ZARINA FOUNDATION,MUMBAI vs. CIT (EXEMPTIONS), MUMBAI

Per Anikesh Banerjee (JM):

Both the appeals of the assessee were filed against the order of the Learned Commissioner of Income-tax (Exemption), Mumbai [for brevity,
‘Ld.CIT(E)] passed under sections 12A & 80G(5) of the Act, date of both the orders is 27/09/2024. 2. Considering the facts and issue in the present appeals were heard together.
ITA No.6277/Mum/2024 is taken as the lead case.

2
ITA 6276 & 6276/Mum/2024
Zarina Trust

The ground raised by the assessee in this appeal are as follows: -
“1. (a).
The order passed u/s. 12AB of the Act is invalid, non-est and bad in law.
(b).
The Ld. CIT(Exemptions) erred in law and facts in rejecting the application u's
10AB without granting the adequate opportunity of being heard and merely on technical glitch.
2. All the above grounds are independent and without prejudice to each other.
3. The Appellant craves leave to add, amend, delete and modify the above grounds of appeal.”

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ITA 6276 & 6276/Mum/2024
Zarina Trust application for 80G(5) was duly cancelled. Being aggrieved on the impugned order, the assessee filed an appeal before us.
3. The Ld.AR argued and filed a paper book containing pages 1 to 81, which is kept on the record. The Ld.AR stated the date-wise instance of the assessee’s application, which is tabulated as under:-
Sr.No.
Issue

Date
1. Trust incorporated

29/04/2022
2. Activity started

16/09/2022
3. Provisional registration granted

22/06/2022
4. First Application filed for permanent regn.
13/03/2023
5. First Application rejected

25/09/2023
6. Second Application filed for permanent regn.
20/03/2024
7. Second Application rejected

27/09/2024

The Ld.AR stated that the assessee previously filed an application, but discrepancy found in the trust deed by the Ld.CIT(E). Accordingly, the petition was duly rejected. Finally, the assessee amended the specific provision in the trust deed and filed second application on 20/03/2024. The assessee tried to file this application by perusing section 12A(1)(ac)(iii) of the Act, but in the on-line system, the said section was not accepted. Considering this, the assessee informed the income-tax authority and finally a letter was issued to the CPC, Bengaluru, related to error caused in application for the registration. The copy of letters are duly annexed in APB pages 76-81. But no assistance or reply was received from revenue’s side. Due to restriction of time limit, as per section 12(A)(1)(ac)(iii) of the Act, the assessee filed the application by mentioning the wrong section. He

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ITA 6276 & 6276/Mum/2024
Zarina Trust further mentioned that in none of the show cause noticesissued by the Ld.CIT(E), it was revealed that the assessee applied under a wrong section in the application form. Finally, when the order was received, the assessee found that the said application was rejected due to quotingthe wrong section. So, the Ld.AR prayed for restoring the matter to the file of the Ld.CIT(E) for accepting the application, as applied for by the assessee.
4. The Ld.DR argued and only relied on the order of the revenue authorities.
5. We have heard the rival submissions and perused the documents available on record. Upon consideration, we find that the assessee inadvertently applied for regularization of registration under the incorrect provision, namely Section 12A(1)(ac)(vii)(B) of the Act, whereas the correct provision applicable to the assessee's case is Section 12A(1)(ac)(iii) of the Act. Despite this error, no show- cause notice was issued by the Ld. CIT(E) highlighting the discrepancy in the application.It is observed that the assessee was in a position to correctly quote the applicable section while submitting the application; however, due to technical constraints in the online portal, the correct section could not be selected. The application was ultimately rejected by the Ld. CIT(E) solely on this procedural ground, without adjudicating any substantive issue or issuing a show-cause notice to the assessee in respect thereof. This, in our considered opinion, renders the rejection order unsustainable in law, as it suffers from a violation of the principles of natural justice.
The Ld. DR could not produce any show-cause notice issued by the Ld. CIT(E) for the said error. Furthermore, the letter submitted by the assessee to the CPC highlighting the technical difficulty was not addressed. Thus, it is evident that reasonable opportunity of being heard was denied to the assessee.

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ITA 6276 & 6276/Mum/2024
Zarina Trust

The Ld. AR placed reliance on the decisions of the Co-ordinate Bench of the ITAT,
(2025) 170 taxmann.com 720 and Deodhar Education and Vocational Academy vs. CIT (2025) 172 taxmann.com 312, as well as the decision of the Co-ordinate
The assessee is also directed to comply with any notices issued by the Ld. CIT(E) in this regard and to furnish all necessary supporting documents/evidence with due diligence in support of its application for registration.
Accordingly, the grounds raised in the appeal by the assessee are allowed.
6. Insofar as the application under Section 80G(5) of the Act is concerned, the decision on the application under Section 12A shall apply mutatis mutandis to this issue as well. Hence, ITA No. 6276/Mum/2024 is also remanded to the file of the Ld. CIT(E) with similar directions as stated above.

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ITA 6276 & 6276/Mum/2024
Zarina Trust

BY ORDER,
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(Asstt.