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Facts
The assessee was granted registration under Section 80G of the Income Tax Act, 1961. However, while applying for renewal, the assessee inadvertently filed in the wrong form (10AB instead of 10A) and selected the wrong section code. The CIT(E) rejected the application on these grounds.
Held
The Tribunal held that rejecting the application solely on the ground of incorrect form, without providing adequate opportunity to rectify, violates the principle of natural justice. The show-cause notice was also issued with insufficient time for compliance.
Key Issues
Whether the rejection of a renewal application for registration under Section 80G due to a technical error in form selection and insufficient opportunity for rectification is sustainable.
Sections Cited
80G, 12A, 12A(1)(ac)(i), 12A(1)(ac)(ii), 12A(1)(ac)(iii), 12A(1)(ac)(iv), 12A(1)(ac)(v), 12A(1)(ac)(vi)
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Income Tax Appellate Tribunal, HYDERABAD BENCHES “B”, HYDERABAD
Before: SHRI K. NARASIMHA CHARY, HON’BLE & SHRI MADHUSUDAN SAWDIA, HON’BLE ACCOUNTNT MEMBER
आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 26/11/2024 passed by the learned Commissioner of Income Tax (Exemption)-Hyderabad (“Ld. CIT(E)”), in the case of Unicorpus Health Foundation (“the assessee”), assessee preferred this appeal. 2. Brief facts of the case are that the assessee was granted registration under section 80G of the Income Tax Act, 1961 (“the Act”) by order dated 29/03/2019. However, due to an inadvertent omission, the assessee did not file any application for renewal of registration under section 80G of the Act, while applying for renewal under section 12A. However, in view of CBDT Circular No.7/2024 dated 25/04/2024, which extended the due date for filing of Form No.10A/10AB, the assessee filed an application for registration under section 80G(5) on 21/05/2024 vide Form No.10AB.
Subsequently, the Ld.CIT(E) issued notice dated 10/06/2024, seeking various information, which the assessee duly complied on 28/06/2024. Thereafter on 22/09/2024, the Ld.CIT(E) issued show cause notice fixing the hearing for 25/11/2024. Notice was issued late on Friday, providing only two days for compliance including Saturday and Sunday. Finally, the application was rejected by Ld.CIT(E) on 26/11/2024 on the ground that the application was filed in Form 10AB, instead of Form 10A and the application should have been made under section 80G(5)(i) instead of under section 80G(5)(iii).
Aggrieved by the order of the Ld.CIT(E), the assessee is in appeal before us. Learned AR submitted that the Ld.CIT(E) did not provide sufficient opportunity before dismissing their claim. Further, there was only technical mistakes while making application for registration. He further submitted that under an identical issue, a coordinate bench of ITAT in the case of Seven Hills Educational Society Vs. ITO (E) in directed the Ld.CIT(E) to allow the assessee to file application in correct form and thereafter decide the issue on merits. Relying on the decision of ITAT, where similar procedural defects were rectified by permitting the assessee to file an application in prescribed form and directing the Ld.CIT(E) to consider the same. The assessee prayed before the bench to remit the issue to the file of the Ld.CIT(E).
Per contra, Ld.DR relied on the order of Ld.CIT(E).
We have considered rival contentions and perused the material available on record in view of the submissions made by either parties. It is evident that the assessee had a valid registration under section 80G of the Act and had applied for renewal within the extended due date as per the CBDT Circular No.7/2024. Rejection of the application merely on the ground of incorrect form filed, without granting adequate opportunity to rectify the procedural defects goes against the principle of natural justice. Moreover, the show cause notice was issued at an unreasonable short notice, thereby denying the applicant adequate opportunity of being heard. Further, we find that under an identical issue, the coordinate bench of ITAT in the case of Seven Hills Educational Society Vs. ITO (E) has decided the issue in favour of the assessee, which are to the following effect : “11. It is an undisputed fact that, having possessed the registration under section 12A of the Act, the assessee was supposed to make an application under section 12A(1)(ac)(i) of the Act in which event, the assessee had to submit the application in Form 10A vide Rule 17A of the Income Tax Rules, 1962 (“the Rules”). If the assessee applying by selecting the wrong section code as 02-Sub clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act was a mistake, still it is a mistake on 13/06/2023 also by applying for registration in Form 10AB. If really the assessee wanted to apply under 02-Sub clause (i) of clause (ac) of sub-section (1) of section 12A of the Act on any occasion, the proper form was not Form 10AB, but it should be Form 10A only. Form 10AB is applicable for the section code of 02-Sub clause (ii) or (iii) or (iv) or (v) of clause (ac) of sub-section (1) of section 12A of the Act, whereas for section code 02-Sub clause (i) or (vi) of clause (ac) of sub-section (1) of section 12A of the Act, the application shall be in Form 10A only.
Be that as it may, the fact remains that the assessee did not avail the opportunity of extension of time for filing application in Form 10A, if really its intention is to apply for 02-Sub clause (i) of clause (ac) of subsection (1) of section 12A of the Act, by bringing the mistake to the notice of the authorities, since the assessee holds the registration under section 12A of the Act. When the CBDT took cognizance of the matter and by way of circulars extended the due date for filing Form 10A, it cannot be said that the learned CIT(E) can exercise jurisdiction to condone the delay in applying the Form 10A on the ground of mistake, because the time extended for such purpose by the CBDT expired by 30/06/2024. In these circumstances, we do not find anything illegality or irregularity in the rejection of application by the learned CIT(E).
Now coming to the practical aspect of hardship that has befallen on the assessee, the fact remains that finally vide Circular No.7/2024 dated 25/04/2024, CBDT extended the date up to 30/06/2024, whereas the assessee filed Form 10A by 13/06/2023. Assessee filed another application on 30/06/2024 in Form 10AB by that date. Though in a wrong Form, the request of the assessee was pending before the due date. In this peculiarity of the circumstances, we deem it just and proper to condone the mistake committed by the assessee while applying registration by making a selection of wrong section code, namely, 02-Sub clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act instead of 02-Sub clause (i) of clause (ac) of sub-section (1) of section 12A of the Act. We accordingly condone such a mistake. Learned CIT(E) will proceed to hear and dispose the request of the assessee by allowing it to apply now under Form 10A. Grounds are allowed.” 7. Respectfully following the judicial precedent relied upon by the assessee, we direct the Ld.CIT(E) to allow the assessee to file an application in Form 10A and thereafter decide the application afresh on merits in accordance with law. 8. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on this the 5th day of March, 2025.