Incorrect Mention of Sub-Clause in 12A(1)(ac) Application Not Fatal: ITAT Ahmedabad

Case Title: Sainath Education Charitable Trust v. Commissioner of Income Tax (Exemptions)
Citation: [2025] 177 taxmann.com 582 (Ahmedabad - Trib.)
Bench: ITAT Ahmedabad, Bench ‘D’
Coram: Shri Sanjay Garg (Judicial Member) & Smt. Annapurna Gupta (Accountant Member)
Appeal No.: ITA No. 608/Ahd/2025
Date of Decision: August 19, 2025

Introduction

The Income Tax Appellate Tribunal (ITAT), Ahmedabad, has held that an assessee-trust’s application for registration under Section 12A(1)(ac) of the Income-tax Act, 1961 cannot be rejected merely because it was filed under the wrong sub-clause, provided that such an error is not material for deciding the eligibility of the trust.

In Sainath Education Charitable Trust v. CIT (Exemptions), the Tribunal clarified that mentioning an incorrect sub-clause (ii instead of iii) does not make the application non-maintainable when the Commissioner already has the relevant facts regarding the trust’s registration/provisional registration on record.

This judgment underscores the principle that substance should prevail over form, especially in cases where technical errors do not affect the Commissioner’s ability to verify the trust’s genuineness and charitable objects.

Relevant Legal Provision

Section 12A(1)(ac), Income-tax Act, 1961

This provision governs the registration procedure for charitable or religious trusts to claim exemption under Sections 11 and 12.

Key sub-clauses relevant to the case:

• Clause (ii): Application is required where a trust is already registered under Section 12AB and its period of registration is about to expire.

• Clause (iii): Application is required where a trust has been provisionally registered under Section 12AB and the period of provisional registration is expiring, or the trust has commenced activities (whichever is earlier).

In both circumstances, the Commissioner of Income Tax (Exemptions) must verify:

1. The genuineness of the trust; and

2. The charitable nature of its objects and activities.

Facts of the Case

• The assessee-trust filed an application seeking registration under Section 12A(1)(ac).

• The application was filed under sub-clause (ii) instead of sub-clause (iii).

• The Commissioner of Income Tax (Exemptions), Ahmedabad rejected the application as non-maintainable, holding that the trust applied under the wrong sub-clause.

• The assessee appealed to the ITAT, contending that the error was merely technical and did not affect the Commissioner’s ability to examine its case.

Additionally, there was a delay of 114 days in filing the appeal, which was explained by the trust on account of its accountant leaving and the order being discovered late on the portal.

Legal Issue

Whether an application for registration under Section 12A(1)(ac) can be rejected as non-maintainable merely because it was filed under the wrong sub-clause (ii instead of iii), despite the relevant facts being available on record with the Commissioner.

Tribunal’s Observations

1. On Condonation of Delay

   • The ITAT found the explanation of delay (accountant leaving and order being overlooked) genuine and reasonable.

   • The delay of 114 days was condoned in the interest of justice.

2. On Sub-Clause Error

   • The Tribunal noted that:

     • Sub-clause (ii) applies when a trust is already registered under Section 12AB.

     • Sub-clause (iii) applies when a trust is provisionally registered under Section 12AB.

   • The only difference between the two situations is whether the trust is “registered” or “provisionally registered.”

   • In both cases, the Commissioner must verify genuineness of activities and charitable nature of objects.

3. On Commissioner’s Rejection

   • The ITAT held that merely quoting an incorrect sub-clause has no material impact on the process.

   • The Commissioner already had the facts of the trust’s registration/provisional registration on record.

   • Therefore, rejection of the application as non-maintainable was unjustified.

Decision

• The ITAT held that the assessee’s application could not be rejected merely for quoting the wrong sub-clause.

• The case was remanded back to the Commissioner (Exemptions) to consider the application afresh, treating it as filed under the correct sub-clause.

• The assessee’s appeal was allowed for statistical purposes.

Key Takeaways

1. Substance over Form: Incorrect reference to a sub-clause in Section 12A(1)(ac) is not fatal if the Commissioner has sufficient facts to process the application.

2. Duty of Commissioner: The Commissioner must verify genuineness of activities and charitable objects irrespective of whether the trust is registered or provisionally registered.

3. Technical Errors Not Fatal: Procedural or technical errors should not defeat substantive rights of a trust to seek exemption.

4. Condonation of Delay: Courts/Tribunals may condone delays when explained with bona fide reasons.

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