Loading judgment…
Facts
The assessee, a registered charitable trust, applied for final registration under section 80G of the Income Tax Act. The CIT(E) rejected the application, stating that the assessee had claimed exemption in previous years and thus should have applied under a different section.
Held
The Tribunal held that the assessee had inadvertently selected the wrong section code while filing the application for final registration and had not been given a proper opportunity to be heard. Therefore, the issue was remitted back to the CIT(E).
Key Issues
Whether the assessee's application for final registration under Section 80G was wrongly rejected due to inadvertent selection of a wrong section code and lack of opportunity to be heard.
Sections Cited
80G, 12A, 14A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SMT. RENU JAUHRI
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 31/08/2024 passed by Ld.CIT(E), Mumbai for assessment year 2025-26 on following grounds of appeal :
A.Y. 2025-26 Vijayam Memorial Trust “1. Error in Law: The learned Commissioner of Income Tax (Exemption) erred in law in rejecting the application for final registration under section 80G(5)(iv)(B) of the Income Tax Act 2. Failure to Provide a Fair Opportunity: The CIT (Exemption) failed to give the appellent a fair opportunity to respond to the notice of hearing dated 19th June 2024. The assessee had approached the department for clarification regarding the requirements for responding to the notice but was informed that no action was required as the notice was system-generated. This miscommunication led to the rejection of the application without the assessee being able to present any additional documents or clarifications.
3. Failure to Consider Provisional Registration: The CIT (Exemption) failed to consider appellent was granted provisional registration under section 80G on 28th Feb 2023, valid until Assessment Year 2025-2026.
The appellant Prays that: • The order dated 31" August 2024 passed by the CIT (Exemption) be set aside. • Direct the CIT (Exemption) to grant final approval within a time bound period. • Such order rectify as may be dememed appropriet in the facts & circumstances of the case.” Brief facts of the case are as under:
The assessee is registered charitable trust u/s.12A of the Act and incorporated on 03/03/1967 the assessee made application for seeking final approval u/s.80G of the Act in form 10AB on 18/03/2024. It is submitted that the assessee filed application under 80G(5)(iv)(B) seeking registration u/s.80G that was rejected by the Ld.CIT(E) by observing as under: “1. M/s Vijayam Memorial Trust [hereafter 'the applicant' or 'the assessee'] filed application in Form 10AB u/s 80G(5)(iv)(B) seeking registration under section 80G of the Income Tax Act [hereafter the Act'].
A.Y. 2025-26 Vijayam Memorial Trust 2. Under the relevant section 80G(5) (iv)(B) of the Act, in any other case, where activities of the trust or institution have: “…………. (B) commenced and no income or part thereof the said trust or institution has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, or section 11 or section 12, for any previous year ending on or before the date of such application, at any previous year ending on or before the date of such application, at any time after the commencement of such activity."
3. On verification of the facts and circumstances of the case, it is found that the trust was 3. incorporated on 03.03.1967. The assessee has taken provisional approval u/s 80G. Further, the assessee has claimed exemption in previous years and filed ITR 7.
4. As per above mentioned provision of Income Tax Act, the assessee has to file Form 10AB u/s 80G(5)(iv)(B), if the assessee has not claimed exemption in previous year. Since the assessee has claimed exemption in previous years, therefore this application u/s 80G is not allowable. Further, the assessee is not fulfilling the stipulated conditions prescribed for filing application for approval in Form 10AB. In view of the above this application Form is hereby rejected.
For statistical purposes, this application is non maintainable and stands rejected.”
2.1 The Ld.AR submitted that, the assessee while filing Form 10AB for final registration inadvertently mentioned wrong section as sub-clause (B) of clause (iv) of first proviso to subsection (5) of section 80G instead of section clause (iii) of first proviso to subsection (5) of section 80G. The Ld.AR further submitted that, the assessee could not explain the error before the Ld.CIT(A) because the notice calling for details mentioned the subject proceedings to be under section 14A and that, when the staff of the assessee approached the office of the Ld.CIT(E) it was advised that no action is required.
A.Y. 2025-26 Vijayam Memorial Trust The Ld.AR thus submitted that, no proper opportunity was granted to the assessee before rejecting the application for registration under section 80G.
2.2 The Ld.AR also drew our attention to the relevant provisions of section 80G to submit that, the reason as quoted by the Ld.CIT(E) to reject the application is not applicable to the assessee. Therefore, the Ld.AR prayed that a directions may be given to the Ld.CIT(E) to grant approval for registration under section 80G to the assessee.
2.3 The Ld.AR in support placed reliance on coordinate bench of this Tribunal in case of Rambha Charitable Trust Vs. CIT(E) in for A.Y. 2024-25 Vide order dated 29/11/2024, wherein, identical issue was considered and the issue was remanded to the Ld.CIT(E) to decide the application with certain direction. 2.4 The Ld.DR on the other hand, relied on the order passed by the authorities below. However, did not object for the application to be remitted back to the Ld.CIT(E) to consider it afresh. We have perused the submissions on advance by both the sides in the light of records placed before us.
We note that, the similar issue was considered by coordinate bench of this Tribunal in Rambha Charitable Trust (supra) by observing as under:
“5. We heard the parties and perused the material on record. Before we proceed to examine the facts in assessee's case, it is important to first look at the relevant provisions of first proviso to subsection (5) of section 80G which read as under -Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed A.Y. 2025-26 Vijayam Memorial Trust form and manner to the Principal Commissioner or Commissioner, for grant of approval, - (i) where the institution or fund is approved under clause (vi) [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the 1st day of April, 2021; (ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period; (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier; [or] [(iv) [***] where activities of the institution or fund have-- (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought; (B) commenced [***]at any time after the commencement of such activities:] 6. The assessee in terms of the above provisions first applied for a provisional approval under sub-clause (B) of clause (iv) of first proviso to subsection (5) of section 80G within and subsequently (refer clause 2 in Form 10A) and was given the provisional registration up to AY 2025-26 on 30.11.2022. In the application for final approval in Form 10AB, it noticed that the assessee has once again mentioned same section i.e. sub-clause (B) of clause (iv) of first proviso to subsection (5) of section 80G whereas the correct section code under which the assessee ought to have sought approval is clause (iii) of first proviso to subsection (5) of section 80G. We also noticed that the CIT(E) has treated the application as one filed under sub-clause (B) of clause (iv) of first proviso to subsection (5) of section 80G and accordingly rejected the application for not fulfilling the stipulated conditions prescribed for filing application for approval in Form 10AB. From the perusal of forms filed and the facts of the case, in our considered view, there is merit in claim of the Id AR that the assessee has selected the wrong section code inadvertently while filing the application for final registration in Form 10AB. Further, we notice that the assessee did not have the opportunity of being heard before CIT(E) due to incorrect course of action advised, and that A.Y. 2025-26 Vijayam Memorial Trust otherwise the assessee might have explained the facts before the CIT(E) to avoid rejection. In view of these discussions and respectfully following the above decision of the Kolkata Bench in the case of North Eastern Social Research Centre (supra) we remit the issue back to CIT(E) with a direction to grant final approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. We also direct the CIT(E) to decide the application of the assessee for final approval as quickly as possible before the expiry of the provisional approval granted in order to enable the assessee to have the benefit of section 80G without any break. It is ordered accordingly” 3.1 Respectfully following the above, we remit the issue back to the Ld.CIT(E) to consider the claim of assessee based on the directions here in above. Accordingly the grounds raised by the assessee stands partly allowed for statistical purposes.
In the result the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 22/04/2025