ITAT Ahmedabad Remands Section 12AB and Section 80G Applications Rejected on Technical Error

Background of the Dispute

The Ahmedabad Bench of the Income Tax Appellate Tribunal in Vir Savarkar Shishan & Seva Sanshtha Vs CIT (ITA No. 369/AHD/2026 and ITA No. 370/AHD/2026) dealt with two connected appeals filed by the same assessee. Both matters arose from orders passed by the Commissioner of Income-Tax (Exemption), Ahmedabad [CIT(E)], concerning:

  • Rejection of registration under Section 12A/12AB of the Income Tax Act 1961; and
  • Rejection of approval under Section 80G(5) of the Act.

The Tribunal’s order, pronounced on 21/08/2026, focuses on whether applications can be rejected purely on a technical selection of the wrong statutory clause in the electronic form, without providing any opportunity of hearing or correction to the assessee.

Appeal No. 369/AHD/2026 – Registration Under Section 12A/12AB

Facts Relating to Form No.10AB Application

In this appeal, the assessee challenged the order dated 16/01/2026 by the CIT(E) rejecting its application in Form No.10AB for registration under Section 12A(1)(ac).

Key aspects:

  • The assessee intended to apply under Section 12A(1)(ac)(iii).
  • While e-filing Form No.10AB, the assessee inadvertently selected Section 12A(1)(ac)(ii) instead of Section 12A(1)(ac)(iii).
  • Section 12A(1)(ac)(ii) applies to charitable entities already enjoying regular registration and seeking renewal.
  • The assessee’s contention was that it was not given any notice highlighting this technical error, nor was any opportunity of hearing granted before the application was rejected.

Assessee’s Contentions Before the Tribunal

The learned Authorised Representative argued that:

  • The rejection was based solely on a technical defect arising from wrong selection of the clause in the form.
  • The CIT(E) did not examine the substantive eligibility or merits of the assessee’s claim for registration.
  • No show cause notice or defect memo was issued pointing out the incorrect selection of Section 12A(1)(ac)(ii).
  • Had the assessee been put to notice, it could have explained that the intention was to file under Section 12A(1)(ac)(iii) and taken steps to rectify the mistake.

Accordingly, the assessee requested that the order be set aside and the matter be remitted for fresh consideration after allowing rectification of the inadvertent error.

Revenue’s Stand

The learned Departmental Representative supported the order of the CIT(E), submitting that:

  • The assessee itself chose the wrong statutory provision while filing the application.
  • As the application was not filed under the correct clause, the rejection by the CIT(E) could not be faulted.

Tribunal’s Analysis and Findings on Section 12A(1)(ac) Application

The Tribunal:

  • Examined the material on record and considered the rival submissions.
  • Recorded that, according to the assessee, the application was always meant to be under Section 12A(1)(ac)(iii), and the selection of Section 12A(1)(ac)(ii) occurred inadvertently during electronic filing.
  • Noted that no notice of hearing or communication regarding the defect was ever issued by the CIT(E).
  • Observed that the assessee was thus deprived of the opportunity to explain the nature of the mistake or to correct the selected clause.

In the Tribunal’s view, natural justice required that the assessee be confronted with such a defect and given a fair chance to rectify or clarify the error, especially when the issue was purely technical and not related to the genuinene...