I did not file the Rule 17A documents in time and the CIT(E) rejected my Form 10AB, cancelled the provisional registration and directed computation of tax under s.115TD. Can a rejection for non-filing carry all that?
Not without an inquiry into the merits. The Tribunal set the order aside and restored the matter for de novo consideration, holding that the CIT(E) had rejected the application solely for non-filing of documents, after only two notices at very short intervals, without any verification or inquiry, and that procedural lapses alone should not result in denial of substantial justice. It did not decide the s.115TD point, which was raised only in argument.
Decided by the ITAT (Siddhartha Nautiyal, Judicial Member and Narendra Prasad Sinha, Accountant Member — ITAT Ahmedabad "B" Bench) on 2025-10-15, reported as I.T.A. No.1367/Ahd/2025. It bears on section 12AB, section 12AB(1)(b), section 12A, section 12A(1)(ac), section 12A(1)(ac)(iii), section 115TD, section 253 of the Income Tax Act 1961, in Charitable Trusts & Exemption and Capital Gains Exemptions matters.
The practical lesson is about the consequences package, not the remand. When a Form 10AB under s.12A(1)(ac)(iii) is rejected, s.12AB(1)(b)(ii)(B)(I) requires the Commissioner not merely to reject the application but also to cancel the existing registration — and the loss of registration is what opens the door to the exit tax on accreted income under s.115TD. So a trust that treats a document-production notice as a routine compliance matter is risking far more than a delayed registration. The trust's argument that the s.115TD direction was premature because there was no finding of cessation of charitable activity or conversion of property is recorded but undecided, so it remains open. On the merits, the Tribunal's reasoning is that at the registration stage the Commissioner is required to ascertain both the genuineness of the activities and the charitable nature of the objects, and that denial without such examination is not sustainable — the same proposition the CIT(E) had himself invoked from the opposite direction, relying on Dawoodi Bohara Jamat and New Noble Educational Society for his power to inquire.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The trust filed Form 10AB under sub-clause (iii) of clause (ac) of s.12A(1) seeking registration, describing itself as a religious-cum-charitable trust. The CIT(E) treated the application as governed by s.12AB(1)(b) and Rule 17A, and issued notices — two of them, dated 24 February 2025 and 16 May 2025, calling for audited accounts, the trust deed, a list of activities and evidence of compliance. The trust neither filed the documents nor sought an adjournment. Relying on the Supreme Court in CIT, Ujjain v Dawoodi Bohara Jamat for the proposition that the Commissioner must call for documents and make due inquiry before granting registration, and on New Noble Educational Society for the proposition that he may examine not only the stated objects but the actual functioning, accounts and related documents, the CIT(E) held he could not form the satisfaction required by law, and by order dated 24 May 2025 rejected the Form 10AB application and cancelled the provisional registration. The order also directed computation of tax liability under s.115TD. Before the Tribunal counsel said the non-compliance was technical and not intentional, that no inquiry into genuineness had been made, and that the s.115TD direction was premature because there was no finding on cessation of charitable activities or conversion of the trust's property.
Appeal allowed for statistical purposes in the interests of justice. The CIT(E) had rejected the application solely on account of non-filing of documents, without conducting any verification or inquiry into the merits, only two notices of hearing at very short intervals having been issued; procedural lapses alone should not result in denial of substantial justice; and denial of registration without ascertaining both the genuineness of the activities and the charitable nature of the objects is not sustainable. The order was set aside and the matter restored to the CIT(E) for de novo consideration after adequate opportunity, the trust being directed to cooperate and furnish all documents called for (paras 6 and 7).
The Tribunal took the CIT(E)'s own authorities and turned them round. Dawoodi Bohara Jamat and New Noble Educational Society, as the CIT(E) had cited them, establish that in considering registration under s.12A or s.12AB the Commissioner is required to ascertain both the genuineness of the activities and the charitable nature of the objects; it follows, the Tribunal held, that denial of registration without such examination is not sustainable. On the facts it found the non-compliance technical, that only two notices at very short intervals had been issued, and that no opportunity for an effective hearing had been given before rejection. It therefore restored the matter for de novo consideration rather than deciding the entitlement to registration, and left the s.115TD point untouched.
It is settled law that procedural lapses alone should not result in denial of substantial justice.
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Handle my notice → Ask a CA on WhatsAppNot without an inquiry into the merits. The Tribunal set the order aside and restored the matter for de novo consideration, holding that the CIT(E) had rejected the application solely for non-filing of documents, after only two notices at very short intervals, without any verification or inquiry, and that procedural lapses alone should not result in denial of substantial justice. It did not decide the s.115TD point, which was raised only in argument. This was decided by the ITAT (Siddhartha Nautiyal, Judicial Member and Narendra Prasad Sinha, Accountant Member — ITAT Ahmedabad "B" Bench) and bears on section 12AB, section 12AB(1)(b), section 12A, section 12A(1)(ac), section 12A(1)(ac)(iii), section 115TD, section 253 of the Income Tax Act 1961. It is reported as I.T.A. No.1367/Ahd/2025. The practical lesson is about the consequences package, not the remand. When a Form 10AB under s.12A(1)(ac)(iii) is rejected, s.12AB(1)(b)(ii)(B)(I) requires the Commissioner not merely to reject the application but also to cancel the existing registration — and the loss of registration is what opens the door to the exit tax on accreted income under s.115TD. So a trust that treats a document-production notice as a routine compliance matter is risking far more than a delayed registration. The trust's argument that the s.115TD direction was premature because there was no finding of cessation of charitable activity or conversion of property is recorded but undecided, so it remains open. On the merits, the Tribunal's reasoning is that at the registration stage the Commissioner is required to ascertain both the genuineness of the activities and the charitable nature of the objects, and that denial without such examination is not sustainable — the same proposition the CIT(E) had himself invoked from the opposite direction, relying on Dawoodi Bohara Jamat and New Noble Educational Society for his power to inquire. If it applies to you, the first step is this: Treat a Rule 17A(2) notice as the substantive hearing. Answer it fully, and if you cannot, seek an adjournment on the record — the Tribunal noted that this trust neither filed the documents nor sought an adjournment.
The trust filed Form 10AB under sub-clause (iii) of clause (ac) of s.12A(1) seeking registration, describing itself as a religious-cum-charitable trust. The CIT(E) treated the application as governed by s.12AB(1)(b) and Rule 17A, and issued notices — two of them, dated 24 February 2025 and 16 May 2025, calling for audited accounts, the trust deed, a list of activities and evidence of compliance. The trust neither filed the documents nor sought an adjournment. Relying on the Supreme Court in CIT, Ujjain v Dawoodi Bohara Jamat for the proposition that the Commissioner must call for documents and make due inquiry before granting registration, and on New Noble Educational Society for the proposition that he may examine not only the stated objects but the actual functioning, accounts and related documents, the CIT(E) held he could not form the satisfaction required by law, and by order dated 24 May 2025 rejected the Form 10AB application and cancelled the provisional registration. The order also directed computation of tax liability under s.115TD. Before the Tribunal counsel said the non-compliance was technical and not intentional, that no inquiry into genuineness had been made, and that the s.115TD direction was premature because there was no finding on cessation of charitable activities or conversion of the trust's property. The matter was decided on 2025-10-15 by the ITAT (Siddhartha Nautiyal, Judicial Member and Narendra Prasad Sinha, Accountant Member — ITAT Ahmedabad "B" Bench). On those facts the ITAT held as follows. Appeal allowed for statistical purposes in the interests of justice. The CIT(E) had rejected the application solely on account of non-filing of documents, without conducting any verification or inquiry into the merits, only two notices of hearing at very short intervals having been issued; procedural lapses alone should not result in denial of substantial justice; and denial of registration without ascertaining both the genuineness of the activities and the charitable nature of the objects is not sustainable. The order was set aside and the matter restored to the CIT(E) for de novo consideration after adequate opportunity, the trust being directed to cooperate and furnish all documents called for (paras 6 and 7).
The Tribunal took the CIT(E)'s own authorities and turned them round. Dawoodi Bohara Jamat and New Noble Educational Society, as the CIT(E) had cited them, establish that in considering registration under s.12A or s.12AB the Commissioner is required to ascertain both the genuineness of the activities and the charitable nature of the objects; it follows, the Tribunal held, that denial of registration without such examination is not sustainable. On the facts it found the non-compliance technical, that only two notices at very short intervals had been issued, and that no opportunity for an effective hearing had been given before rejection. It therefore restored the matter for de novo consideration rather than deciding the entitlement to registration, and left the s.115TD point untouched. In the words reproduced by the source cited on this page: "It is settled law that procedural lapses alone should not result in denial of substantial justice."
It was decided by the ITAT on 2025-10-15 and is reported as I.T.A. No.1367/Ahd/2025. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 12AB, section 12AB(1)(b), section 12A, section 12A(1)(ac), section 12A(1)(ac)(iii), section 115TD, section 253, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. Appeal allowed for statistical purposes in the interests of justice. The CIT(E) had rejected the application solely on account of non-filing of documents, without conducting any verification or inquiry into the merits, only two notices of hearing at very short intervals having been issued; procedural lapses alone should not result in denial of substantial justice; and denial of registration without ascertaining both the genuineness of the activities and the charitable nature of the objects is not sustainable. The order was set aside and the matter restored to the CIT(E) for de novo consideration after adequate opportunity, the trust being directed to cooperate and furnish all documents called for (paras 6 and 7). It arises in Charitable Trusts & Exemption and Capital Gains Exemptions matters, on section 12AB, section 12AB(1)(b), section 12A, section 12A(1)(ac), section 12A(1)(ac)(iii), section 115TD, section 253 of the Income Tax Act 1961, and was decided by Siddhartha Nautiyal, Judicial Member and Narendra Prasad Sinha, Accountant Member — ITAT Ahmedabad "B" Bench. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Count the notices and their dates. Two notices at very short intervals, with no effective opportunity, was the finding that carried this appeal; set out the chronology in the grounds. Where the rejection also cancels the registration and directs a s.115TD computation, challenge each limb separately — the cancellation under s.12AB(1)(b)(ii)(B)(I) and the s.115TD consequence are not automatic corollaries of a document-production failure. File the documents with the appeal memorandum and paper book, and be ready to ask for a remand; that is the relief realistically available where nothing was produced below. Note that the Supreme Court authorities the Commissioner relies on to justify inquiry — Dawoodi Bohara Jamat and New Noble Educational Society — cut both ways: they require him to make the inquiry, not merely to reject for want of material.
Searched for later treatment; none was found. That is not the same as a source affirming it. The citator returns nothing and a case-name search across all courts returns only this order. The holding that rejection of a Form 10AB application cancels the existing registration and triggers s.115TD has not been followed, doubted or carried to the Gujarat High Court so far as can be traced. Given how severe that consequence is, the absence of any confirming authority is worth stating to a client. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order runs to seven numbered paragraphs, continuous. At paragraph 4 it describes the order appealed against as the CIT(E)'s order "dismissing the appeal of the assessee", which is a slip — the CIT(E) rejected an application and no appeal lay before him. The s.115TD direction is recorded only in the assessee's submission at paragraph 5 and is not addressed in the Tribunal's reasoning at paragraph 6; the trust's contention that it was premature for want of a finding on cessation of activities or conversion of property is therefore undecided. Ground 4 invokes "Section 253(5)" for condonation of delay. There is a factual inconsistency in the report as to the sub-clause under which the application was made: paragraph 3 records it as under sub-clause (iii) of s.12A(1)(ac), while paragraph 5 records the assessee's counsel as saying Form 10AB was filed on 5 December 2024 under clause (ac)(i). Dawoodi Bohara Jamat, New Noble Educational Society and M.V. Karmari Charitable Trust have not been read here. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Appeal allowed for statistical purposes in the interests of justice. The CIT(E) had rejected the application solely on account of non-filing of documents, without conducting any verification or inquiry into the merits, only two notices of hearing at very short intervals having been issued; procedural lapses alone should not result in denial of substantial justice; and denial of registration without ascertaining both the genuineness of the activities and the charitable nature of the objects is not sustainable. The order was set aside and the matter restored to the CIT(E) for de novo consideration after adequate opportunity, the trust being directed to cooperate and furnish all documents called for (paras 6 and 7).
TaxSphere, “Lakulish Sanatan Sanskriti Prabodhan Abhiyan v CIT (Exemption), Ahmedabad”, https://taxnotice.vittsphere.com/caselaw/case/lakulish-form-10ab-rejection-cancels-registration-and-triggers-115td/ (validity last checked 2026-09-08)
The judgment itself is a government work and may be quoted freely. The summary, the validity note and the reasoning on this page are this library's own writing: quote them with attribution, and please do not present either as the words of the court — this page keeps the two apart and so should a quotation of it.
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The CIT(E) rejected my Form 10AB as premature because the trust had not yet started activities or received donations. Can he do that?
We simply missed the deadline for the fresh application under s.12A(1)(ac). We have not been cancelled and nobody has rejected anything. Can the exit tax under s.115TD really apply to us?
The CIT(E) refused my Form 10AB because the memorandum says the objects may be carried out in India 'and elsewhere'. Is a possible application of funds outside India a ground to refuse registration?
My Form 10AB for final registration under s.12AB was rejected as time-barred because I missed the 30 June 2024 date in Circular 7/2024. Is anything left to me?
