MUKTISAR WELFARE CLUB,MUKTSAR, PUNJAB V. ITO WARD 2(2), MUKTSAR, MUKTSAR

ITA 235/ASR/2025

AI Insights

The case involves the Muktisar Welfare Club, which applied for final registration under section 12A(1)(ac)(iii) of the Income Tax Act, 1961, after being provisionally registered. The CIT(E) rejected the application due to a clerical error in the section code used in the application form, despite the society's activities and financial conduct being in accordance with its charitable objectives. The Tribunal noted that such a technical error should not be a ground for rejection without an opportunity for rectification, especially when the merits of the case were not in dispute.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 787523 (ITAT-AMRITSAR)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2024-2025
• Appeal Filed On: 20-03-2025
• Other Referred Cases: Inclusive Recycling Foundation v. Commissioner of Income-Tax, Exemption, Niravadya Foundation v. Commissioner of Income-Tax (Exemption), Gopal Navjeevan Kendra v. CIT, Exemption, Pune, Deodhar Education and Vocational Academy v. CIT, Sahrdaya Educational Trust v. Commissioner of Income-tax (Exemptions), Zarina Foundation v. Commissioner of Income-tax (Exemption), D.Y. Patil Agriculture & Technical University v. Commissioner of Income-tax (Exemption)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JIVANDEEP SINGH KAHLON
• Assessee Lawyers: ROHIT KAPOOR; V. S
• Keywords: Set aside; Principle of natural justice; Charitable institution
• Section: 11; 12AA; 12A; 12; 10; 80G

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR. BEFORE SH. MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER AND SH. UDAYAN DAS GUPTA, JUDICIAL MEMBER (Hybrid Hearing) I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 Muktisar Welfare Club, Near Manga Petrol Pump Ajit Cinema Road, C/o Rinku Pharma Muktsar, Muktsar, Punjab. [PAN: AADAM2794B] (Appellant) Vs. ITO, Ward-2(2), Muktsar. (Respondent) Appellant by Sh. Rohit Kapoor, Adv & Sh. V.S. Aggarwal, ITP Respondent by Sh. Jivandeep Singh Kahlon, CIT. DR Date of Hearing 14.10.2025 Date of Pronouncement 21.11.2025 ORDER Per: Udayan Das Gupta, J.M.: This appeal is filed against the rejection of application dated 19/08/2024, filed by the assessee, for registration u/s 12A(1) (ac)(iii) of the Act 61, vide order of the Ld CIT (E) Chandigarh, dated 19/02/2025. ITA No.182/Asr/2025 Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 2 2. The grounds of appeal taken by the assessee in form 36 are as follows: “1. On the facts and circumstances of the case, CIT(E) erred in rejecting final registration applied by the assessee u/s 12A(l)(ac)(iii). The rejection order passed by CIT (E) in form 10AD is against the facts and provisions of law. 2. That The CIT(E) has erred in dismissing application for registration merely on a nontechnical ground/reason i.e original provisional application was not filed by selecting the appropriate clause, without pointing out any discrepancy on merits. 3. That the rejection order passed by the CIT (E) is required to be set aside and form 10AD be issued by allowing the final registration under section 12A(l)(ac)(iii) for AY's 2024-25 to 2028-29. 4. That The CIT(E) has failed to appreciate that the expenses incurred, as per the financial statements, are consistent with the aims and objects of the society. That, the CIT(E) failed to appreciate that the reason for rejection is not embedded in the specified violation as per section 12AB(4). 5. That the rejection of the final registration by the Learned CIT (Exemption), Chandigarh, is unjustified. The CIT (E) failed to consider that the typographical error in the provisional registration application, where the provision was incorrectly cited under Section 12A(1)(ac)(vi)(B) instead of Section 12A(1)(ac)(vi)(A), should not invalidate the final registration. Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 3 5 1. That CIT (E) failed to appreciate that the typo error in selecting the appropriate clause cannot be the reason for rejection. Furthermore, if the same had been pointed out during the provisional registration process, it could have been rectified. Therefore, the 'ejection of the final registration on this issue is not warranted. 6. That the ld. CIT(E) has erred in rejecting the application without providing any adverse material regarding genuineness of activities of the society.” 3. Brief facts emerging from records are that the assessee society is registered under the society registration Act 1960 and is carrying out various charitable activities such as medical relief, providing education to poor, organising health camps, conducting awareness programmes against drugs abuse, and other child and women welfare activities. 4. The provisional registration applied on 12/02/2024 , was granted to the assessee on 20th February, 2024 for the period AY 2024-25 to AY 2026-27, and thereafter, the assessee sought final registration in form 10AB on 19th August, 2024, u/s 12A(1)(ac) ( iii) of the Act , which has been rejected on the ground of defects already existing in the original provisional application filed on 12th February, 2024, as evident from para 3.2 of the rejection order , where the Ld CIT ( E ) has observed that the activities of the society has already commenced before the date of Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 4 provisional registration and as such the registration granted was bad in law which also resulted in rejection of this present application filed in form 10AB u/s 12A(1)(ac) (iii) of the Act 61. 5. In course of hearing the ld. AR of the assessee submitted that any defect in the provisional application cannot be a valid ground for rejection of the application for final registration as there was no specified violation u/s 12AB(4) of the Act 61. It was further argued that defect if any should have been pointed out by the department at the time of granting the provisional registration and the same could have been rectified at that stage itself and this present situation would not have arisen. 5.1 He further submitted that in the instant case, while filing the application in Form 10A, the assessee in advertently selected a wrong section 12A(1) (ac)(vi)(A) where as the correct section in this case would have been 12A(1)(ac)(vi)(B). 5.2 He further submitted that the error in selecting a wrong section code was purely a clerical and unintentional error and such a typographical error cannot constitute a valid ground for rejection. 5.3 In other word he submits that Since this rejection order is passed solely on this procedural defect without pointing out any other deficiency regarding the genuineness of the activities or application of income for other than chartable Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 5 purpose or for violation of any other object clause of the society, this application should have been accepted and registration should have been granted. 5.4 He further submitted, drawing reference to the financial statements of the assessee, that the said expenses has been incurred wholly to meet the objects of the society and there is no violation on financial count. 5.5 He further referred to the meaning of specified violation as per the provisions of section 12A(4) of the Act which reads as follows: “(a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or (b) the trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c) the trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not enure for the benefit of the public; or (d) the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 6 (e) any activity being carried out by the trust or institution, - (i) is not genuine; or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (I) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality [; or] (g) the application referred to in clause (ac) of sub-section (1) of section 12 A [***] contains false or incorrect information.]” 5.6 Referring to the above he further submitted that since the charitable activities carried out are in accordance with the objects of the society and the same has never been disputed by the ld. CIT(E), the requirement of section 12A(1)(ac)(iii) stands fulfilled and the ld. CIT(E) was not legally justified in rejecting the application without any opportunity to the assessee to rectify the error or to provide clarification regarding the commencement of activities or selection of a particular clause which clearly violates the principles of natural justice. 5.7 The ld. AR further in support of his contention and arguments relied on various judicial precedents some of which are reproduced for ready reference: Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 7 “(i) [2025] 171 TAXMANN.COM 386 (PUNE - TRIB.) IN THE ITAT PUNE BENCH ’A’ INCLUSIVE RECYCLING FOUNDATION V. COMMISSIONER OF INCOME-TAX, EXEMPTION (Refer Page no. 1-3 of Case Law PB) Section 12A, read with section 12AA, of the Income-tax Act, 1961 - Charitable or religious trust - Registration of (Rejection of application) - Assessee-company, a non-profit company, applied for registration under section 12AA - Commissioner (Exemption) found that application was furnished under section 12A(l)(ac)(vi) which was not applicable to assessee since deduction under section 11 was claimed by assessee Accordingly, Commissioner(Exemption) rejected application filed by assessee - Assessee submitted that due to a typographical/inadvertent error application was filed under section 12A(l)(ac)(vi) whereas assessee was required to file application under section 12A(l)(ac)(iii) - Whether since Commissioner (Exemption) had not given any adverse finding on merits of case, against assessee, application was to be treated as filed under section 12A(l)(ac)(iii) and order rejecting application was to be set aside - Held, yes [Para 61 [In favour of assessee. (ii) [20251 173 Taxmann.Com 179 (AHMEDABAD - TRIB.) IN THE ITAT AHMEDABAD BENCH B' NIRAVADYA FOUNDATION V. COMMISSIONER OF INCOME-TAX (EXEMPTION) (Refer Page no. 4-8 of Case Law PB) Section 12A, read with section 12AB, of the Income-tax Act, 1961 - Charitable or religious trust - Registration of (Scope of provision) - Assessee filed an application for registration in Form No, 10AB under section Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 8 12A(l)(ac)(iii) - Commissioner (Exemption) rejected application on ground that assessee was not registered under section 12AB, therefore, application was premature and not maintainable - Assessee contended that it had inadvertently filed application under section 12A(l)(ac)(iii) when it should have been filed under clause (i) of section 12A(l)(ac) Whether since application was inadvertently filed by assessee under an incorrect provision. Commissioner (Exemption) was to be directed to treat application filed as per applicable provision and consider case on merits - Held, yes (Para 12) (In favour of assessee). 5.8 He also relied on the following judgments for further support: “i. [2025] 172 taxmann.com 314 (Pune - Trib.) IN THE ITAT PUNE BENCH 'A' Gopal Navjeevan Kendra v. CIT, Exemption, Pune (Refer Page no. 9-11 of Case Law PB) ii. (2025] 172 taxmann.com 312 (Pune - Trib.) IN THE ITAT PUNE BENCH 'A' Deodhar Education and Vocational Academy v. CIT(Refer Page no. 12-14 of Case Law PB) iii. [2025] 173 taxmann.com 151 (Cochin - Trib.) IN THE ITAT COCHIN BENCH Sahrdaya Educational Trust v. Commissioner of Income- tax (Exemptions) (Refer Page no. 15-18 of Case Law PB) iv. [2025] 174 taxmann.com 913 (Mumbai - Trib.) IN THE ITAT MUMBAI BENCH 'G' Zarina Foundation ^Commissioner of Income-tax (Exemption) (Refer Page no. 19-22 of Case Law PB) Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 9 v. [2025] 174 taxmann.com 1112 Pune - Trib.) IN THE ITAT PUNE BENCH 'A' D.Y. Patil Agriculture & Technical University v. Commissioner of Income-tax (Exemption) (Refer Page no. 23-26 of Case Law PB).” Referring to the above judicial precedents, he prayed for granting of the application for registration. 6. The ld. DR relied on the order of the ld. CIT(E). 7. We have heard the rival submissions and considered the materials on record and we find that the assessee society was granted provisional registration on 20th February 2024 for the period assessment year 2024-25 to 2026-27 and the assessee has applied for final registration on 19th August 2024 well within time and the said registration application has been rejected without any opportunity of clarification on the ground that the application has been made under a wrong section code. 7.1 We also find that the genuineness of the charitable activities carried out by the said society has not been disputed and the financial of the said society has also been incurred for the purpose of rendering its objects. 7.2 Further we also refer to the scope and applicability of section 12A(1)(ac)(iv)(A) and section 12A(1)(ac)(vi)(B): Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 10 Section Particulars Remarks 12A(l)(ac)(vi)(A) Applicable to newly established institutions that have not yet commenced their activities That Ld. CIT(E) rejected the application solely on technical grounds—first, holding that since the appellant commenced its activities in F.Y. 2021-22, the provisional registration u/s 12A(l)(ac)(vi)(A) granted under Form 10AC on 20.02.2024 was invalid as the option required to be selected was 12A(l)(ac)(vi)(B) instead of 12A(l)(ac)(vi)(A). That the CIT(E ) rejected the final registration filed under 10AB dated 19.08.2025 without pointing out any adverse comments on the genuineness or merits of the appellant's activities. 12A(l)(ac)(vi)(B) Applicable to institutions that have commenced activities and have not excluded any income under sections 11, 12, or 10(23C) prior to filing the registration application. 7.3 We also observe that the assessee was actually supposed to have filed the application u/s 12A(1)(ac)(vi)(B) of the Act instead of wrongly filed u/s 12A(1)(ac)(vi)(A) of the Act which has resulted in this rejection even though, the genuineness of the activities has never been disputed by the ld. CIT(E). 7.4 We find that the coordinate bench of this tribunal in the case of IIT Ropar Technology Business Incubator Foundation in ITA 612/Asr/2024 dated 20th August 2025 has held that an application filed in time mentioning a wrong section, cannot be a ground for rejecting the application. 7.5 We also find that similar views has been taken by various other benches of the tribunal one in the case of Society For Technology Business Incubator vs. CIT(E) in ITA 1134/Chd/2024 where it has been held that registration cannot be rejected for Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 11 any curable defect like making an application under a wrong section or in a wrong Form and in such a situation it is duty of ld. CIT(E) to inform the assessee about the said mistake and ask the assessee to rectify it rather than to reject the application for merely such a technical mistake. 7.6 As such, we hold that in the instant case, since there is no adverse finding by the ld. CIT(E) regarding the genuineness of the activities or on merits of the case, or on any violation of section 12A(4) of the Act, the application filed by the assessee may be treated as filed under the correct provision, and to consider the application for registration on merits. As such, we remand the matter back to the file of the ld. CIT(E) for considering the application for registration afresh as per provisions of law. ITA No. 235/ASR/2025 8. This appeal is filed by the assessee against rejection of approval. The application for approval u/s 80G of the Act 1961 has been e-filed by the assessee on 19.08.2024 in Form 10 AB, which has been rejected on the ground that the application of registration u/s 12A (1)(ac)(iii) has been rejected. 9. We have already remanded the matter back to the ld. CIT(E) in ITA 182/Asr/2025, and as such we also remand this registration matter back to the file of the ld. CIT(E) for consideration afresh. Our observation in the above appeal shall Printed from counselvise.com I.T.A. No. 182 & 235/Asr/2025 Assessment Year.: 2024-25 12 apply mutatis mutandis to this appeal also, and we remand this issue u/s 80G(5) for fresh consideration in tandem with the application for registration u/s 12A (1)(ac)(iii) of the Act 61. 10. In the result, both the appeals of the assessee are allowed for statistical purposes. Order pronounced on 21 .11.2025 at Amritsar, Punjab in accordance with Rule 34(4) of the Income tax (Appellate Tribunal) Rules, 1963. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (UDAYAN DAS GUPTA) Accountant Member Judicial Member Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The DR, I.T.A.T. True Copy By Order Printed from counselvise.com "