SAHAY FOUNDATION,GANDHINAGAR vs. THE CIT(EXEMPTION), AHMEDABAD

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ITA 3009/AHD/2026Status: DisposedITAT Ahmedabad15 October 2026AY 2025-263 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the application for final approval under Section 80G(5) should not be rejected solely on the ground of the assessee inadvertently mentioning the incorrect sub-clause (ii instead of iii). The Tribunal observed that post the amendment to Section 80G w.e.f. 01.04.2021, there was significant confusion regarding the interpretation of the provisions, leading to mistakes by assessees and even tax authorities. The Tribunal noted that Co-ordinate Benches have consistently held that assessees should not be punished for bona fide mistakes in application forms, especially when the entire facts are on record and the assessee is otherwise eligible. The Tribunal found that the CIT(E) was aware of the assessee's eligibility but felt constrained by the incorrect clause mentioned. Therefore, the impugned order of the CIT(E) was set aside. The matter was restored to the file of the CIT(E) with a direction to treat the application as moved under the relevant clause (80G(5)(iii)) irrespective of the clause mentioned by the assessee and to decide the application afresh on merits. The appeal was allowed for statistical purposes.

What were the facts?

The assessee, Sahay Foundation, filed an appeal against the order dated 23.06.2026 passed by the Commissioner of Income Tax (Exemption) (CIT(E)), Ahmedabad. The CIT(E) rejected the assessee's application for final approval under Section 80G(5) of the Income Tax Act, 1961. The assessee had previously obtained provisional approval. In the application for final approval, the assessee inadvertently ticked clause 80G(5)(ii) instead of clause (iii). The CIT(E) rejected the application solely on this ground, stating that his office could not suo motu change the clause under which the application was made. The assessment year in question is 2025-26.

What were the issues?

1. Whether the application for final approval under Section 80G(5) of the Income Tax Act, 1961, can be rejected solely on the ground of mentioning an incorrect sub-clause (ii instead of iii) when the assessee is otherwise eligible for approval? Assessee's contention: The assessee argued that due to amendments to Section 80G and related provisions effective from 01.04.2021, there was widespread confusion among assessees, professionals, and even tax authorities regarding the correct interpretation. The assessee relied on pronouncements by Co-ordinate Benches of the Tribunal which held that assessees should not be penalized for bona fide mistakes in mentioning the relevant clause in application forms, especially given the complexities and discrepancies in prescribed forms. The assessee contended that the entire facts were before the CIT(E) and the assessee was otherwise eligible. Revenue's contention: The judgment records no specific contention from the revenue.

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, “B” BENCH, AHMEDABAD

Before: SHRI SANJAY GARG & SHRI R. GOVINDARAJAN

For Appellant: Shri Mehul K. Patel, Advocate, Shri Ram Tiwari, CIT. DR
For Respondent: Shri Ram Tiwari, CIT. DR
Hearing: 14/10/2026

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE: SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI R. GOVINDARAJAN, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No.3009/Ahd/2026 (िनधा�रण वष� / Assessment Year : 2025-26) बनाम Sahay Foundation CIT(Exemption), 702, 7th Floor, Skyline / Ahmedabad Vs. Complex, Opp. Ramkatha Medan, Gandhinagar, Gujarat-382010 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : ABHTS0530K (Appellant) .. (Respondent) अपीलाथ� ओर से /Appellant by : Shri Mehul K. Patel, Advocate ��यथ� क� ओर से/Respondent by : Shri Ram Tiwari, CIT. DR Date of Hearing 14/10/2026 15/10/2026 Date of Pronouncement (आदेश)/ORDER Per Sanjay Garg, Judicial Member:

The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Exemption), (hereinafter referred to as “CIT(E)”), Ahmedabad dated 23.06.2026 rejecting the application of the assessee for final approval u/s 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

2.

In this case, the assessee applied for provisional approval u/s. 80G(5) of the Act, which was granted to the assessee-trust. The assessee, thereafter,

I.T.A. No.3009/Ahd/2026 Sahay Foundation vs. CIT(E) - 2 – applied for final approval to the Ld. CIT(E). However, the assessee inadvertently mentioned/ticked the clause as 80G(5)(ii) instead of clause (iii) in the prescribed form. Merely, on this ground, the Ld. CIT(E) rejected the application of the assessee observing that his office suo moto cannot change the clause under which the application has to be made.

3.

It is observed here that after the amendment to the relevant provisions w.e.f. 01.04.2021, there were many misunderstandings and confusions about the correct interpretation of the same, not only among the assessees/Income Tax professionals, but also with the Income Tax Authorities. Even the CBDT had to issue circulars and clarifications regarding correct interpretation of the relevant provisions from time to time. Even the time/limitation for making the applications has also been extended from time to time taking note of such confusions in properly understanding relevant provisions. The Co-ordinate Benches of the Tribunal have held time and again that due to the complex provisions and even there being certain discrepancies in prescribed forms for issuing certificates, the assessees should not be punished for any mistake in mentioning the relevant clause in the application form. In the case in hand, the entire facts were before the Ld. CIT(E) and he was very much aware that the case of the assessee was otherwise eligible for granting final approval, however, he found himself helpless only because the assessee had not mentioned correct clause. It has been held time and again that the litigants should not be punished for their bona fide mistakes. The impugned order of the Ld. CIT(E) is set aside and the matter is restored to the file of the CIT(E). It is directed that the Ld. CIT(E) will treat the application moved by the assessee under the relevant clauses 80G(5)(iii), irrespective of the clause

I.T.A. No.3009/Ahd/2026 Sahay Foundation vs. CIT(E) - 3 –

mentioned by the assessee in the application form and will decide the application of the assessee afresh on merits in accordance with law.

4.

With the above observations, the appeal of the assessee is treated as allowed for statistical purposes.

This Order pronounced on 15/10/2026

Sd/- Sd/- (R. GOVINDARAJAN) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 15/10/2026 SKSinha, PS TRUE COPY आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. 3. संबंिधत आयकर आयु� / Concerned CIT आयकर आयु�(अपील) / The CIT(A)- 4. 5. �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,

उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad

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