Rejection of Registration for Selecting Wrong Sub-Clause Unjustified; Matter Remanded for Rectification and Consideration

By | October 17, 2026
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Rejection of Registration for Selecting Wrong Sub-Clause Unjustified; Matter Remanded for Rectification and Consideration

Issue

Whether the CIT(E) was justified in rejecting an application for regularisation of provisional registration under Section 12AB filed in Form 10AB solely because the trust selected the wrong sub-clause in the form.

Facts

  • Assessee Profile: The assessee is a trust established for educational, medical, social, cultural, welfare, and charitable purposes.
  • Provisional Status: The trust was provisionally registered under Section 12A and held provisional approval under Section 80G.
  • Application Filed: The trust filed Form 10AB seeking regularisation of its provisional registration for AY 2025-26.
  • Procedural Error: While filling Form 10AB, the assessee inadvertently selected Section 12A(1)(ac)(ii) (pertaining to renewal) instead of Section 12A(1)(ac)(iii) (pertaining to regularisation of provisional registration).
  • CIT(E) Action: The CIT(E) rejected the application on this technical ground without questioning or doubting any of the substantive conditions or requirements fulfilled by the trust.

Decision

  • Procedural Defect Not Fatal: Rejecting an application under Section 12A solely for mentioning an incorrect sub-clause in the form is a hyper-technical approach that cannot be sustained.
  • Impugned Order Set Aside: The order passed by the CIT(E) rejecting the registration application was set aside.
  • Remand for Rectification: The matter was remanded to the CIT(E) with directions to permit the assessee to rectify the mistake in the application form.
  • Fresh Consideration on Merits: The CIT(E) was directed to reconsider the application on its merits for grant of registration under Section 12AB after providing a reasonable opportunity of hearing to the assessee. (Matter remanded)

Key Takeaways

  • Substance Over Technicality: In procedural applications like Form 10AB for trust registrations, selection of an incorrect sub-clause is a curable defect and should not lead to summary rejection.
  • Opportunity to Rectify: Revenue authorities are expected to grant the assessee an opportunity to rectify inadvertent clerical or code selection errors before rejecting applications.
  • Merit-Based Adjudication: Where substantive eligibility criteria for charitable registration are otherwise undisputed, applications under Section 12AB must be decided on merits rather than technical dismissals.
IN THE ITAT MUMBAI BENCH ‘F’
Fredun Foundation
v.
Commissioner of Income-tax (Exemption)*
Challa Nagendra Prasad, JUDICIAL MEMBER
and Prabhash Shankar, ACCOUNTANT MEMBER
IT Appeal No. 5612 (MUM) of 2026
[Assessment year 2025-26]
SEPTEMBER  16, 2026
Rohan Mittal, AR for the Appellant. Nishant Samaiya, CIT-DR for the Respondent.
ORDER
Prabhash Shankar, Accountant Member. – The present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Exemptions), Mumbai [hereinafter referred to as “CIT(E)”] pertaining to the order passed u/s. 12AB of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2025-26.
2. The grounds of appeal are as under:
1. Under the facts and the circumstances of the case and in law, the order dated 31.08.2024 passed by the Commissioner of Income Tax, (Exemptions), Mumbai (“Ld. CIT(E)”) under sub-clause (b) of sub- section (1) of section 12AB of the Income Tax Act, 1961 (“the Act”) read with Rule 17A along with Form No. 10AD is perverse, arbitrary, without jurisdiction, and bad in law.
2. Under the facts and circumstances of the case and in law, Ld. CIT (E) erred in rejecting the application for regularization of provisional registration/ approval under sub clause (b) of sub- section (1) of section 12AB of the Act read with Rule 17A along with Form No. 10AD without providing adequate opportunity of being heard, thereby violating the principle of natural justice.
3. Under the facts and circumstances of the case and in law, the Ld. CIT (E) has grossly erred in denying the appellant application for regularisation of provisional registration dated 22.03.2024, filed in Form No. 10AB, merely on the technical ground that the appellant, while filing the said application, inadvertently quoted clause (ii) of Section 12A(1)(ac) of the Act instead of clause (iii) thereof.
4. Under the facts and circumstances of the case and in law, the Ld. CIT (E) has acted beyond the scope of jurisdiction vested under Section 12AB in rejecting the Appellant application for regularisation of registration solely on the ground of incorrect quoting of the relevant clause. The Act does not confer any power upon the Ld. CIT (E) to reject an application on such curable technical defects.
5. Under the facts and circumstances of the case and in law, it is respectfully submitted that the issue involved in the present appeal, relating to the rejection of the application for registration merely on technical grounds, is squarely covered in favour of the Appellant by the decision of the Hon’ble Coordinate Bench in the Appellant own case in ITA No. 7187 Mum 2025 for AY 2025 26.
3. At the outset, it was noticed that the instant appeal is delayed by 554 days. In this regard, an application for condonation of the delay alongwith an affidavit of the Trustee has been submitting stating that Mr. Fredun Nariman Medhora, a trustee of the Trust and in-charge of the major responsibilities of the Trust, including filing of the return of income under the Act and ensuring compliance with other statutory requirements under the provisions of the Act. Post receipt of the impugned order, he was in the process of discussing the same with consultant regarding available legal remedy. However, his father Mr. Nariman Bamansha Medhora, who was also one of the trustees of the Trust, was critically ill and required frequent constant medical care and attention due to deterioration of his health. Since Mr. Medhora was solely looking after all the medical needs and was completely involved in taking care of his father, who unfortunately passed away on 20.06.2025, caused immense distress and disruption within the family, he was not able to seek the legal remedy against the order in time. However, after checking the income tax portal, the appellant appointed new Authorized Representative and accordingly the present appeal was filed. The delay in filing the present appeal was bona fide and attributable to unavoidable circumstances, including the medical emergency in the family of Mr. Medhora, the non-responsiveness of the earlier legal consultant in filing the appeal and an inadvertent oversight on the part of the newly appointed Authorized Representative. Refusing the condonation of delay application the sole purpose of justice will be defeated. Further no prejudice would be caused to the department/revenue if the appeal is admitted after condoning the delay in filing and adjudicated by Hon’ble Bench.
4. On careful consideration of the submissions of the assessee, we are of the view that the delay in filing of the present appeal was not intentional but due to unavoidable and sufficient cause. Such a bonafide mistake needs to considered liberally. In this connection, reliance could be placed on the landmark decision of hon’ble Supreme Court which inter alia held in Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC) that “ordinarily, a litigant does not stand to benefit by lodging an appeal late ….. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated ….. Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period ….. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk.” We therefore, condone the delay and proceed to adjudicate the grounds on merits.
5. Relevant facts of the case are that the assessee is a Trust registered under the Maharashtra Public Trusts Act, 1950, created by virtue of a trust deed dated 15.01.2016, established for educational, medical, social, cultural, welfare, and charitable purposes. The Trust was granted provisional registration under section 12A as well as provisional approval under section 80G vide orders dated 07.01.2022 passed by the ld.CIT(E). For regularisation of the said provisional registration/ approval, it filed applications in Form 10AB. However, the said application was rejected by the ld.CIT(E) stating that the trust was provisionally registered, provisions of section 12A(1)(ac)(iii) were applicable to it. On perusal of the From 10AB filed by the assessee, it was observed that the assessee had applied under section 12A(1)(ac)(ii) i.e. for renewal of registration and not for regularisation of provisional registration. Hence, the application was rejected.
6. The ld.AR has submitted that the registration was denied on a technical ground without adequate opportunity to the assessee to rectify the alleged mistake thereby violating the principle of natural justice. The ld.CIT(E) has acted beyond the scope of jurisdiction vested under Section 12AB in rejecting the application for regularisation of registration solely on the ground of incorrect quoting of the relevant clause. The Act does not confer any power upon him to reject an application on such curable technical defects. Further, the issue involved in the present appeal, relating to the rejection of the application for registration merely on technical grounds, is squarely covered in favour of the assessee by the decision of the Hon’ble Coordinate Bench in the its own case in ITA No. 7187 Mum 2025 for AY 2025-26.
7. On careful consideration of all relevant facts, we find that the ld.CIT(E) has not doubted or questioned the other requirements and conditions satisfied by the assessee but the application of the assessee was dismissed only on a technical ground. Having heard the parties and perused the material available on record and rival submissions, it is apparent that he has rejected the application filed u/s 12A of the Act, simply on mentioning the wrong sub clause of relevant provision applicable to the case. We are of the considered opinion that a bonafide mistake cannot be a ground for denial of registration. It is trite law that in the administration of justice, the form cannot prevail over substance. We are of the opinion that mere mistake in filing the form would not vitiate the claim of the assessee. Therefore, we set aside the impugned order and matter is remanded to him with the direction to permit the assessee to rectify the mistake in the application form and then consider the application of the assessee for grant of registration u/s 12AB of the Act by passing an order on merits of the matter after giving an opportunity of hearing to the assessee.
8. Before parting, we may make it clear that our decision to restore the matter back to the file of the ld.CIT(E) shall in no way be construed as having any reflection or expression on the merits of the dispute, which shall be adjudicated by him independently in accordance with law.