Technical Portal Error Cannot Override Charitable Trust's Right to Section 12AB Registration: ITAT Bangalore
Overview
The Bangalore Bench of the Income Tax Appellate Tribunal, in the matter of M Friends Charitable Trust Vs CITE (ITAT, Bangalore Bench), rendered a significant ruling on the question of whether a charitable trust's application for permanent registration under Section 12AB of the Income Tax Act, 1961 can be outrightly rejected merely on account of selection of a wrong code in the online Form No. 10AB. The Tribunal answered this in the negative, restored the matter to the Commissioner of Income Tax (Exemptions), and directed fresh adjudication on merits.
Background of the Trust and Its Registration History
M Friends Charitable Trust came into existence through a trust deed executed on 20 September 2019. The principal charitable objectives of the trust encompassed:
- Rendering medical assistance to persons in need, without any distinction based on caste, creed, or religion
- Providing support to families that suffered losses due to accidental or contingent deaths
- Organizing free medical camps for the general public
- Carrying out activities directed at relief of the poor, education, and medical relief
The trust had applied for provisional registration on 9 March 2020, following which it was granted provisional registration under Section 12AA of the Income Tax Act, 1961, effective from 1 March 2021. At the time of granting such provisional registration, the concerned authority had duly acknowledged that the trust's activities fell squarely within the statutory meaning of "charitable purpose," thereby making it eligible for the benefits available under Section 11 and Section 12 of the Act.
The Application for Permanent Registration and Subsequent Events
Following the expiry of its provisional registration, the trust filed Form No. 10AB on 17 June 2025, seeking permanent registration under Section 12AB. During the processing stage, the Commissioner of Income Tax (Exemptions) [CIT(E)] sought documentary evidence to verify:
- The genuineness of the trust's charitable activities
- Compliance with applicable statutory conditions
The trust responded by furnishing certain details; however, key documents including bank account statements, the rental agreement, and the list of trustees were not included in the initial submission. The CIT(E) accordingly directed the trust to produce these outstanding documents.
The Wrong Code Issue
At this juncture, the CIT(E) also detected that the application had been submitted using an incorrect section code, despite the trust already holding registration effective from 1 March 2021. A show-cause notice dated 20 August 2025 was issued calling upon the trust to furnish the requisite information by 1 September 2025.
Since no reply was received within the stipulated period, a second show-cause notice was dispatched on 6 November 2025.
The Trust's Explanation
In its response to the second notice, the trust advanced the following explanation:
The trust operated under a bona fide belief that the registration conferred upon it from 1 March 2021 was of a perpetual nature, and that the requirement prescribed under
Section 12A(1)(ac)was consequently inapplicable to its situation.
The CIT(E) found this explanation unacceptable and held that selection of a wrong code on the portal did not constitute a valid reason for non-compliance. On these grounds, the CIT(E) passed an order dated 31 December 2025 rejecting the Form No. 10AB application.
Issues Before the Tribunal
The Tribunal was called upon to examine the following core questions:
Can an application for registration under
Section 12ABbe rejected solely because the assessee selected an incorrect code or statutory provision while uploading the online application?Was the CIT(E) obligated to provide the assessee an opportunity to rectify the technical error before proceeding to reject the application?