ITAT Chennai: Technical Portal Glitches Cannot Deprive Existing Trusts of 5-Year Registration under Section 12AB

In a significant ruling that comes as a relief to charitable institutions grappling with the transition to the new registration regime, the Income Tax Appellate Tribunal (ITAT), Chennai Bench, has held that an existing trust cannot be denied its statutory right to a five-year registration due to technical glitches on the income tax portal.

The case of Rajah Annamalaipuram Vs CIT (Exemptions) highlights the difficulties faced by assessees during the "grey period" of transition mandated by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA 2020). The Tribunal ruled that when an assessee is forced to select an incorrect option due to systemic constraints, the Department must rectify the error and grant the registration the assessee is legally entitled to.

Background of the Case

The dispute involved two connected appeals filed by the assessee, a Temple Trust. The primary grievance arose from an order dated 18.10.2022 passed by the Principal Commissioner of Income Tax (Exemptions)/CPC.

The assessee, an old institution registered under Section 12A of the Income-tax Act, 1961 since 1986, had applied for re-registration under the new regime. However, instead of being granted "regular" registration for five years (spanning AY 2022-23 to AY 2026-27), the assessee was granted "provisional" registration for only three years, commencing from AY 2023-24.

This discrepancy caused a significant break in the continuity of registration for the Assessment Year 2022-23, thereby denying the assessee the benefit of exemption under Section 11 for that specific year.

Additionally, the assessee challenged a separate ex-parte order dated 03.06.2025, where the Commissioner (Exemptions) rejected the trust’s application in Form 10AB seeking regular registration under Section 12AB.

Condonation of Delay: The "Sufficient Cause"

Before addressing the merits, the Tribunal had to adjudicate on substantial delays in filing the appeals—1035 days for the first appeal and 47 days for the second.

The assessee submitted an affidavit explaining the circumstances leading to the delay:

  • The trust had been regularly claiming exemptions and was compliant since 1986.
  • The long-serving President of the society passed away in 2015.
  • Following his demise, severe internal disputes arose regarding the office-bearers, leading to a civil suit before the Madras High Court.
  • The administration of the trust was eventually stabilized only after the High Court intervened, appointed a Judge Commissioner, and conducted fresh elections.