ITAT Mumbai: Procedural Defect in Form 10AB Cannot Extinguish Substantive Rights of a Trust — Section 12AB and Section 80G Applications Restored
Overview of the Dispute
A charitable trust lost both its registration renewal and donor deduction approval not because of any fault in its objects or activities, but because it ticked the wrong box in a statutory form. The Mumbai Bench of the Income Tax Appellate Tribunal, in Narmada Navnirman Abhiyan v. CIT Exemptions (ITA No. 6117/MUM/2026, dated 25/09/2026), held that such a curable procedural error cannot be allowed to permanently foreclose a trust's statutory entitlements without first offering a meaningful opportunity to correct it.
This ruling is significant for charitable institutions navigating the complex renewal framework under the Income Tax Act, 1961, particularly those required to file Form 10AB for continued registration under Section 12AB and for approval under Section 80G.
Background: The Trust and Its Prior Registration
Narmada Navnirman Abhiyan had obtained regular registration under Section 12A of the Income Tax Act, 1961, through an order in Form 10AC issued on 24 September 2021. This registration was valid from Assessment Year 2022–23 to Assessment Year 2026–27.
As the registration period was approaching its end, the trust filed Form 10AB on 30 September 2025, seeking continued registration — a routine step for trusts holding regular registration under the existing framework.
The Procedural Error That Triggered Rejection
Clause (iii) vs. Clause (ii): A Critical Distinction
The income tax framework under Section 12A(1)(ac) distinguishes between two categories of applicants:
Section 12A(1)(ac)(ii)— Applies to a trust or institution already holding regular registration and seeking its renewal.Section 12A(1)(ac)(iii)— Applies to a trust or institution holding provisional registration that is approaching expiry and seeking conversion to regular registration.
While filing Form 10AB, the trust inadvertently selected Section 12A(1)(ac)(iii) — the clause applicable to provisional registration holders — even though it already possessed regular registration. The applicable clause, as the CIT(Exemptions) correctly identified, was Section 12A(1)(ac)(ii).
What Happened Before the CIT(E)
Upon receipt of the application, the CIT(Exemptions) observed certain deficiencies and called for additional documents. The trust responded through a letter dated 13 January 2026, furnishing the requisite details.
However, after reviewing the submission alongside data available on the ITBA/CPC portal, the CIT(Exemptions) determined that since the trust held regular registration, the application under Section 12A(1)(ac)(iii) was inapplicable. By an order dated 23 March 2026, the CIT(Exemptions) held the application "not maintainable" on account of the wrong clause selection and rejected it accordingly.
The rejection was not based on any adverse finding concerning the trust's stated objects or the genuineness of its charitable activities.
The Cascading Consequence: Section 80G Approval Also Denied
On the same date — 30 September 2025 — the trust had also filed a Section 80G(5) application in Form 10AB seeking approval that would entitle donors to claim deductions on contributions made to the trust.