IMAME RABBANI FOUNDATION,SANGRUR V. INCOME TAX OFFICER WARD-1, MALERKOTLA

ITA 142/CHANDI/2025

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The case involves the Imame Rabbani Foundation, a charitable trust, which appealed against the decision of the Commissioner of Income-tax (Exemptions), Chandigarh, rejecting its application for registration under section 12AB of the Income Tax Act. The rejection was based on the ground that the trust had commenced its activities by purchasing land before applying for provisional registration. The Tribunal examined whether the purchase of land constituted the commencement of charitable activities and whether the procedural rejection by the CIT(E) was justified.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 773260 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 28-01-2025
• Other Referred Cases: Shrimati Shantaben Haribhai Gajera Foundation vs. CIT(E)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MEENAKSHI VOHRA
• Assessee Lawyers: DHARMENDRA KUMAR
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Charitable institution; Procedural lapse
• Section: 12A

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “A” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: VIRTUAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी मनोज क ुमार अŤवाल, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. MANOJ KUMAR AGGARWAL, AM आयकर अपील सं./ ITA No. 142/Chd /2025 U/s 12AB (1) (b)(ii) Assessment Years: 2024-25 to 2026-27 Imame Rabbani Foundation, Madrasatul Madina Faizane Gauso Khawaja, Ward No. 9, Abbaspura Punjab 148023 बनाम ITO, Ward 1, Malerkotla ˕ायी लेखा सं./PAN NO: AACTI1189G अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Sh. Dharmendra Kumar, CA राजˢ की ओर से/ Revenue by : Smt. Meenakshi Vohra, CIT DR सुनवाई की तारीख/Date of Hearing : 24.09.2025 उदघोषणा की तारीख/Date of Pronouncement : 24.09.2025 आदेश/Order PER LALIET KUMAR, J.M: This appeal by the assessee is directed against the order of the Ld. Commissioner of Income-tax, Exemptions, Chandigarh dated 29.11.2024. 2. The grounds of appeal raised by the assessee are as under:- 1. That Ld. CIT (Exemptions), Chandigarh did not consider the small clerical mistake committed by the appellant-trust in Printed from counselvise.com 2 filing of Form No. 10A. The rejection of the application of the appellant-trust under section 12AB of the Act on this ground is arbitrary, against the law of natural justice and fair play. unjustified, unlawful and without jurisdiction. 2. In case where the CPC, Bengaluru, while issuing Form No. 10AC, has itself allowed the appellant-trust registration from a correct assessment year, which was in line with the provisions of section 12A(1)(ac) (vi) (B) of the Act, even after considering that 2 the assessee, though mistakenly, had selected item (A) of section 12A(1)(ac) (vi) of the Act while furnishing the application for registration before the Commissioner of Income-tax (Exemptions), then the appellant-trust should not be punished for a mere clerical mistake incurred by it while filing a form. 3. No proper opportunity of being heard or show-cause notice was given to the appellant-trust before cancelling the application for registration as well as the provisional registration granted to the appellant-trust. 4. That the appellant reserves right to modify and/or add any other 4 ground or grounds of appeal as the circumstances of the case might require or justify. 5. That the assessment made by Ld. CIT(E) is highly excessive, contrary to facts and against the principles of natural justice and fair play. 6. Where the appellant-trust would have been granted provisional registration from a future assessment year, the appellant-trust would have suo-motu surrendered its provisional registration and corrected its clerical mistake by applying for registration under section 12A(1)(ac) (vi) (B) of the Act in the same financial year and the Ld. CIT(E) would Printed from counselvise.com 3 have given registration under section 12A of the Act from the same financial year. Hence, where the defect in the application filed by the appellant-trust was curable without any adverse consequences in the hands of the appellant- trust, such defect should not be a reason to reject the application for registration filed by the appellant-trust. 3. The facts of the case are that the assessee-trust filed its application under section 12A(1)(ac)(iii) in Form 10AB on 28.06.2024, seeking regular registration under section 12AB. The case of the assessee was that it had been granted provisional registration earlier by CPC vide order dated 16.01.2024. The CIT(E), however, rejected the application on the ground that the assessee had “already commenced” its activities as on 26.12.2022 by purchasing land, and hence provisional registration itself was bad in law. The learned CIT(E) concluded that, since provisional registration could only be sought by institutions which had not commenced activities, the assessee’s application was not maintainable. 4. The learned Authorised Representative (“AR”) for the assessee assailed the order of the CIT(E) as being hyper-technical and contrary to law. He submitted that the mere purchase of land, or the acquisition of infrastructure, cannot by itself be equated with the commencement of charitable activities. The AR emphasised that charitable activities, in the real sense, begin only when benefits are actually delivered to the beneficiaries in line with the objects of the trust. 5. He placed strong reliance on the decision of the Surat Bench of the Tribunal in Shrimati Shantaben Haribhai Gajera Foundation vs. CIT(E), ITA No. 688/SRT/2023, order dated 16.01.2024, wherein it was categorically held that Printed from counselvise.com 4 preparatory steps such as receiving seed donations or purchasing land are not tantamount to commencement of charitable activities. The Tribunal in that case observed that commencement must be understood purposively to mean actual implementation of charitable objects, and not preliminary acts of setting up. 6. The AR argued that the rejection by the CIT(E) in the present case was wholly unjustified. He stressed that procedure is only a handmaiden of justice and technical lapses, such as selecting the wrong clause or treating preparatory steps as commencement, cannot deprive a genuine charitable trust of its substantive right to registration. He urged that the order of the CIT(E) be set aside and a direction be issued to grant registration under section 12AB. 7. The learned Departmental Representative (“DR”), supporting the order of the CIT(E), submitted that as per section 12A(1)(ac)(iii), provisional registration is meant only for trusts which have not commenced activities. He pointed out that the assessee itself admitted to having purchased land on 26.12.2022, which clearly demonstrates the commencement of activity. Once this fact was established, the DR contended, the assessee’s application under the provisional registration category was misconceived. 8. The DR further argued that the statutory language must be given due effect, and once it is found that the assessee had commenced activities, the provisional registration and subsequent application were not maintainable. He thus pleaded that the order of the CIT(E) be upheld. Printed from counselvise.com 5 9. We have considered the rival submissions, perused the record, and carefully gone through the statutory provisions as well as the judicial precedents cited. The short controversy is whether the purchase of land by the assessee on 26.12.2022 amounted to the commencement of activities, thereby rendering its subsequent application for registration under section 12AB non-maintainable. 10. At the outset, we note that the genuineness of the assessee’s objects or activities has not been doubted by the learned CIT(E). The rejection is based solely on the fact that preparatory acts—such as land purchase—amount to commencement and the assessee had obtained the provisional registration by selecting the wrong column 11. In this regard, we find merit in the submissions of the assessee. The Surat Bench in Shrimati Shantaben Haribhai Gajera Foundation (supra) has clearly held that “mere receipt of donation or purchase of land cannot be considered as commencement of charitable activities; such steps are only preparatory and facilitate future operations” (emphasis supplied). The Tribunal observed that charitable activity in the real sense commences only when the beneficiaries actually receive the intended benefits. 12. Applying the above principles to the present case, we are of the considered opinion that the CIT(E) erred in treating the assessee’s application as non-maintainable. Land purchase is a preparatory step, not the commencement of charitable activity. The assessee was therefore well within its right to apply for registration under section 12AB. Printed from counselvise.com 6 13. In the absence of any adverse finding on the genuineness of the trust or its objects, denial of registration on a purely technical ground is not justified. Moreover the scheme of section 12AB is benevolent in nature and intended to facilitate the registration of genuine charitable institutions; it should not be frustrated by adopting hyper-technical interpretations. We must also acknowledge that the law in this area has been recently amended and is still evolving. The level of digital literacy in our country has yet to reach a stage where every assessee or professional is fully conversant with the intricacies of the new portal-driven compliance system. More so, this transition occurred in the backdrop of the Covid-19 pandemic, when procedural and technical hurdles were a common reality. In such circumstances, substantive justice must prevail over form, and procedural lapses or mistaken selection of the wrong category cannot deprive a bona fide charitable trust of its legitimate right to registration. 14. We accordingly set aside the impugned order of the learned CIT(E). The appeal of the assessee is allowed and the CIT(E) is directed to grant registration to the assessee-trust under section 12AB of the Act forthwith. 15. In the result, appeal of the assessee-trust stands allowed. Order Pronounced in the open Court on 24/ 09/2025. Sd/- Sd/- मनोज क ुमार अŤवाल लिलत क ुमार (MANOJ KUMAR AGGARWAL) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER rkk Printed from counselvise.com 7 आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 5. गाडŊ फाईल/ Guard File सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "