Technical Glitch No Ground for Rejection: ITAT Allows Charitable Trust to Refile Registration Application [Read Order]

In a recent ruling, the Income Tax Appellate Tribunal (ITAT), Mumbai, allowed a charitable trust, Celebrate Life, to refile its application for registration under Section 12AB of the Income Tax Act,1961. The decision came after the trust's original application was rejected due to an inadvertent error in the section code mentioned in the application.

The case pertains to the assessment year 2022-23. The trust had applied for registration under Section 12AB, which grants tax exemptions to charitable and religious institutions. However, the application was rejected by the Commissioner of Income Tax (Exemptions) on the grounds that the trust had mistakenly filed under the wrong sub-clause.

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According to the order passed by the CIT (E), the appellant had been granted provisional registration under Section 12A for the period from 2022-23 to 2024-25. The application for regular registration was filed under Section 12A(1)(ac)(ii), which is intended for trusts that already have regular registration and are seeking its renewal. The CIT (E) noted that the trust, being provisionally registered, should have applied under Section 12A(1)(ac)(iii), which specifically covers trusts with provisional registration.

The error occurred when the trust inadvertently filled in the wrong section code in Form 10AB, typing "01-Sub-Clause(ii) of Clause (ac) of Sub-Section (1) of Section 12A" instead of the correct "clause (iii)" related to provisional registration. This technical glitch led to the rejection of the application as non-maintainable.

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Two Member Bench comprising of Amit Shukla(Judicial Member) and Girish Agarwal(Accountant Member) upon reviewing the facts, found that the error was purely technical and not intentional. The Tribunal acknowledged the trust’s honest mistake and ruled that the rejection based on such a minor issue was unjust. It granted the trust the opportunity to refile its application under the correct sub-clause.

The CIT (E) was instructed to accept a fresh application, either physically or online, and process it in accordance with the law after providing a fair hearing to the trust.

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The Tribunal’s decision emphasizes the importance of technical accuracy in legal submissions but also highlights a pragmatic approach to ensuring fairness in the application of tax laws. Charitable institutions facing similar procedural errors can now look to this ruling as a benchmark for rectifying mistakes without suffering adverse consequences.

This case illustrates that while procedural compliance is crucial, a genuine error should not hinder an institution’s ability to access tax exemptions, especially when rectified promptly. The matter has been allowed for statistical purposes, signaling a fair chance for the trust to proceed with its registration process.

To Read the full text of the Order CLICK HERE

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