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Facts
The assessee had been granted provisional registration under Section 80G of the Income Tax Act. While applying for regular registration, the assessee inadvertently selected the wrong clause in Form 10AB, which led to the rejection of their application by the Ld. CIT(E).
Held
The Tribunal found merit in the assessee's claim of inadvertent error in selecting the wrong section code. The Tribunal restored the matter to the Ld. CIT(E) with a direction to grant final approval if the assessee is otherwise eligible, ensuring the benefit of Section 80G without a break.
Key Issues
Whether rejection of application for regular registration under Section 80G due to inadvertent selection of wrong clause is justified. Whether the assessee was given adequate opportunity to be heard.
Sections Cited
80G, 80G(5)
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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
This appeal has been preferred by the assessee against order dated 09.11.2024 passed by the Ld. Commissioner of Income-tax (Exemptions), Mumbai [in short ‘the Ld. CIT(E)’], wherein the application of the assessee for registration u/s 80G of the Income-
Aashray Seva Kendra 2 tax Act, 1961 (in short ‘the Act’) has been rejected. The grounds tax Act, 1961 (in short ‘the Act’) has been rejected. The grounds tax Act, 1961 (in short ‘the Act’) has been rejected. The grounds raised by the assessee are reproduced as under: raised by the assessee are reproduced as under:
In the facts and circumstances of the case and in law, the ts and circumstances of the case and in law, the ts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in learned Commissioner of Income tax (Exemptions) has erred in learned Commissioner of Income tax (Exemptions) has erred in passing the impugned order dated 09.11.2024 in Form 10AD passing the impugned order dated 09.11.2024 in Form 10AD passing the impugned order dated 09.11.2024 in Form 10AD rejecting the approval sought by the appellant for final rejecting the approval sought by the appellant for final rejecting the approval sought by the appellant for final registration under section 80G o registration under section 80G of the Act merely on account of f the Act merely on account of inadvertent and unintentional mistake in selecting clause (iv) of inadvertent and unintentional mistake in selecting clause (iv) of inadvertent and unintentional mistake in selecting clause (iv) of section 80G(5) in place of clause (iii) of the said section in Form section 80G(5) in place of clause (iii) of the said section in Form section 80G(5) in place of clause (iii) of the said section in Form 10AB.
In the facts and circumstances of the case and in law, the 2. In the facts and circumstances of the case and in law, the 2. In the facts and circumstances of the case and in law, the learned Commissioner of learned Commissioner of Income tax (Exemptions) has erred in Income tax (Exemptions) has erred in passing the impugned order dated 09.11.2024 in Form 10AD passing the impugned order dated 09.11.2024 in Form 10AD passing the impugned order dated 09.11.2024 in Form 10AD - rejecting the approval sought by the appellant for final rejecting the approval sought by the appellant for final rejecting the approval sought by the appellant for final registration under section 80G of the Act without providing any registration under section 80G of the Act without providing any registration under section 80G of the Act without providing any show cause notice in respect of the pr show cause notice in respect of the proposed rejection.
3. In the facts and circumstances of the case and in law, the 3. In the facts and circumstances of the case and in law, the 3. In the facts and circumstances of the case and in law, the learned Commissioner of Income tax (Exemptions) has erred in learned Commissioner of Income tax (Exemptions) has erred in learned Commissioner of Income tax (Exemptions) has erred in passing the impugned order dated 09.11.2024 in Form 10AD passing the impugned order dated 09.11.2024 in Form 10AD passing the impugned order dated 09.11.2024 in Form 10AD rejecting the approval sought by the appellant for final rejecting the approval sought by the appellant for final rejecting the approval sought by the appellant for final registration under section 80G of the Act egistration under section 80G of the Act- in utter disregards to in utter disregards to the factual matrix the factual matrix of the case. 2. We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused We have heard rival submissions of the parties and perused the relevant materials on record the relevant materials on record. The assessee had been granted . The assessee had been granted provisional registration u/s 80G provisional registration u/s 80G of the Act and thereafter thereafter filed an application seeking regular registration u/s 80G of the Act, application seeking regular registration u/s 80G of the Act, application seeking regular registration u/s 80G of the Act, however, inadvertently applied in Form No. 10AB in clause (iv)(B) of however, inadvertently applied in Form No. 10AB in clause (iv however, inadvertently applied in Form No. 10AB in clause (iv the first proviso to section 80G(5) of the Act the first proviso to section 80G(5) of the Act, which was meant for which was meant for provisional registratio provisional registration. Due to application by the assessee under n. Due to application by the assessee under wrong form, the Ld. CIT(E) declined to grant registration to the wrong form, the Ld. CIT(E) declined to grant registration to the wrong form, the Ld. CIT(E) declined to grant registration to the assessee observing as under: assessee observing as under:
Aashray Seva Kendra 3 “3. On verification of the facts and circumstances On verification of the facts and circumstances of the case, it is of the case, it is found that the trust was found that the trust was incorporated on 14.09.2015. Further, 14.09.2015. Further, the assessee has already claimed exemption by filing ITR the assessee has already claimed exemption by filing ITR the assessee has already claimed exemption by filing ITR-7 before applying for approval in Form 10AB (Previous Years). before applying for approval in Form 10AB (Previous Years). before applying for approval in Form 10AB (Previous Years).
As per above mentioned provision of Income Tax Act, the 4. As per above mentioned provision of Income Tax Act, the 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 to file Form 10AB u/s 80G(5)(iv)(B), if the assessee has to file Form 10AB u/s 80G(5)(iv)(B), if the assessee has not claimed exemption in Previous years. Since the assessee has not claimed exemption in Previous years. Since the assessee has not claimed exemption in Previous years. Since the assessee has claimed exemption in Previous years, therefore this has claimed exemption in Previous years, therefore this has claimed exemption in Previous years, therefore this application u/s 80G is not allowable. Further, the assessee is not application u/s 80G is not allowable. Further, the assessee is not application u/s 80G is not allowable. Further, the assessee is not fulfilling the stipulated conditions prescribed for filing a fulfilling the stipulated conditions prescribed for filing a fulfilling the stipulated conditions prescribed for filing application for approval in Form 10AB. In view of the above this application for approval in Form 10AB. In view of the above this application for approval in Form 10AB. In view of the above this application Form is hereby hereby rejected” 2.1 Before us, the Ld. counsel for the assessee referred to the Before us, the Ld. counsel for the assessee referred to the Before us, the Ld. counsel for the assessee referred to the decision of Co-ordinate Bench in the case of Rotary Charity Trust in ordinate Bench in the case of Rotary Charity Trust in ordinate Bench in the case of Rotary Charity Trust in wherein the Tribunal in identical wherein the Tribunal in identical circumstances restored the matter back to the Ld. CIT(E) for circumstances restored the matter back to the Ld. CIT(E) for circumstances restored the matter back to the Ld. CIT(E) for considering the application of the registration for regular approval. considering the application of the registration for regular approval. considering the application of the registration for regular approval. The relevant finding of the Tribunal is reproduced as under: The relevant finding of the Tribunal is reproduced as under: The relevant finding of the Tribunal is reproduced as under:
5. We have heard the parties 5. We have heard the parties and perused the material on and perused the material on record. Before we proceed to examine the facts in assessee's record. Before we proceed to examine the facts in assessee's record. Before we proceed to examine the facts in assessee's case, it is important to first look at the relevant provisions of first case, it is important to first look at the relevant provisions of first case, it is important to first look at the relevant provisions of first proviso to subsection (5) of section 80G which read as under proviso to subsection (5) of section 80G which read as under proviso to subsection (5) of section 80G which read as under - Provided that the institution or Provided that the institution or fund referred to in clause (vi) shall fund referred to in clause (vi) shall make an application in the prescribed form and manner to the make an application in the prescribed form and manner to the make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval, Principal Commissioner or Commissioner, for grant of approval, Principal Commissioner or Commissioner, for grant of approval,- (i) where the institution or fund is approved under clause (vi) (as (i) where the institution or fund is approved under clause (vi) (as (i) where the institution or fund is approved under clause (vi) (as it stood immediately it stood immediately before its amendment by the Taxation and before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Other Laws (Relaxation and Amendment of Certain Provisions) Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the Ist day of April, 2021; Act, 2020], within three months from the Ist day of April, 2021; Act, 2020], within three months from the Ist day of April, 2021; (ii) where the institution or fund is approved and the period of (ii) where the institution or fund is approved and the period of (ii) where the institution or fund is approved and the period of such approval is due to e such approval is due to expire, at least six months prior to expiry xpire, at least six months prior to expiry of the said period; of the said period; (iii) where the institution or fund has been provisionally (iii) where the institution or fund has been provisionally (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the approved, at least six months prior to expiry of the period of the approved, at least six months prior to expiry of the period of the Aashray Seva Kendra 4 provisional approval or within six months of commencement of its provisional approval or within six months of commencement of its provisional approval or within six months of commencement of its activities, whichever is earlier: [or] tivities, whichever is earlier: [or] [(iv) [*] where activities of the institution or fund have [(iv) [*] where activities of the institution or fund have-- (A) (A) (A) not not not commenced, commenced, commenced, at at at least least least one one one month month month prior prior prior to to to the the the commencement of the previous year relevant to the assessment commencement of the previous year relevant to the assessment commencement of the previous year relevant to the assessment year from which the said approval is sought; year from which the said approval is sought; (B) commenced [*** Jat any time after the commencement of such B) commenced [*** Jat any time after the commencement of such B) commenced [*** Jat any time after the commencement of such activities:] 6. Assessee, in terms of the above provisions, first applied for a Assessee, in terms of the above provisions, first applied for a Assessee, in terms of the above provisions, first applied for a provisional approval under sub provisional approval under sub-clause (B) of clause (iv) of first clause (B) of clause (iv) of first proviso to subsection (5) of section 80G within proviso to subsection (5) of section 80G within and subsequently and subsequently (refer clause 2 in Form 10A) and was given the provisional (refer clause 2 in Form 10A) and was given the provisional (refer clause 2 in Form 10A) and was given the provisional registration up to AY 2024 registration up to AY 2024-25 on 04.04.2022. In the application 25 on 04.04.2022. In the application for final approval in Form 10AB, it is noticed that assessee has for final approval in Form 10AB, it is noticed that assessee has for final approval in Form 10AB, it is noticed that assessee has once again mentioned same section i.e. sub once again mentioned same section i.e. sub-clause (B) of clause B) of clause (iv) of first proviso to subsection (5) of section SOG whereas the (iv) of first proviso to subsection (5) of section SOG whereas the (iv) of first proviso to subsection (5) of section SOG whereas the correct section code under which the assessee ought to have correct section code under which the assessee ought to have correct section code under which the assessee ought to have selected is clause (iii) of first proviso to subsection (5) of section selected is clause (iii) of first proviso to subsection (5) of section selected is clause (iii) of first proviso to subsection (5) of section 80G. We also noticed that ld. CIT(E) has trea 80G. We also noticed that ld. CIT(E) has treated the application ted the application as one filed under sub as one filed under sub-clause (B) of clause (iv) of first proviso to clause (B) of clause (iv) of first proviso to subsection (5) of section 80G and accordingly rejected the subsection (5) of section 80G and accordingly rejected the subsection (5) of section 80G and accordingly rejected the application for not fulfilling the stipulated conditions prescribed application for not fulfilling the stipulated conditions prescribed application for not fulfilling the stipulated conditions prescribed for filing application for approval in F for filing application for approval in Form 10AB. 6.1. From the perusal of forms filed and the facts of the case, in 6.1. From the perusal of forms filed and the facts of the case, in 6.1. From the perusal of forms filed and the facts of the case, in our considered view, there is merit in claim of the ld. AR that our considered view, there is merit in claim of the ld. AR that our considered view, there is merit in claim of the ld. AR that assessee has selected the wrong section code inadvertently assessee has selected the wrong section code inadvertently assessee has selected the wrong section code inadvertently while filing the application for final registration in F while filing the application for final registration in F while filing the application for final registration in Form 10AB. Further, we notice that assessee did not have the opportunity of Further, we notice that assessee did not have the opportunity of Further, we notice that assessee did not have the opportunity of being heard before ld. CIT(E) due to incorrect course of action being heard before ld. CIT(E) due to incorrect course of action being heard before ld. CIT(E) due to incorrect course of action advised, which otherwise assessee might have explained the advised, which otherwise assessee might have explained the advised, which otherwise assessee might have explained the facts to avoid the impugned rejection. In view of these facts to avoid the impugned rejection. In view of these facts to avoid the impugned rejection. In view of these discussions and respectfully following the above decision of the scussions and respectfully following the above decision of the scussions and respectfully following the above decision of the Kolkata Bench in the case of North Eastern Social Research Kolkata Bench in the case of North Eastern Social Research Kolkata Bench in the case of North Eastern Social Research Centre (supra), we remit the issue back to the file of ld. CIT(E), Centre (supra), we remit the issue back to the file of ld. CIT(E), Centre (supra), we remit the issue back to the file of ld. CIT(E), with a direction to grant final approval to assessee under Clause with a direction to grant final approval to assessee under Clause with a direction to grant final approval to assessee under Clause (iii) to first proviso to section 80G(5) of the Act, if assessee is iii) to first proviso to section 80G(5) of the Act, if assessee is iii) to first proviso to section 80G(5) of the Act, if assessee is otherwise found eligible. We also direct ld. CIT(E) to decide the otherwise found eligible. We also direct ld. CIT(E) to decide the otherwise found eligible. We also direct ld. CIT(E) to decide the application of the assessee for final approval as quickly as application of the assessee for final approval as quickly as application of the assessee for final approval as quickly as possible before the expiry of the provisional approval granted possible before the expiry of the provisional approval granted possible before the expiry of the provisional approval granted in order to enable the assessee to have the benefit of section 80G order to enable the assessee to have the benefit of section 80G order to enable the assessee to have the benefit of section 80G without any break. It is ordered without any break. It is ordered accordingly.
Aashray Seva Kendra 5 2.2 Since in the instant case Since in the instant case also, the assessee inadvertently , the assessee inadvertently applied under the sub applied under the sub-clause (B) of clause (iv) of first proviso to clause (B) of clause (iv) of first proviso to sub-section 5 of section 80G as against the clause n 5 of section 80G as against the clause n 5 of section 80G as against the clause (iii) of the relevant provision. Therefore, respectfully following the finding of relevant provision. Therefore, respectfully following the finding of relevant provision. Therefore, respectfully following the finding of the Tribunal (supra), we restore the matter back to the file of the Ld. the Tribunal (supra), we restore the matter back to the file of the Ld. the Tribunal (supra), we restore the matter back to the file of the Ld. CIT(E) directing to consider the application of the assessee consider the application of the assessee for approval under relevant relevant clause of first proviso to section 80G(5) of first proviso to section 80G(5) of the Act, if otherwise the assessee if otherwise the assessee meets conditions prescribed conditions prescribed for approval. The grounds of appeal of the assessee are accordingly . The grounds of appeal of the assessee are accordingly . The grounds of appeal of the assessee are accordingly allowed.
In the result, the appeal of the assess In the result, the appeal of the assessee is allowed for ee is allowed for statistical purposes. statistical purposes.