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Facts
The assessee, an existing registered Trust, sought renewal of its Section 80G approval. Due to a bonafide mistake in selecting the wrong section code while filing Form 10A, the CPC granted provisional registration instead of regular approval. The CIT (Exemptions) rejected the application on technical grounds.
Held
The Tribunal held that a bonafide mistake in selecting the section code is a technical error and should not be a ground for denying registration. Both the assessee and the revenue were found to be at fault. The CIT's order was set aside.
Key Issues
Whether rejection of a Section 80G approval application on the sole ground of a technical mistake in selecting the wrong section code is justified, despite the assessee being an existing registered trust.
Sections Cited
80G, 12A
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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 No.90/Hyd/2025 (िनधा�रण वष�/Assessment Year: 2025-26) Kusuma Kamala Ratnam Vs. CIT (Exemptions) Memorial Trust, Hyderabad Hyderabad PAN:AADTK0370J (Appellant) (Respondent) िनधा��रती �ारा/Assessee by: Shri R.V. Chalam, CA राज� व �ारा/Revenue by:: Shri Narender Kumar Naik, CIT (DR) सुनवाई की तारीख/Date of hearing: 09/07/2025 घोषणा की तारीख/Pronouncement: 16/07/2025 आदेश/ORDER
Per Vijay Pal Rao, Vice President
This appeal filed by the assessee is directed against the order dated 23/12/2024 of the learned CIT (Exemptions), for the 2025-26 whereby the application of the assessee seeking approval u/s 80G of the Act was rejected due to mistake in selection of section code.
The assessee has raised the following grounds of appeal:
The learned AR of the assessee has submitted that due to bonafide mistake in selecting the section code, the assessee was granted a provisional registration u/s 80G of the Act. Thereafter, the assessee filed an application assessee seeking regular registration which was rejected on the ground that in the application made by the assessee in Form-10A, the wrong section code was selected. The learned AR has submitted that this is only a technical mistake at the time of granting provisional registration by the CPC and consequently, a Bonafide mistake on the part of the assessee for selecting a wrong section code. The learned AR has submitted that since the assessee is an existing registered/approved Trust u/s 80G of the Act and therefore, instead of granting the provisional approval u/s 80G, a regular registration ought to have been granted to the assessee. Thus, the learned AR has submitted that the rejection of the application by the CIT (Exemptions) is highly arbitrary and not based on the Page 2 of 8 correct facts. He has pointed out that the assessee did not make any request for withdrawal of the application before the CIT (Exemptions). He has thus pleaded that the impugned order of the CIT (Exemptions) may be set aside, and an appropriate direction be issued for considering the application of the assessee for regular registration and treating the same as an application under the correct section. The learned AR of the assessee has relied upon the following decisions: i) ITAT Hyderabad Bench in the case of Telangana State Chapter Indian Radiological & Imaging Association vs. Income Tax Officer (Exemptions) in dated 15/06/2023. ii) ITAT Mumbai Benches in the case of Salam Social Medical Services vs, CIT in dated 31/12/2024. iii) ITAT Ahmedabad Bench in the case of Suhard Ahmedabad vs. CIT (Exemptions) in ITA No.747/Ahd/2024 dated 8/11/2024 iv) Hon'ble Supreme Court in the case of CIT vs. Ahmedabad Rana Caste Association reported in 140 ITR 1 (S.C) dated 7th April 1981.
On the other hand, the learned DR has submitted that the CIT (Exemptions) has stated in the impugned order that the assessee requested to allow them to withdraw the application and consequently, the same was rejected. He has relied upon the impugned order of the CIT (Exemptions).
We have considered the rival contentions as well as the relevant material available on record. The assessee is an existing rust having registration u/s 12A as well as approval u/s 80G of Page 3 of 8 the Act. The assessee filed the application in Form 10A on 17/06/2024 seeking renewal of the approval u/s 80G. However, due to mistake in selection of section code, the CPC granted the provisional registration/approval u/s 80G by issuing Form 10AC dated 2/10/2021 and consequently, the application filed by the assessee for regular registration was picked up by the system in the category of new Trust seeking approval. Thus, there was a wrong section code selection at the time of filing the application. The CIT (Exemptions) has dismissed the application of the assessee on technical grounds as under:
It is pertinent to note that when the fact of the matter remains that the assessee is an existing registered Trust u/s 12A as well as section 80G of the Act, then the grant of provisional registration by CPC due to mistake of selection of the wrong section code is a mere technical mistake. The CIT (Exemptions) at the time of deciding the application ought to have considered the facts of the case and the findings should be based on the material facts and substance, not on a technical basis. This Tribunal in the case of Telangana State Chapter Indian Radiological & Imaging Association vs. Income Tax Officer (Exemptions) (Supra) 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
Page 5 of 8 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: 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 Page 6 of 8
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 the wrong section code cannot be a ground for denial of registration. Hence, in view of the facts and circumstances of the case, we set aside the impugned order of the CIT (Exemptions) and the matter is remanded to the record of the CIT (Exemptions) with a direction to permit the assessee to rectify the mistake in the application form and then consider the application of the assessee for grant of regular approval u/s 80G of the Act by passing an order on merits of the matter.
In the result, appeal filed by the assessee is allowed for statistical purposes.