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Facts
The assessee, an existing registered trust, applied for renewal of registration under Section 12AB and approval under Section 80G. However, due to a bonafide mistake in selecting the wrong section code in the application form, the CPC granted provisional registration instead of regular registration. Subsequently, the subsequent application for regular registration was rejected by the CIT (Exemptions) on technical grounds.
Held
The Tribunal held that a bonafide mistake in selecting the wrong section code cannot be a ground for denying registration and approval. The Tribunal found fault with both the assessee for the initial mistake and the revenue for not pointing it out. The matter was remanded to the CIT (Exemptions) to allow the assessee to rectify the mistake and decide the application on merits.
Key Issues
Whether a bonafide mistake in selecting the wrong section code while applying for registration/approval can lead to rejection of the application, and if the revenue has a duty to point out such mistakes.
Sections Cited
12A, 12AB, 80G, 80G(5)
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Income Tax Appellate Tribunal, Hyderabad ‘DB-B‘ Bench, Hyderabad
Before: Shri Vijay Pal Rao, Vice-Shri Manjunatha, G.
आयकर अपील�य अ�धकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘DB-B‘ Bench, Hyderabad Before Shri Vijay Pal Rao, Vice-President A N D Shri Manjunatha, G. Accountant Member आ.अपी.सं /ITA Nos. 208 & 209/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2022-23 & 2025-26) Aashritha The Dr U Vs. CIT (Exemptions) Sankaranarayana Raju Hyderabad Charitable Trust, Hyderabad PAN:AACTA3113G (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri K.S.Rajendra Kumar, IRS (Retired) राज� व �ारा/Revenue by:: Shri Narender Kumar Naik, CIT (DR) सुनवाई की तारीख/Date of hearing: 10/07/2025 घोषणा की तारीख/Pronouncement: 16/07/2025 आदेश/ORDER Per Vijay Pal Rao, Vice President
These 2 appeals by the assessee are directed against the 2 separate orders, dated 13/12/2024 & 20/12/2024 respectively of the learned CIT (Exemptions), whereby the applications of the assessee for registration u/s 12AB as well as approval u/s 80G of the Act were rejected.
Page 1 of 13 Page 2 of 13 ii) Page 3 of 13
The learned AR of the assessee has submitted that the assessee Trust was constituted on 13/06/2008 and it was granted registration u/s 12A vide order dated 12/05/2009, a copy of the registration is filed by the assessee at Page No.1 of the Paper Book. The assessee was also granted approval u/s 80G(5) of the Act vide order 17/8/2019 w.e.f. 1/4/2009, a copy of the same is placed at pages 2 & 3 of the paper book. As per the amendment made in the provisions of section 12A and 80G, the assessee was required to file the application for renewal of the registration u/s 12AB as well as approval u/s 80G(5) of the Act. Accordingly, the assessee has filed an application in Form 10A for the renewal of the registration u/s 12A as well as approval u/s 80G of the Act. However, due to an inadvertent mistake in Page 4 of 13 selection of wrong section code clause (iv), the CPC granted provisional registration u/s 12AB as well as provisional approval u/s 80G. Thereafter, the assessee filed the application in Form 10AB for the regular registration u/s 12AB as well as regular approval u/s 80G which were rejected by the CIT (Exemptions) on the ground that the application becomes infructuous as the assessee has selected wrong section code while filing the application. Thus, the learned AR has submitted that the rejection of the application on technical reasons and merely due to a bonafide mistake in selecting the wrong section code is not justified. He has referred to the CBDT Circular No.7/2024 whereby the due date was extended up to 30/06/2024 for making the application in Form 10A for fresh registration u/s 12AB as well as approval u/s 80G of the Act for the existing Trusts which are already having registration u/s 12A and approval u/s 80G prior to 1/4/2021. The learned AR has submitted that in the same circular, the CBDT has also extended the due date up to 30/06/2024 for making the application in Form 10AB for regular registration u/s 12AB and regular approval u/s 80G in cases of the Trusts which have been granted provisional registration u/s 12AB as well as provisional approval u/s 80G after 1/4/2021. The assessee has filed the first application in Form 10A as applicable in case of the Trusts already having registration prior to 1/4/2021, however, due to bonafide mistake in selecting the section code instead of renewal of the resignation u/s 12AB and approval u/s 80G(5), a provisional registration and approval was Page 5 of 13 granted. Thus, the learned AR has submitted that the application filed by the assessee ought to have been considered for renewal of the registration u/s 12AB as well as approval u/s 80G(5) instead of granting provisional registration and approval and consequently, the CIT (Exemptions) is not justified in rejecting the registration u/s 12AB and approval u/s 809G(5) of the Act. In support of his contentions, he has relied upon the following decisions: i) ITAT Hyderabad Benches in the case of Mandava Foundation vs. Income Tax Officer (E) in ii) ITAT Hyderabad Benches in the case of Seven Hills Educational Society vs. Income Tax Officer (E) reported in (2024) 169 Taxmann.com 144 (Hyd.) iii) ITAT Delhi Benches in the case of Raj Krishan Jain Charitable Trust vs. CIT (Exemptions) in iv) ITAT Cochin Tribunal in the case of Sahrdaya Educational Trust vs. CIT (Exemptions) reported in (2025) 173 Taxmann.com 151 (Cochin-Trib). v) ITAT Hyderabad Benches in the case of Telangana State Chapter Indian Radiological & Imaging Association vs. Income Tax Officer (E) in IRTA No.255/Hyd/2023
Page 6 of 13 vi) ITAT Hyderabad Benches in the case of Unicorpus Health Foundation vs. CIT (Exemptions) in vii) ITAT Pune Benches in the case of Help for Children in Need Foundation vs. CIT (Exemptions) in ITA No.1774/PUN/2024. viii) ITAT Ahmedabad Benches in the case of Idrashi Innovative Foundation vs. CIT (Exemptions) in 2023
On the other hand, the learned DR has submitted that this is a mistake on the part of the assessee while filing the application for renewal of the registration u/s 12AB as well as approval u/s 80G of the Act as the assessee has opted for provisional registration and approval instead of renewal of existing registration prior to 1/4/2021. Thus, the application of the assessee was considered by the CPC for granting provisional registration u/s 12AB as well as approval u/s 80G and thereafter, when the assessee filed the application in Form 10AB, the CIT (Exemptions) has rightly rejected the same by considering the fact that the assessee is not falling in the category of the Trust seeking first time registration after 1/4/2021 but the assessee was already in existence and having registration prior to 1/4/2021. The learned DR has further submitted that the CIT (Exemptions) had no power to extend the time limit for filing the application in Page 7 of 13 Form 10A or 10AB. He has relied upon the impugned order of the CIT (Exemptions).
We have considered the rival submissions as well as the relevant material available on record. There is no dispute that the assessee Trust was an existing Trust and was having registration u/s 12A as well as approval u/s 80G prior to 1/4/2021. Therefore, in view of the amended provisions of section 12A as well as section 80G, after 1/4/2021, the assessee was required to apply for renewal of registration u/s 12AB as well as approval u/s 80G of the Act. The assessee filed the application in Form 10A for the registration u/s 12AB as well as approval u/s 80G but due to inadvertent and bonafide mistake in selecting the wrong section code and particularly, the clause of section 12A(1) as well as proviso to section 80G(5), the application filed by the assessee in Form 10A was considered as an application for provisional registration as well as approval and consequently, the CPC granted provisional registration in Form 10AC instead of granting the renewal of registration u/s 12AB as well as section 80G(5) of the Act. Thereafter, the assessee filed the application in Form 10AB for seeking regular registration u/s 12AB as well as approval u/s 80G(5) which were rejected by the CIT (Exemptions) by giving the identical reasons. The reasons given for rejection of application for regular registration u/s 12AB of the Act are as under:
Thus, the CIT (Exemptions) has not doubted or questioned the other requirements and conditions satisfied by the assessee being a Trust having charitable objects and also carrying
Page 9 of 13 out the charitable activities since past several years, but the application of the assessee was dismissed only on the technical ground of wrong selection of section code. It is a matter of fact that the assessee initially applied in Form 10A but due to some technical bonafide mistake, a provisional registration as well as approval was granted which cannot be a reason for denial of renewal of the registration u/s 12AB as well as approval u/s 80G(5) of the Act. The application of the assessee ought to have been decided by the CIT (Exemptions) based on the undisputed fact and not on the technicalities. This Tribunal has considered this issue in a series of decisions as relied upon by the learned AR of the assessee. In the case of Telangana State Chapter Indian Radiological & Imaging Association vs. Income Tax Officer (E) (Supra), the Tribunal has considered an identical issue in para 11 to 13 as under: “11. We have heard the rival contentions of the parties and perused the material available on record. Admittedly, the assessee was a society, which was holding registration u/s. 80G of the Act prior to 31.03.2021 and was required to submit the application u/s. 80G(5) of the Act after ticking the correct 'section code-12' in form 10A. However, on account of the error in submitting the correct application, the provisional registration was granted to the assessee on 19.03.2022. As per the section 80G(5)(iii) of the Act, the assessee was required to file an application for permanent registration within six months of grant of provisional registration. The relevant portion of the Act, provides as under: (iii) where the application is made under clause (iv) of the said proviso, pass an order in writing granting it approval provisionally for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the institution or fund:
Page 10 of 13 Provided also that the order under clause (i), sub-clause (b) of clause (ii) and clause (iii) of the first proviso shall be passed in such form and manner as may be prescribed, before expiry of the period of three months, six months and one month, respectively, calculated from the end of the month in which the application was received: Provided also that the approval granted under the second proviso shall apply to an institution or fund, where the application is made under-- (a) clause (i) of the first proviso, from the assessment year from which approval was earlier granted to such institution or fund. (b) clause (iii) of the first proviso, from the first of the assessment years for which such institution or fund was provisionally approved. (c) in any other case, from the assessment year immediately following the financial year in which such application is made.] 12. Since in the present case, on account of the mistake committed by the assessee, while filing the application, the provisional registration was granted to the assessee on 19.03.2022 and, therefore, the assessee had filed the application for grant of permanent registration vide application dt. 30.09.2022, being the existing continuing society.
The application of the assessee has been rejected by the ld.CIT(E) on the pretext that the assessee was having registration upto assessment year 2024-25. And further the assessee has not submitted the document for verification. In our view, the assessee, being a society was registered even prior to 31.03.2021 and thereafter had applied for registration, as mentioned herein above on provisional basis. In our considered opinion, though the assessee had committed a mistake in selecting the wrong section code 11 while making an application at the first instance, however, for such a mistake, the permanent registration cannot be denied by the respondent. In our view, the respondent is also duty bound to cross-verify the details, submitted by the assessee at the time of issuance of provisional certificate and should have issued a notice at that time by pointing out the wrong selection of section code by the assessee. Thus, the assessee as well as Revenue both are at fault. In view of the above, we deem it appropriate to remand back the matter to the file of the ld.CIT(E) with a direction to permit the assessee to rectify the mistake in submitting the application form and with a further direction to consider the application of assessee for grant of permanent registration.
Needless to say, that the assessee is also directed to co-operative with the ld.CIT(E) and shall file all the necessary details as may be required by the authorities so as to facilitate earlier and speedy disposal of the case.”
Accordingly, a bonafide mistake in selecting wrong section code cannot be a ground for denial of registration u/s 12AB as well as approval u/s 80G(5) of the Act. Hence, , in the facts and circumstances of the case, we set aside the impugned order of the CIT (Exemptions) in both the appeals and matters are remanded to the record of the CIT (Exemptions) with the direction to permit the assessee to rectify the mistake in the application form and then consider the applications of the assessee for grant of registration u/s 12AB as well as approval u/s 80G of the Act by passing an order on merits of the matter after giving an opportunity of hearing to the assessee. We order accordingly.
In the result, appeal filed by the assessee is allowed for statistical purposes.