MOTIBEN JADVJIBHAI MALANI EDUCATION AND CHARITABLE TRUST KHAMATA,KHAMATA, PADDHARI V. THE COMMISSIONER OF INCOME TAX (EXEMPTION), AHMEDABAD

ITA 92/RJT/2025

AI Insights

The case involves the Motiben Jadvjibhai Malani Education and Charitable Trust, which appealed against the decision of the CIT(Exemption) rejecting their applications for renewal of registration under section 12A of the Income-tax Act, 1961. The Trust had initially filed applications under incorrect clauses, which were rejected due to non-compliance. Upon correcting the error and reapplying within the extended deadline provided by the CBDT, the CIT(Exemption) still rejected the applications as non-maintainable, leading to the present appeal. The Tribunal found that the CIT(Exemption) had erred in law by not considering the applications on their merits and treating them as non-maintainable based on the rejection of earlier applications.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 706057 (ITAT-RAJKOT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: misc
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY PUNGLIA; LD
• Assessee Lawyers: VIMAL DESAI; LD
• Keywords: Set aside; Principle of natural justice; Charitable institution
• Section: 11

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT BEFORE DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER AND SHRI DINESH MOHAN SINHA, JUDICIAL MEMBER आयकरअपीलसं./ITA No. 92/RJT/2025 (Ǔनधा[रणवष[ / Assessment Year: (NA) (Hybrid Hearing) Motiben Jadvjibhai Malani Education and Charitable Trust Khamata C/o. Sarda & Sarda (CA), Sakar 1st floor, Dr. Radha Krishna Road, Opp. Rajkumar College, Rajkot-360001 Vs. CIT(Exemption) Room No. 609, Floor No. 6, ayakar Bhavan (Vejalpur), Prahalad nagar, Road, Ahmedabad - 380015 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAATM2847B (Appellant) (Respondent) Appellant by : Shri Vimal Desai, Ld. AR Respondent by : Shri Sanjay Punglia, Ld. CIT(DR) Date of Hearing : 30/04/2025 Date of Pronouncement : 03/07/2025 आदेश / O R D E R PER DINESH MOHAN SINHA, JM: Captioned appeal filed by the assessee, is directed against the order passed by the Learned Commissioner of Income Tax(Exemption), wherein the Ld. CIT(E) rejected the assessee’s application in Form 10AD for approval u/s. 12AB(I)(b)(ii) of the Act and also rejected provisional approval, and also cancel the provision of the assessee. 2. Grounds of appeal raised by the assessee are as follows: 1. The order passed under Section 12AB(1)(b)(ii) of the Act is bad in law. 2. The learned CIT (Exemption) has erred in law as well as on facts in rejecting the application for registration u/s 12A(1)(ac)(iii) by considering it as non- maintainable. Page | 2 ITA No.92/Rjt/2025 Motiben J. Malani …. 3. Brief facts of the case that the appellant is a trust registered with the office of the Charity Commissioner with effect from 25.09.1997. The appellant trust is carrying on charitable activities in terms of objects contained in the trust deed. A copy of trust deed is enclosed herewith. The appellant is also provisionally registered under section 12A(1)(ac) of the Income-tax Act, 1961 in accordance with the provisions of Section 12AB of the Income-tax Act, 1961. A copy of registration certificate u/s. 12A(1)(ac) (vi) of the Act issued to the appellant on 23.09.2021 in Form No. 10AC having validity period from A.Y. 2022-23 to 2024-25 is enclosed herewith. The income of the appellant is eligible for exemption u/s. 11 of the Income-tax Act, 1961. A copy of acknowledgement of last return of income filed by the appellant for A.Υ. 2024-25 is enclosed herewith. The appellant has duly get its books of account audited and has regularly filed its return of income from time to time reporting therein the details of activities, income and its application. A copy of audit report in Form No. 10BB for the latest A.Y. 2024-25 furnished online is enclosed herewith. The appellant had thereafter applied for renewal of its aforesaid registration which was under wrong sub clause (vi) of Section 12A(1)(ac) vide online application in Form No. 10AB dated 21.03.2024. On becoming aware about the mistake in quoting the correct section in the application for renewal of registration, the appellant filed fresh application for renewal of its registration under correct sub clause (iii) of Section 12A(1)(ac) vide online application in Form No. 10AB on 01/06/2024 which is within the extended time limit i.e. 30/06/2024 allowed by the CBDT vide its Circular No. 7 dated 25/04/2024. The learned CIT(Exemption), Ahmedabad rejected the first application dated 21.03.2024 vide order dated 02.09.2024, on the ground of non-compliance as it was filed under wrong clause. The second application dated 01.06.2024 has also been rejected by the learned CIT (Exemption) vide order dated 19.12.2024 by considering it as non-maintainable by misreading of the correct facts. The Page | 3 ITA No.92/Rjt/2025 Motiben J. Malani …. learned CIT (Exemption) has failed to consider the fact that the application dated 01.06.2024 was a fresh application which was filed within the extended time limit and it was not filed against the rejection order of the first application. 4. Aggrieved by the order of the Ld. CIT(E), the assessee is in appeal before us. 5. During the course of argument, the Ld. AR of the assessee submitted that earlier applications were mistakenly filed under incorrect clauses on 21.03.2024. The subsequent application filed on 01.06.2024. That the Ld. CIT(E) has to be examined the application on merit. 6. On the other hand, the Ld. DR for the revenue relied on the order of the Ld. CIT(E), and not objected to the prayer of the Ld. AR. 7. We have carefully considered the rival contentions and perused the materials available on record. The controversy in the appeal revolves around the rejection of the assessee’s applications dated 01.06.2024 filed under the correct statutory provisions, which were treated by the CIT(Exemption) as non- maintainable, without adjudication on merits. • Section 12A(1)(ac)(iii) of the Act. 8. That the applications were intended to rectify the procedural defect in the for application in 10AB sub clause (vi) of sec. 12A(1)(ac) of the Act. 9. The approach adopted by the CIT(Exemption) in treating the said applications as non-maintainable on the basis that the earlier applications were rejected, is not tenable in the facts and circumstances of the present case. The assessee had not filed a revision or appeal against the earlier orders. The second applications were made under the correct provisions within the prescribed extended window allowed for filing as specified in the Page | 4 ITA No.92/Rjt/2025 Motiben J. Malani …. CBDT Circular No. 07/2024 dated 25.04.2024. The principle of fairness and natural justice required the authority to consider the substance of the matter rather than rejecting application on the beyond of non maintainable. We find merit in the submission of the assessee that since the second applications were filed under the correct provisions and were within the extended compliance period stipulated by the CBDT, they ought to have been examined as if filed within time. The assessee is entitled for fair adjudication on merits. 10. We hold that the orders dated 19.12.2024 passed by the CIT(Exemption), Ahmedabad, rejecting the assessee’s applications under section 12A(1)(ac)(iii) of the Income- tax Act, 1961, as non-maintainable is not legally sustainable and deserve to be set aside, and the matters are restored to his file with following directions: i. The CIT(Exemption) shall treat the assessee’s applications dated 01.06.2024 in Form No. 10AD under section 12A(1)(ac)(iii) as valid, and maintainable, and proceed to dispose of them on merits in accordance with law. ii. The said applications shall be treated as having been filed within the period prescribed under the Act, taking into account the extended deadline allowed vide CBDT Circular No. 07/2024 dated 25.04.2024. 12. The assessee is directed to fully cooperate in the proceedings before the CIT(Exemption) and to furnish all requisite information and documents as may be required to facilitate timely adjudication. 13. In the result, the appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 03-07-2025 Sd/- Sd/- (Dr. A. L. SAINI) (DINESH MOHAN SINHA) ACCOUNTANT MEMBER JUDICIAL MEMBER Rajkot Ǒदनांक/ Date: 03/07/2025 Page | 5 ITA No.92/Rjt/2025 Motiben J. Malani …. Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr. CIT 5. DR/AR, ITAT, Rajkot 6. Guard File By Order Assistant Registrar/Sr. PS/PS ITAT, Rajkot "