ITAT ruling on 12AB registration What NGOs should know
The recent ITAT ruling on 12AB registration brings clarity for charitable trusts and NGOs. In 2025 TAXSCAN (ITAT) 1117, the Ujjain-based NGO’s registration rejection under Section 12AB was set aside, and the matter was sent back to the CIT (Exemption).
This order highlights how NGOs can challenge adverse orders and safeguard their tax-exempt status.
Background: What is 12AB registration?
- Section 12AB of the Income Tax Act governs the fresh registration process for trusts and institutions.
- It replaced the older Section 12AA to streamline periodic re-registration.
- Without valid 12AB registration, donations may lose tax exemption under Section 80G, and the trust itself may face tax on income.
Case facts at a glance
| Details | Summary |
|---|---|
| Tribunal | Indore Bench, ITAT |
| NGO location | Ujjain, Madhya Pradesh |
| Issue | Rejection of fresh registration under Section 12AB |
| Order outcome | Rejection set aside; matter remanded to CIT (Exemption) |
| Citation | 2025 TAXSCAN (ITAT) 1117 |
Why did ITAT interfere?
- The ITAT noted procedural lapses in how the CIT (Exemption) rejected the application.
- Principles of natural justice were not fully followed.
- No proper opportunity given to the NGO to clarify documents or facts.
Thus, the Tribunal ruled that fair hearing is essential before cancelling or rejecting 12AB registration.
Expert tip: How to avoid 12AB issues
Here’s how NGOs can handle their 12AB registration smoothly:
✅ Maintain complete books of account
✅ Respond to any notices on time
✅ File proper annual returns (Form 10B/10BB)
✅ Keep trust deed updated and aligned with charitable purposes
Legal reference
- Income Tax Act, 1961 – Section 12AB
- CBDT Circular No. 20/2020 – Explains transition from 12AA to 12AB
- Read official forms and procedures on incometaxindia.gov.in
What this means for other NGOs
This ITAT ruling shows that:
- CIT (Exemption) must follow due process.
- If your 12AB application is rejected unfairly, you can appeal to ITAT.
- Always preserve communication and evidence to prove charitable activity.
FAQs: ITAT ruling on 12AB registration
Q1. Can an NGO reapply if 12AB is rejected?
Yes. You can appeal or file fresh with proper documents.
Q2. Does rejection affect 80G approval?
Yes. 80G depends on valid 12AB registration.
Q3. Where to appeal a rejection?
File an appeal with the Income Tax Appellate Tribunal (ITAT).
Summary
The recent ITAT ruling on 12AB registration underscores fair hearing rights for NGOs. If a CIT (Exemption) rejects your trust’s registration without proper reasons, you can appeal. Maintain clear records and follow compliance norms to protect tax-exempt status.
Closing
Facing challenges with 12AB registration? Our experts at Efiletax help NGOs and trusts comply with tax rules and handle appeals effectively.