ITAT Mumbai Remands Section 12AB Registration Matter When Email Notice Went Unnoticed

The decision in Rayoman Charitable & Research Foundation Vs ITO Exemption (ITAT Mumbai) deals with a situation where a charitable trust’s application for renewal of registration under Section 12AB was rejected purely for alleged non-compliance with a notice, which the assessee claimed it never effectively received due to an email-related issue. The Tribunal stepped in to ensure that the assessee received a fair chance to substantiate its claim for renewal.

This order is important for charitable and religious institutions seeking continuation or renewal of registration under Section 12AB, as it underscores that purely procedural lapses—especially those linked to electronic communication—should not, by themselves, deprive an entity of beneficial statutory rights, unless the authority has examined the merits and recorded clear adverse findings.

Background and Material Facts

Application for renewal under Section 12AB

  • The assessee, Rayoman Charitable & Research Foundation, is a trust engaged in charitable activities.
  • The trust filed Form No. 10AB on 30.09.2025 under Section 12A(1)(ac)(ii) of the Income Tax Act 1961.
  • Through this application, the assessee sought renewal of registration under Section 12AB.

Notice issued by CIT(E)

  • The learned Commissioner of Income Tax (Exemptions), Mumbai (CIT(E)), on scrutiny of the application, formed a view that the application was incomplete and not supported by all documents mandated by Rule 17A(2) of the Income Tax Rules, 1962.
  • Accordingly, a notice dated 07.01.2026 was issued to the assessee, calling upon it to furnish the complete set of documents and details as required under Rule 17A(2).

Rejection order dated 01.03.2026

  • According to the CIT(E), the assessee did not comply fully with the requisitions in the notice dated 07.01.2026.
  • The CIT(E) observed that renewal under Section 12AB must be examined with reference to:
    • the objects of the trust or institution,
    • the genuineness of its activities, and
    • compliance with other laws that are material for achieving such objects, in line with Section 12AB(1)(b).
  • In the absence of what he considered to be proper compliance with the notice, the CIT(E) held that he could not reach the requisite level of satisfaction on these statutory parameters.
  • Consequently, the CIT(E) rejected the application for renewal of registration under Section 12AB by order dated 01.03.2026, issued in Form No. 10AD.

Grounds Raised by the Assessee Before ITAT

The assessee challenged the order of the CIT(E) before the Income Tax Appellate Tribunal, Mumbai, and raised multiple grounds, which can be broadly summarized as follows:

  1. Mechanical rejection without identifying defects

    • The assessee contended that the CIT(E) rejected the Form No. 10AB application dated 30.09.2025 mechanically, without properly applying his mind.
    • It was argued that the order did not highlight any specific deficiencies in the application apart from a general allegation of non-compliance.

  2. Finding of “incomplete application” disputed

    • The assessee asserted that supporting documents were already enclosed with the Form No. 10AB at the time of filing.
    • Therefore, the conclusion that the application was “incomplete” and that requisite documents were not furnished was, according to the assessee, factually incorrect.

  3. Arbitrary disregard of long-standing charitable status

    • The assessee’s trust was formed on 21.03.1992.
    • It was originally granted registration under Section 12A via Certificate No. TR/29404 dated 04.11.1993.