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Facts
The assessee Trust applied for revalidation of registration under Section 12A of the Income Tax Act, 1961. The CIT(E) rejected the application, observing that the assessee selected the wrong sub-clause for filing the application. The assessee contended that this was an inadvertent mistake and they were not given an opportunity to rectify it.
Held
The Tribunal held that selecting the wrong section code was an inadvertent error and not fatal to the application, provided no prejudice was caused. The Tribunal noted that the assessee was not given an opportunity to be heard or to correct the mistake.
Key Issues
Whether rejecting an application for registration under Section 12A due to inadvertent selection of a wrong sub-clause, without providing an opportunity to rectify the error, is justified?
Sections Cited
12A, 12A(1)(ac)(iv), 12A(1)(ac)(iii), 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI LAXMI PRASAD SAHU & SHRI SOUNDARARAJAN K
Per Laxmi Prasad Sahu, Accountant Member :
This is an appeal filed by the assessee against CIT(E)’s order vide DIN & Notice No: ITBA/EXM/F/EXM45/2024- 25/1073362314(1) dated 17.02.2025, on the following grounds:
1. The Commissioner of Income Tax (Exemptions), Mumbai, erred in rejecting the Appellant Trust's application for revalidation under Section 12A of the lncome Tax Act, 1 961; 2. The Commissioner of Income Tax (Exemptions), Bangalore, failed to appreciate that the Appellant Trust had received a letter dated 17.02.2025 in respect of proceedings under Section 12A(1)(ac)(iv) vide DIN & Notice No. ITBA/EXM/FlEXM45l2024 2511073362314(1), dated 17.02.2025 seeking documentary evidence of 10AB in the case of revalidation of 12A on or before 17.02.2025.
3. The Appellant Trust had submitted copy of 10AB [Order for Provisional Registration] for 124 validation on as per lncome Tax Department's communication dated 02.08.2024, acknowledged by the Office of the Commissioner of lncome Tax (Exemptions) vide No.346952670020824.
4. The Appellant Trust had received Rejection Order dated 17.02.2025 stating that Appellant Trust is not qualified to make the application under Section 12A since the application filed is non-maintainable and stands rejected; 5. The Commissioner of lncome Tax (Exemptions), Bangalore, failed to give the Appellant Trust reasonable opportunity to validate the 12A Certificate; 6. The Appellant Trust had made an enquiry personally and was informed that the Section in which the Application vide Serial No.02-Sub Clause (iii) of Clause (ac) of Sub-Section (1) of Section 124. The Appellant Trust owing to inadvertence had mentioned in Clause 1 Sub-Clause (ii) of Clause (ac) of Sub-Section (1) of Section 124; 7. The Appellant Trust was deprived out of naturaljustice since no opportunity was given to rectify the error occurred in selecting the clause for revalidation; 8. The Appellant Trust is a Charitable Trust, which is rendering meritorious services and providing meritorious services for which it is established; 9. The Appellant Trust should get the benefit of 12A since the Trust is claiming expenditure as admissible under Income Tax Act, 1961;
GENERAL: The appellant Trust craves leave to add to, alter and amend the grounds of appeal on or before the date of hearing
2. Briefly stated the facts of the case are that the assessee filed application in Form 10AB for registration under section 12A(1)(ac)(iv) of the Act dated 02.08.2024. The learned CIT(E) issued notice on 17.02.2025 vide DIN and Notice No.ITBA/EXMF/EXM45/2024-25/1073362314(1) dated 17.02.2025 seeking documentary evidence of 10AB in the case of revalidation of 12A on or before 17.02.2025. The assessee submitted copy of 10AB, provisional registration of 12AB validation as per communication letter dated 02.08.2024 and the assessee received rejection Order dated 17.02.2025 that the appellant trust is not qualified to make application under section 12A of the Act since the application filed is not maintainable and stands rejected. During the course of filing of application by the assessee, due to oversight, the assessee selected wrong section which can be cured. In support of his arguments, he relied on the judgment in the case of Subharma Charitable Trust Vs. ITO(E) in Order dated 25.02.2025 which is placed on record, the relevant part of the judgment is reproduced below:
“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.
8. 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.
9. 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: 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 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 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 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.”
The learned DR relied on the Order of the lower authorities.
Considering the rival submissions and on perusal of the material available on record, we noted that Form No.10AD dated 17.02.2025 in which the learned CIT(E) has observed that “assessee had selected wrong section code while applying Form 10AB for registration under section 12A(1)(ac)(iv) of the Income Tax Act, 1961.” Therefore, the learned CIT(E) has rejected the application without giving chance to the assessee for curing the defects as noted by the CIT(E). Accordingly, by relying on the above judgments cited b y the assessee, we restore this issue back to the learned CIT(E) for fresh consideration and decide the issue as per law after giving reasonable opportunity of hearing to the assessee and assessee is directed to produce the necessary documents to establish its case and not to seek unnecessary adjournment for early disposal of the case.
In the result, appeal filed by the assessee is allowed for statistical purposes.