THE ABILITY PEOPLE,VISAKHAPATNAM vs. INCOME TAX OFFICER, EXEMPTION WARD,, VISAKHAPATNAM

In the above cited appeal, the appellant Trust is aggrieved with the rejection of application for registration u/s 12AB of the Income Tax Act, 1961 (“the Act”). The appellant claims that the Ld.CIT(E) erred in rejecting the application for registration u/s 12AB merely for technical error of selecting incorrect section code while filing the application. From the order of Ld.CIT(E), it is noticed that a notice was issued to the assessee in respect of proceedings u/s 12A(1)(ac)(ii) filed in Form 10AB by the assessee, to furnish a detailed reply on the specific information called for in the said notice. In response to the same, the appellant has submitted information before the Ld.CIT(E). In this case, the CPC has issued a provisional registration in Form No.10AC on 28.05.2021 and the same is valid for 3 years from AY 2022-23 to AY 2024-25. It was mentioned that as per the provisions of Income Tax Act, 1961, the assessee should have applied Form 10AB u/s 12A(1)(ac)(iii) to regularize its provisional registration, whereas the appellant Trust applied u/s 12A(1)(ac)(ii), which is for renewal of the cases where the Trust is already having regular registration. Since the assessee filed the present application before the Ld.CIT(E) by choosing incorrect section code, the application filed in Form 10AB seeking regular registration u/s 12AB was rejected by saying that the same is infructuous.

Aggrieved by the order of Ld.CIT(E), an appeal is filed before ITAT. The Ld.AR of the appellant Trust filed a written submission, in which, it was stated that the goal of the Trust is promoting the welfare of persons with disabilities and its mission is to deal with critical issues such as health, education and training, emphasizing accessibility, rehabilitation and providing employment opportunities to the disabled people. The appellant Trust claims that it has served total of 4278 individuals and provided support and environment for a better future of these disabled people. It was also mentioned that the Ld.CIT(E) rejected the application vide order dated 06.02.2026, holding that the application is infructuous solely on the ground that, the application has been filed under incorrect section code. The Ld.CIT(E) has adopted a very pedantic approach without examining the eligibility on merits, argued the Ld.AR of the appellant Trust. The error occurred in selecting a wrong code is a curable and venial in nature and it was argued that the Ld.CIT(E) ought to have decided the application on merits, adopting a more justice oriented approach. In the written submission, it was further mentioned that since the application under consideration is in pursuance of a provisional registration, the same was required to be filed u/s 12A(1)(ac)(iii), but the tax consultant inadvertently selected section code as 12A(1)(ac)(ii) while filling the application online. As the Society had been carrying on charitable activities and serving the under privileged section of the society, the technical defects shall not come in the way of rendering substantive justice. It was also argued that the Ld.CIT(E) ought to have allowed/given an opportunity to the appellant society for curing the defect and should have considered the application on merits. For this proposition, the Ld.AR of the appellant relied on certain decisions of ITAT, including that of ITAT, Visakhapatnam order dated 10.07.2025 in ITA No.208/Viz/2025 in the case of BRITG Foundation vs. CIT(E). In this case, the coordinate Bench has taken a decision that a mere technical or procedural lapse cannot be fatal to deny the exemption in toto. It is also well settled principle that procedural mistake should not defeat the substantial rights especially in cases involving registration of charitable institutions, which otherwise meet the conditions stipulated under the Act. The coordinate Bench in the above case, relied on the decision of Hon’ble Supreme Court in the case of CIT Vs. G.M.Mittal Stainless Steel (P) Ltd. [263 ITR 255 (SC)], where, it was held that the procedural lapses should not come in the way of granting substantive relief, provided the assessee is otherwise eligible. Therefore, rejection of application without affording opportunity to rectify the error is not in consonance with the principles of natural justice.

The Ld.DR opposed the argument of the Ld.AR of the appellant, stating that the mistake was committed by the assessee and hence, the order of Ld.CIT(E) is correct.

After hearing both the sides and in view of the ratio laid down by the Hon’ble Supreme Court, we hold that the rejection of assessee’s application is not justified and therefore, we set aside the same and restore the matter to the file of Ld.CIT(E), with a direction to examine the assessee’s application on merits and allow the assessee to rectify the procedural errors. The Ld.CIT(E) is directed to dispose of application afresh and needless to say that due opportunity of hearing should be afforded to the assessee..

In this appeal, the appellant society is aggrieved by the order of Ld.CIT(E), rejecting the application for approval u/s 80G on the ground that the assessee does not hold valid regular registration u/s 12AB of the Act. The Ld.AR of the appellant has argued that the Ld.CIT(E) has adopted a very pedantic approach, without examining the eligibility on merits, with respect to granting approval u/s 80G, because of other aspects remained valid. The first ground of appeal in this case is that the Ld.CIT(E), in facts and law while passing the order, rejected the application u/s 80G of the Act. The application for renewal u/s 80G was rejected due to error in selecting the incorrect section code while filing the application. Approval u/s 80G is intrinsically linked to and dependent upon the existence of valid registration u/s 12AB, which was denied solely in consonance with regular registration u/s 12AB. Hence, the Ld.AR of the appellant has respectfully prayed that on restoring the application u/s 12AB to the file of Ld.CIT(E), the order passed by Ld.CIT(E) rejecting the application seeking approval u/s 80G may also kindly be set aside to the file of Ld.CIT(E) to reconsider the application. In this regard, the Ld.AR of the appellant relied on the decision of ITAT Ahmedabad Bench in the case of Prarthana Foundation Charitable Trust Vs. CIT(E) in ITA No.979 & 980/Ahd/2026, wherein, under identical facts and circumstances, the coordinate Bench has set aside the order of Ld.CIT(E) and restored the application to the file of Ld.CIT(E) for denovo consideration, after deciding the registration u/s 12AB of the Act.

The Ld.DR opposed the argument of the Ld.AR of the appellant, stating that the mistake was committed by the assessee and hence, the order of Ld.CIT(E) is correct.

After hearing both the sides and perusing the decision of coordinate Bench in the case of Prarthana Foundation Charitable Trust (supra), the Bench decides to remit the issue back to the file of Ld.CIT(E) to consider the application filed seeking approval u/s 80G(5) of the Act. In this case, application for seeking exemption u/s 80G was denied solely on the ground that there is no valid registration u/s 12AB of the Act. As mentioned above in ITA No.485/Viz/2026 in assessee’s own case, the matter relating to section 12AB registration was set aside to the file of Ld.CIT(E), this matter relating to granting approval u/s 80G is consequential and hence, the same also is remitted back to the file of Ld.CIT(E). The logic and rationale mentioned in ITA No.485/Viz/2026 as above is applicable mutatis mutandis to this appeal also. The Ld.CIT(E) is directed to decide the registration issue u/s 12AB and then decide this issue of granting approval u/s 80G subsequently as per the provisions of the Act. A reasonable opportunity should be provided to the appellant before disposing of this 80G application. With these observations, the appeal is remitted back to the file of Ld.CIT(E). The appeal of the assessee is allowed for statistical purpose.

In the result, both the appeals filed by the Assessee are allowed for statistical purpose.