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Facts
The assessee filed an application for registration under section 12AB of the Income Tax Act, but mistakenly cited a wrong section. The CIT(E) rejected the application for not fulfilling the stipulated conditions due to this error.
Held
The Tribunal held that filing an application under the wrong provision of law is a curable defect and not fatal to the case, provided no prejudice is caused. The CIT(E) should have given an opportunity of being heard before rejection.
Key Issues
Whether the rejection of a registration application under section 12AB due to the mention of a wrong section code is sustainable when an opportunity of hearing was not provided to the assessee.
Sections Cited
12AB, 12A, 250, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH MUMBAI
Before: HON’BLE SHRI SANDEEP GOSAIN & SHRI PRABHASH SHANKAR
Assessee by Ms. Aarti Visanji a/w Shri Kshyap Vepari Revenue by Shri Ashish Heliwal, CIT DR Date of Hearing 08.01.2025 Date of Pronouncement 25.02.2025 आदेश / ORDER
PER SANDEEP GOSAIN, JM:
The present appeal has been filed by the assessee challenging the impugned order 19.10.2024, passed u/s 250 of the Income Tax Act, 1961 (‘the Act’), by the Ld. Commissioner of Income Tax (Exemptions) (‘Ld. CIT(E)’) for the assessment year 2025-26.
As per the facts of the present case, the assessee had filed an application in Form No. 10 AB thereby seeking registration under section 12 AB of the Act. However, CIT(E) found that assessee has been granted provisional registration 2 Subharma Charitable Trust, Mumbai under section 12A of the Act in Form 10 AC valid from A.Y: 2022–23 to AY: 2024–25, and was of the view that since assessee is provisionally registered, therefore, provision of section 12A(1)(ac)(iii) are applicable to it instead of section 12A(1)(ac)(ii) under which registration is sought, thus does not qualify for the same and rejected the application as the same was filed under wrong section.
3 Now before us, Ld. AR while pressing the grounds of appeal also relied upon the decision of the Coordinate Bench of ITAT in the case of Rambha Charitable Trust Vs CIT, in ITA No. 5111/MUM/2024.
4. On the other hand, Ld. DR relied upon the orders passed by the revenue authorities.
We have heard the counsel for both the parties and perused the material placed on record, judgements cited before us and the orders passed by the revenue authorities.
7. All the grounds raised
by the assessee are interrelated and interconnected and relates to challenging the order of CIT(E) in rejecting the application seeking registration under section 12. AB of the income tax Act, therefore, we have decided to take up all the grounds together and adjudicate the same through the present consolidated order.
3 Subharma Charitable Trust, Mumbai
The facts in the present case are undisputed to the effect that application of the assessee for registration under section 12 AB of the Act was rejected as the same was found to have been moved under wrong section.
In this regard, it was submitted by Ld. AR that inadvertently wrong section was mentioned, but at the same time no proper opportunity was given to the assessee before rejecting the application.
Be that as it may, we were of the view that since assessee has inadvertently mentioned wrong section while applying for registration. In that eventuality, opportunity of hearing should have been provided to the assessee before rejecting the application by CIT(E) otherwise the assessee might have explained the facts and got corrected the mistake to avoid rejection. In this regard, reliance is placed upon the decision of the Coordinate Bench of ITAT in the case of Rambha Charitable Trust Vs CIT, wherein it was held as under:
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 - 4 Subharma Charitable Trust, Mumbai Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed 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[***Jat 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 5 Subharma Charitable Trust, Mumbai 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 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.
In result the appeal of the assessee is allowed for statistical purposes.
Apart from above recently, the Hon’ble Delhi High Court in the case of Rajiv Shukla Vs Gopal Krishan Shukla in CM(M) 2342/2024 & CM Appl. 22074/2024 decided on 7 January 2025 has held that filing of an application under the wrong provision of law is not fatal to the case and is a curable defect provided no prejudice is caused to the other party.
Therefore, respectfully, following the above decisions, we remit the issue back to CIT(E) with a direction to treat the 6 Subharma Charitable Trust, Mumbai application filed by the assessee under section 12A(1)(ac)(iii), if assessee is otherwise found eligible and to decide the application of the assessee expeditiously. We ordered accordingly.
In the result the appeal filed by the assessee is allowed for statistical purposes.