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Facts
The assessee filed applications for regular registration under Section 12AB and approval under Section 80G(5) of the Income Tax Act. These applications were rejected by the CIT(E) at the threshold as non-maintainable for filing under an incorrect clause, specifically filing under clause (ii) instead of the appropriate clause for renewal.
Held
The Tribunal held that the defect in filing the application under an incorrect clause was procedural/technical. The CIT(E) should not have rejected the applications without examining the objects and genuineness of the assessee's activities. The assessee was not given adequate opportunity to rectify the defect.
Key Issues
Whether rejection of registration/approval applications on technical grounds without adjudicating on merits, when opportunity to rectify procedural defects was not provided, is justified.
Sections Cited
12AB, 80G(5), 12A(1)(ac)(ii)
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Income Tax Appellate Tribunal, NAGPUR BENCH :: NAGPUR
Before: SHRI PAWAN SINGH & SHRI KHETTRA MOHAN ROY
These twin appeals filed by the assessee are directed against the separate orders of Ld. Commissioner of Income Tax (Exemption), Pune, both dated 02/04/2025 passed under sections 12AB & 80G(5) of the Income Tax Act, 1961 (for short, “Act”), whereby applications for regular registration u/s. 12AB & 310/NAG/20245 (Nationanext Foundation) r.w.s. 12A(1)(ac)(ii) and for grant of regular approval u/s. 80G(5) of the Act were rejected.
The substantial ground raised in both the appeals is that assessee-society was not given proper opportunity of hearing to correct the provision regarding applicable clause.
Learned counsel for the assessee submitted that rejection of the applications u/s 12AB and 80G is purely technical in nature. Assessee was earlier granted provisional registration/ approval, which came to be cancelled, and thereafter the present applications were filed. It was further submitted that wrong mentioning of clause (i.e., filing under clause (ii) instead of appropriate clause) is a procedural defect, which ought not to defeat substantive rights and the Ld. CIT(E) failed to appreciate that assessee is a charitable institution carrying on genuine activities. It was further submitted that assessee should have been given an opportunity to rectify the defect. He prayed that the matter may be restored to the file of the Ld. CIT(E) for fresh adjudication on merits.
& 310/NAG/20245 (Nationanext Foundation) 4. On the other hand, Ld. Departmental Representative (DR) submitted that the applications were filed under clause (ii) of section 12A(1)(ac), and clause (ii) of first proviso to section 80G(5) of the Act, which are applicable only for renewal of existing regular registration/approval. Since the assessee failed to fulfil the statutory preconditions, the applications were rightly held to be non-maintainable. It was further submitted that Ld. CIT(E) has correctly applied the provisions of the Act. Therefore, Ld.DR prayed that the orders of the Ld. CIT(E) be upheld.
We have heard the rival submissions and perused the material available on record. It is an undisputed fact that assessee does not hold regular registration u/s 12AB nor regular approval u/s 80G. The applications were filed for renewal of existing registration/approval. We further observe that Ld. CIT(E) has rejected the applications at the threshold as non-maintainable without examining the objects and genuineness of activities of the assessee. In our considered opinion, the defect in the present case is procedural/technical in nature, i.e., filing under an incorrect clause. The 3 & 310/NAG/20245 (Nationanext Foundation) authorities are expected to adopt a substantive approach rather than a hyper-technical view, especially in matters relating to registration of charitable Trusts. The assessee was not guided to file the application under the appropriate provision, nor adequate opportunity was granted to cure the defect. Rejection of applications without adjudicating on merits defeats the purpose of registration provisions. In the interest of justice and fair play, assessee deserves one more opportunity to place correct applications and relevant documents. Accordingly, we set aside the impugned orders passed by the Ld. CIT(E) u/s 12AB & 80G and restore the matters back to the file of the Ld. CIT(E). The assessee shall file fresh/correct applications under the appropriate provisions of the Act. The Ld. CIT(E) shall examine the objects and genuineness of activities of the assessee by providing adequate opportunity of being heard and pass a speaking order in accordance with law. Grounds of appeal raised in both the appeals filed by the assessee are allowed for statistical purposes.
& 310/NAG/20245 (Nationanext Foundation) 6. In the result, both the appeals of the assessee are allowed for statistical purposes.