic application. Such incorrect selection of the relevant sub-clause was a curable procedural defect. The principles of natural justice also required that before rejecting the application on such a technical ground, the assessee should have been afforded a reasonable opportunity to rectify the defect or explain the circumstances leading to the error.

11. In these circumstances, and in the interest of substantial justice, we deem it appropriate to set aside such impugned orders and restore the matter to the file of the Ld. CIT(E) who shall permit the assessee to rectify the defect, if permissible in law, or to file an appropriate application under the correct statutory provision, and thereafter examine the application afresh on merits in accordance with law after affording adequate opportunity of being heard to the assessee. In case, a fresh application is required to be filed under correct sub-clause, in that circumstances, the Ld. CIT(E) should condone the delay in filing of the application. All the appeals, which have been rejected due to wrong selection of clause in the application, are allowed for statistical purpose.

Cases of Non-compliance before CIT(Exemption)

12. In the cases of non-compliance, the learned ARs have submitted that the assessee could not comply with the notices issued by the Ld. CIT(E) due to bona fide reasons and that the non-compliance was neither deliberate nor intentional. It was explained that either the notices sent on the email were nor accessed in time or they didn’t have sufficient time to comply to the notices. In many cases reply was filed either physically or on the portal, which was not considered by the Ld. CIT(Exemption). It was submitted that the assessee is willing to furnish all the documents and evidences necessary for examining the conditions prescribed under the Act. It was, therefore, prayed that one more effective opportunity be granted in the interest of justice. In such cases, the Ld. CIT-DR had no objection in setting aside the matter to the file of Ld. CIT(E) for allowing another opportunity to the assessee.

13. We have considered the request of the assessee. Where the application has been rejected solely on account of non-compliance, and no adjudication on merits has taken place, the ends of justice would be served by affording one final opportunity, particularly when the assessee expresses its willingness to place all relevant material before the authority. Having regard to the facts and circumstances of the case, and in the interest of substantial justice, we deem it appropriate to set aside such orders and restore the matter to the file of the Ld. CIT(E) for fresh adjudication. The Ld. CIT(E) shall afford one effective and final opportunity of hearing to the assessee and shall examine the application afresh in accordance with law after considering the documents and evidences that may be furnished by the assessee. Thereafter, the Ld. CIT(E) shall pass a speaking order dealing with the objects of the trust, the genuineness of its activities and the fulfilment of the statutory requirements governing grant of registration. It is made clear that this remand has been ordered to advance the cause of substantial justice and should not be construed as condoning repeated or wilful defaults. The assessee is directed to comply in the remand proceedings and furnish all the information, documents and explanations as may be called for by the Ld. CIT(E). In the event of any failure on the part of the assessee to comply with the notices or directions issued during the set aside proceeding without sufficient cause, the Ld. CIT(E) shall be at liberty to proceed in accordance with law on the basis of the material available on record.

ITA No. 696/Ind/2026

14. In this case, the Ld. CIT(E) had rejected the application of the assessee for the reason that the assessee was not having a valid registration under the old regime. As explained by the Ld. AR, the application of registration u/s. 12A of the Act made in old regime, was rejected by the Ld. Commissioner of Income Tax-1, Indore on 04.01.2012, against which the assessee had filed an appeal. The Tribunal vide order in ITA No. 501/Ind/2012 dated 10.05.2013 had set aside the matter to the file of the Commissioner of Income Tax with a direction to allow another opportunity to the assessee and, thereafter, decide the matter on merits. As submitted by the assessee, the Ld. Commissioner of Income Tax did not decide the set aside matter in spite of lapse of more than 12 years and various reminders issued by the assessee. Thus, when the Department did not act as per the direction of the T ribunal and the application under the old regime u/s. 12A of the Act was not decided, the assessee cannot be penalized for the own fault/inaction of the Department. Since the set aside proceeding was not decided by the Department within the prescribed time line as provided u/s 153 of the Act, the application made u/s. 12A of the Act under the old regime should be deemed to have been allowed. The Ld. CIT(E), is therefore, directed to examine the current application of the assessee as per present law after allowing an opportunity of being heard to the assessee.

ITA No. 352/Ind/2026

15. In this case, the Ld. CIT(E) had rejected the application of the assessee on the ground of delay in filing of Form no. 10AB. He has not given any reason for not condoning the delay in filing of the application. The provision of the Act has since been amended and the Commissioner of Income Tax has been empowered to condone the delay in filing of the application by the assessee. The Ld. CIT(E) is, therefore, directed to condone the delay in filing of the application and, thereafter, decide the application of the assessee on merits.

ITA No. 778/Ind/2026

16. The Ld. CIT(E) had rejected the application of the assessee by holding that the objects and activities of the assessee were religious in nature and did not qualify the eligibility criteria of section 80G(5) of the Act. The Ld. AR of the assessee has explained that the objects of the assessee trust was to spread the philosophy and concept of Nath Sampradaya and also to spread the concept of Vedic culture along with its philosophy, which was educational in nature and intended to impart morality and human values. The objectives of the Trust as explained by the Ld. AR are as under:

•

To spread the philosophy and concepts of the Nath Sampradaya.

•

To propagate Vedic culture and its philosophy.

•

To promote education, morality, and human values.

•

To encourage the practice ofyoga and self-meditation for the welfare of society.

•

To organize public welfare activities, such as Bhandaras (Annadan), by distributing food to the general public without discrimination on the basis of caste, creed, or religion.

•

To serve society at large and not any particular religious community or caste.

The Ld. AR submitted that the Ld. CIT(E) was not correct in treating the objectives of the assessee as religious in nature. Further that, the expenses incurred by the assessee were not restricted to any caste or community or any religious group. The Ld. AR, therefore, requested that the assessee may be allowed another opportunity to explain the objects of the trust and the nature of expenses before the Ld. CIT(E). The Ld. CIT-DR had no objection in setting aside the matter to the file of Ld. CIT(E) for this purpose. Considering the submissions of the assessee, the matter is set aside to the file of Ld. CIT(E) with a direction to allow another opportunity to the assessee to explain the nature of objectives of the trust. The Ld. CIT(E) should also examine the expenditures incurred by the assessee for various objects and activities and thereafter decide the matter as per law.

ITA No. 437/Ind/2026

17. In this case, the Ld. CIT(E) had rejected the application for registration u/s. 12AB of the Act, for the reason that the expenditures incurred were not for the objects of the Trust. He found that the only expenditure incurred was in respect of marketing and consultation. According to the Ld. AR, no opportunity was provided to the assessee before rejecting the application of the assessee. In the interest of justice, therefore, we deem it proper to set aside the matter to the file of the Ld. CIT(E) with a direction to allow another opportunity to the assessee to furnish the details of the expenditures and also to explain as to how the expenses were incurred towards fulfilment of the objects of the Trust. Thereafter, the Ld. CIT(E) should decide the matter on merits as per law.

18. In the final result, all the appeals of the assessee are allowed for statistical purpose.