PRAYATNA FOUNDATION BHAVNAGAR,BHAVNAGAR vs. CIT(EXEMPTION), AHMEDABAD, AHMEDABAD

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ITA 1156/AHD/2026Status: DisposedITAT Ahmedabad18 May 20265 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the rejection of the application solely on account of the technical defect of selecting an incorrect clause in Form No.10AB should not defeat the substantive claim. The matter was restored to the CIT(E) to allow the assessee to file a fresh application under the correct provision.

What were the facts?

The assessee trust applied for renewal of approval under section 80G(5) of the Income-tax Act by filing Form No.10AB under an incorrect clause. The CIT(E) rejected the application as non-maintainable because the assessee did not meet the prerequisites for the selected clause.

What were the issues?

Whether an application for renewal of approval under section 80G can be rejected due to the inadvertent selection of an incorrect clause in the application form.

Which sections of the Income-tax Act were involved?

Section 80G(5)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD

Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA

For Appellant: Shri Manoj Kumar P Gohil, AR
For Respondent: Shri Prem Prakash Meena, CIT DR
Hearing: 13.05.2026Pronounced: 18.05.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER I.T.A. No.1156/Ahd/2026 (Assessment Year: N.A.) Prayatna Foundation Bhavnagar, Vs. Commissioner of Income 17, Laxminagar 2, B/h. R K Tax (Exemption), Mangalam Hall, bharatnagar Road, Ahmedabad Bhavnagar-364002 [PAN No.AACTP1290M] (Appellant) .. (Respondent) Appellant by : Shri Manoj Kumar P Gohil, AR Respondent by: Shri Prem Prakash Meena, CIT DR Date of Hearing 13.05.2026 Date of Pronouncement 18.05.2026 O R D E R PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER: This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide order dated 17.01.2026.

2.

The assessee has taken the following grounds of appeal:

“1. Learned CIT (E) has erred in law and on facts of the case in passing the impugned order without giving proper attention on documents submitted/available with Income Tax Portal like ITRs and Forms. 2. Learned CIT (E) has erred in law and on facts of the case in rejection the provisional registration of the Appellant u/.s 80G of the Act. 3. The appellant craves leave to add, amend, alter or withdraw any of the grounds of appeal.” 3. The brief facts of the case are that the assessee trust, namely PRAYATNA FOUNDATION BHAVNAGAR, filed an application

ITA No. 1156/Ahd/2026 Prayatna Foundation Bhavnagar vs. CIT(E) Asst. Year –N.A. - 2– in Form No.10AB seeking renewal of approval under section 80G(5) of the Income-tax Act, 1961 (“the Act”) before the ld. CIT(Exemptions), Ahmedabad. The application was filed under clause (ii) of the first proviso to section 80G(5) of the Act. During the course of proceedings, the ld. CIT(Exemptions) examined the nature of application and observed that clause (ii) of the first proviso to section 80G(5) applies only in cases where the institution or fund is already approved and the period of such approval is due to expire. According to the ld. CIT(Exemptions), the applicant was required to possess a valid approval for five consecutive years either under section 80G(5)(i) in Form No.10AC or under the second proviso to section 80G(5) in Form No.10AD under the new regime effective from 01.04.2021. Upon examination of records available with the Department, the ld. CIT(Exemptions) observed that the assessee was not in possession of such valid approval and therefore the prerequisite conditions for filing application under clause (ii) of the first proviso to section 80G(5) remained unsatisfied.

4.

The ld. CIT(Exemptions) further observed that even if the assessee had inadvertently selected the wrong section while filing the present application, there was no power or facility available either under the Income-tax Act, 1961 or in the ITBA system to alter the section selected by the applicant while filing Form No.10AB. The ld. CIT(Exemptions), however, observed that the assessee may examine the filing of a fresh application under the correct section of the Act. Proceeding on the aforesaid basis, the ld. CIT(Exemptions) treated the application filed in Form No.10AB as non-maintainable and rejected the same vide order dated 17.01.2026 passed in Form No.10AD.

ITA No. 1156/Ahd/2026 Prayatna Foundation Bhavnagar vs. CIT(E) Asst. Year –N.A. - 3– 5. The assessee is in appeal before us against the order passed by CIT(Appeals) dismissing the appeal of the assessee.

6.

We have heard the rival submissions and perused the material available on record including the written submissions filed by the ld. counsel for the assessee. It is observed that the core controversy involved in the present appeal relates to filing of the application under an incorrect clause while seeking renewal/approval under section 80G of the Act. The ld. counsel for the assessee has submitted that the assessee trust is a long-standing public charitable trust registered under the Bombay Public Trust Act, 1950 since 20.09.2010 and has been regularly carrying out charitable activities. It has further been submitted that the assessee had already furnished relevant supporting documents along with Form No.10AB including the trust deed, registration certificate, earlier approval order under section 80G and audited financial statements. The ld. counsel further submitted that the rejection has been made merely on account of selection of incorrect code/section in the online application and not on merits regarding genuineness of activities or eligibility of the trust.

7.

We further note that the ld. CIT(Exemptions) himself has observed in the impugned order that the assessee may file a fresh application under the correct section of the Act. It is also an undisputed fact emerging from the record that the assessee had earlier been granted approval under section 80G of the Act for the period commencing from 30.01.2019 and therefore the claim of the assessee cannot be rejected merely on account of technical defect in selection of the clause while filing Form No.10AB.

ITA No. 1156/Ahd/2026 Prayatna Foundation Bhavnagar vs. CIT(E) Asst. Year –N.A. - 4– 8. We also find force in the submissions of the ld. counsel that the issue involved is substantially covered by the decision of the Coordinate Bench of the Tribunal in the case of Senior Citizen Council Gandhinagar in ITA No.362/Ahd/2025 order dated 21.05.2025 wherein the Tribunal observed that inadvertent selection of wrong section code while filing Form No.10AB should not defeat a substantive claim of approval under section 80G and accordingly restored the matter to the file of the ld. CIT(Exemptions) for considering the application under the appropriate clause of section 80G(5). We further note that similar view has also been taken by the Coordinate Bench in the case of Shree M. R. Joshi Charitable Trust in ITA Nos.933 & 934/Ahd/2026 order dated 30.04.2026 wherein the issue was restored to the file of the ld. CIT(Exemptions) for fresh adjudication after granting adequate opportunity to the assessee.

9.

Having regard to the entirety of facts and circumstances and in the interest of substantial justice, we are of the considered view that the assessee deserves one more opportunity to file the application afresh under the correct provision of law. Since the assessee was already enjoying approval under section 80G earlier and the present issue has arisen primarily on account of selection of incorrect clause while filing Form No.10AB, we deem it appropriate to restore the matter to the file of the ld. CIT(Exemptions) with direction to permit the assessee to file fresh Form No.10AB under the appropriate clause, namely clause (ii) of the first proviso to section 80G(5) of the Act relating to renewal of existing approval, or such other appropriate clause as may be applicable in accordance with law after verification of the assessee’s earlier approval status under the new registration regime.

ITA No. 1156/Ahd/2026 Prayatna Foundation Bhavnagar vs. CIT(E) Asst. Year –N.A. - 5–

10.

Accordingly, the impugned order passed by the ld. CIT(Exemptions) is set aside and the matter is restored to his file for de novo adjudication in accordance with law. The ld. CIT(Exemptions) shall permit the assessee to file the application afresh under the correct provision/section and thereafter examine the same on merits after providing reasonable and adequate opportunity of being heard to the assessee. The assessee is also directed to furnish all requisite documents and evidences and fully cooperate in the proceedings.

11.

In the result, the appeal of the assessee is allowed for statistical purposes. This Order is pronounced in the Open Court on 18/05/2026

Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 18/05/2026 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 15.05.2026 (Dictated on dragon software) 2. Date on which the typed draft is placed before the Dictating Member 15.05.2026 3. Other Member………………… 4. Date on which the approved draft comes to the Sr.P.S./P.S 15.05.2026 5. Date on which the fair order is placed before the Dictating Member for pronouncement 18.05.2026 6. Date on which the fair order comes back to the Sr.P.S./P.S 18.05.2026 7. Date on which the file goes to the Bench Clerk 18.05.2026 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Dispatch of the Order……………………………………

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