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Facts
The Assessee, Sharayu Foundation, filed an application in Form 10AB seeking approval under Section 80G. The CIT(E) rejected the application, citing failure to comply with notices and furnish provisional registration. The Assessee contended it had inadvertently filed Form 10AB instead of Form 10A and that the CIT(E) rejected the application without granting an opportunity to rectify the error.
Held
The Tribunal noted that the CIT(E) passed the order without confronting the Assessee and that the Assessee had an opportunity to rectify the error. The Tribunal set aside the CIT(E)'s order and directed it to decide the application afresh after granting the Assessee a reasonable opportunity of being heard.
Key Issues
Whether the rejection of an application for approval under Section 80G without providing an opportunity for rectification of a bona fide error constitutes a procedural irregularity leading to prejudice.
Sections Cited
80G, 10A, 10AB, 12A, 12AA, 10AD
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
order : 21.01.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 20/08/2024, passed by the Commissioner of Income Tax (Exemption), Mumbai [hereinafter referred to as the ‘CIT(E)’] whereby the application filed by the Appellant in Form No.10AB seeking approval under Section 80G of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] was rejected.
2. The Assessee has raised following grounds of appeal :
“1. On the facts and under the circumstances of the case and in law the Ld. CIT(E) was not justified in arbitrarily rejecting the application seeking approval u/s.10AD dated 20.08.2024 merely on the basis of non-submission of provisional registration certificate in Form 10AC. Assessment Year N.A.
On the facts and under the circumstances of the case and in law the Ld. CIT(E) failed to consider the fact that the appellant trust was incorporated in the year 2014 and was originally registered u/s.80G vide order dated 27.10.2016. Fresh registration of the trust was made applicable from 01.04.2021 vide notification dated 26.03.2021. There was a lot of confusion regarding the form to be filed for fresh registration, the appellant trust had filed the application in Form 10AB instead of Form 10A and therefore had not received any Provisional Registration Order in Form 10AC.
On the facts and under the circumstances of the case and in law the Ld. CIT(E) failed to consider the fact that the appellant trust had filed Form 10AB on 08.02.2024 i.e., within the extended due date of filing the form as per the CBDT Circular No.7/2024 dated 25.04.2024. 4. The Ld. CIT(E) erred in passing the order u/s.10AD without giving an opportunity of rectifying an inadvertent mistake or an opportunity of refiling of the application in Form 10A.” 3. We have heard the rival submissions and perused the material on record.
We find that the Assessee-Trust was incorporated on 12/04/2014 and was also originally registered under section 12A of the Act vide order, dated 14/10/2016, passed under Section 12AA(1)(b)(i) of the Act and also under Section 80G of the Act vide order, dated 27/10/2016. For registration Section 80G(5) of the Act, the Assessee had filed application in Form 10AB on 08/02/2024. After filling application in Form 10AB the Assessee received notices, dated 02/07/2024 and 03/08/2024, from the CIT(E) requiring the Assessee to furnish the complete set of documents mentioned in Rule 11AA(2) of the Income Tax Rules, 1962 (for short ‘IT Rules’) along with details of expenses, copy of balance sheet of Assessment Year 2022-2023 and provisional registration in Form 10AC for 80G. The Assessee filed reply vide letter dated 18/07/2024, submitting all the documents [except provisional registration in Form 10AC for 80G]. The aforesaid application filed by the Assessee was rejected vide order dated 20/08/2024 passed by CIT(E) on the grounds that 2 Assessment Year N.A.
the Assessee had failed to comply with the notice(s) issued by the CIT(E) and had failed to furnish the provisional registration. On receipt of the aforesaid order, the Assessee realized that the Assessee had inadvertently made application in Form 10AB instead of Form 10A as per clause (i) of First Proviso to Sub-Section (5) of Section 80G of the Act. As the Assessee-Trust was an old trust already registered, the Assessee was required to file application in Form 10A under clause (i) of First Proviso to Sub-Section (5) of Section 80G of the Act. However, the Assessee had filed Form 10AB under Clause (iii) instead of Form 10A under Clause (i) of First Proviso to Sub-Section (5) of Section 80G of the Act. The grievance of the Assessee is that the order rejecting the application filed by the Assessee on 08/02/2024 in Form 10AB was passed by the CIT(E) without granting the Assessee any opportunity to rectify the error and without considering the details/documents filed. It was submitted during the course of hearing that the time period for filing application in Form 10A was extended by the Central Board for Direct Taxes (CBDT) to 30/06/2024 vide Circular No.07 of 2000, dated 25/04/2024, and the Assessee has filed application in Form 10A on 21/11/2024 alongwith application for seeking condonation of delay in filing the application. It was further submitted that the rejection of the application without confronting the Assessee had resulted in grave prejudice to the Assessee and therefore, the order passed by CIT(E) be set aside and an opportunity be granted to the Assessee to make out a case for registration under Section 80G(5) of the Act in terms of application, dated 21/11/2024, filed in Form 10A by the Assessee. On the other hand, the Learned Departmental Representative pointed out that the mistake was committed by the Assessee and that the Assessee had failed to correct the same even after notice was issued by CIT(E) requiring the Assessee to furnish the provisional registration in From 10AC. Since the time limit for passing the order was expiring on 31/08/2024, the CIT(E) had no 3 Assessment Year N.A. option but to reject the application vide order, dated 20/08/2024. In rejoinder the Learned Authorised Representative for the Assessee submitted that the Assessee-Trust was of the bonafide belief that the Assessee-Trust was an old/registered trust and therefore, the requirement of furnishing provisional registration in Form 10AC was not applicable to the Assessee.
Having given thoughtful consideration to the rival submissions recorded hereinabove and after taking into consideration the material on record and the facts & and circumstances of the present case, we deemed it appropriate to grant the Assessee an opportunity to make out the case for registration under Section 80G of the Act. We note that the order impugned was passed by the CIT(E) without confronting the Assessee regarding the infirmity in the application. It is admitted position that the CIT(E) was constrained to pass the order in view of the fact that time limit for deciding the application was expiring on 31/08/2024. Accordingly, we set aside order, dated 20/08/2024, passed by the CIT(E) with the directions to the CIT(E) to decide the application, dated 21/11/2024, filed by the Assessee in Form 10A [in place of application, dated 08/02/2024, filed in Form 10AB] as per law after granting the Assessee a reasonable opportunity of being heard. Ground No. 1 to 4 raised by the Assessee are treated as allowed for statistical purposes.
In result, in terms of paragraph 4 above, the appeal preferred by the Assessee is allowed for statistical purposes.