Loading judgment…
Facts
The assessee, a Section-8 company, applied for registration under Section 12AB of the Income Tax Act, 1961. It had previously obtained registration under Section 12AA. However, the assessee inadvertently applied under the wrong sub-clause of Section 12A(1)(ac). The CIT(Exemption) rejected the application on this ground.
Held
The Tribunal held that the error in mentioning the wrong sub-clause was a technical mistake and not a grave one. Following precedents, the Tribunal set aside the order of the CIT(E) and remanded the matter back for fresh adjudication, directing the CIT(E) to consider the application under the correct sub-clause and provide an opportunity of hearing to the assessee.
Key Issues
Whether an inadvertent error in selecting the wrong sub-clause for registration under Section 12A(1)(ac) should lead to rejection of the application, or if the matter should be remanded for fresh consideration.
Sections Cited
12A, 12AA, 12AB, 80G(5), 11, 12, 10(23C)(iv)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: MS.ASTHA CHANDRA & DR.DIPAK P. RIPOTE
ORDER PER DR. DIPAK P. RIPOTE, AM: These two appeals filed by the assessee are directed against the separate orders of ld.Commissioner of Income Tax(Exemption), Pune rejecting the application for grant of registration u/s.12Ar.w.s 12AB and 80G(5) of the Income Tax Act, 1961(hereinafter referred to as „the Act‟) both dated 28.11.2024 respectively. For the sake of convenience, these two appeals were heard together and are being
1. On the facts and circumstances of the case and in law, the learned CIT(E) has erred while rejecting application under Form 10AD, as applicant was already granted approval u/s 12A on 24.10.20217, however the applicant wrongly applied for registration under sub clause (vi) of Clause (ac) of subsection (1) of section 12A instead of under sub clause (1) of Clause (ac) of subsection (1) of section 12A. We pray that the order of learned CIT(A) may kindly be set aside.
2. On the facts and circumstances of the case and in law, the learned CIT(E) has erred while rejecting application under Form 10AD, the honorable CIT by ignoring the Circular no. 7/2024 issued by CBDT dated 24.04.2024. We pray that the order of learned CIT(A) may kindly be set aside.
3. The appellant hereby reserves the right to add, alter, amend or delete any ground/s of appeal.”
Submission of ld.AR : 2. Ld.AR for the Assessee submitted that Assessee is Section-8 Company duly registered and performing charitable activities and it has obtained registration u/s 12AA of the Income Tax Act on 24/10/2017.Copy of the same is at page 01-02 of the paper book. Ld.AR admitted that there was inadvertent mistake of mentioning 2 & 217/PUN/2025 [A] wrong sub-clause in the application. Ld.AR pleaded that since assessee is in the charitable activity the error may be condoned and Assessee‟s application may be decided on merit.
Submission of Ld.DR : 3. Ld.Deprtmental Representative supported the order of the ld.CIT(E).
Findings & Analysis : 4. We have heard both the parties and perused the records. In this case admittedly the Assessee was registered u/s 12AA of the Income Tax Act vide order Number PN/CIT(exem)/Tech/12AA/Pune Rg/045/587/2017-18/3490 dated 24/10/2017 by the Commissioner of Income Tax(Exemption) Pune. The Income Tax Act was amended by Finance Act, 2020. Accordingly, the existing charitable organizations having registration u/s.12AA was required to apply for registration again u/s.12A r.w.s 12AB of the Act. The relevant Section 12A of Income Tax Act is reproduced here as under : “Conditions for applicability of sections 11 and 12.
12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following 3 conditions are fulfilled, namely:— & 217/PUN/2025 [A] ………………. (ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution,— (i) where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first day of April, 2021; (ii) where the trust or institution is registered under section 12AB 93[or approved under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10] and the period of the said registration 93[or approval, as the case may be,] is due to expire, at least six months prior to expiry of the said period; (iii) where the trust or institution has been provisionally registered under section 12AB 93[or provisionally approved under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10], at least six months prior to expiry of period of the provisional registration 93[or provisional approval, as the case may be,] or within six months of commencement of its activities, whichever is earlier; (iv) where registration of the trust or institution has become inoperative due to the first proviso to sub-section (7) of section 11, at least six months prior to the commencement of the assessment year from which the said registration is sought to be made operative; (v) where the trust or institution has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, within a period of thirty days from the date of the said adoption or modification; 4 & 217/PUN/2025 [A] 94[(vi) in any other case, where activities of the trust or institution 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 registration is sought; (B) commenced and no income or part thereof of the said trust or institution has been excluded from the total income on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, or section 11 or section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities,] and such trust or institution is registered under section 12AB: 95[Provided that where the application is filed beyond the time allowed in sub-clauses (i) to (vi), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable cause for delay in filing the application, condone such delay and such application shall be deemed to have been filed within time;]
5. Since the Assessee was already having registration u/s.12AA of the Act, as per Amended Section 12A(1)(ac) of the Act, the Assessee was required to apply for registration within the three months from 1st April, 2021. The time limit of three months from 01.04.2021 was extended due to Covid-19 Pandemic.
Subsequently, Central Board of Direct Taxes(CBDT) vide Circular No.07/2024 dated 25.04.2024 had extended the date as under : 5 & 217/PUN/2025 [A] “3. On consideration of the matter, with a view to avoid and mitigate genuine hardship in such cases, the Board, in exercise of the powers conferred under section 119 of the Act, hereby extends the due date of making an application/intimation electronically in - (i) Form No. 10A, in case of an application under clause (i) of the first proviso to clause (23C) of section 10 or under sub-clause (i) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5) of section 80G or in case of an intimation under fifth proviso of sub-section (1) of section 35 of the Act, till 30.06.2024; (ii) Form No. 10AB, in case of an application under clause (iii) of the first proviso to clause (23C) of section 10 or under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, till 30.06.2024.
It may be also noted that extension of due date as mentioned in paragraph 3(ii) shall also apply in case of all pending applications under clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, as the case may be. Hence, in cases where any trust, institution or fund has already made an application in Form No.10AB under the said provisions on or before the issuance of this Circular, and where the Principal Commissioner or Commissioner has not passed an order before the issuance of this Circular, the pending application in Form No. 10AB may be treated as a valid application.
4.1 Further, in cases where any trust, institution or fund has already made an application in Form No. 10AB, and where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular, solely on account of the fact that the application was furnished after the due date or that the application has been furnished under the wrong section 6 & 217/PUN/2025 [A] code, it may furnish a fresh application in Form No. 10AB within the extended time provided in paragraph 3(ii) i.e. 30.06.2024.
It is also clarified that if any existing trust, institution or fund who had failed to file Form No. 10A for AY 2022-23 within the due date as extended by the CBDT circular no. 6/2023 dated 24.05.2023 and subsequently, applied for provisional registration as a new trust, institution or fund and has received Form No. 10AC, it can avail the option to surrender the said Form No. 10AC and apply for registration for AY 2022-23 as an existing trust, institution or fund in Form No. 10A within the extended time provided in paragraph 3(i) i.e. 30.06.2024.”
7. In this case, admittedly, Assessee also have provisional registration u/s.10(23C)(iv) of the Act, dated 24.09.2021valid up to A.Y.2026-27.
The Commissioner of Income Tax(Exemption) rejected assessee‟s application as assessee had mentioned incorrect sub- clause in the application. The relevant paragraph 9 of ld.CIT(E)‟s is reproduced here as under : “9. Considering the above, and since the assessee's activities were already commenced and it has also claimed deduction under section 11 for previous year before the date of the present application, the assessee trust is not eligible to file application u/s 12A(1)(ac) (vi)-ITEM 'B' of the Income-tax Act, 1961. Therefore, the application filed by the assessee is hereby rejected.”
We have already reproduced Amended Section 12A of the Act, in earlier paragraphs. Since Assessee had already obtained 7 & 217/PUN/2025 [A] registration u/s.12AA of the Act, Assessee was required to apply for registration u/s.12A(1)(ac)(i) of the Act, however, Assessee inadvertently applied u/s.12A(1)(ac)(vi) of the Act. It is an admitted position by the ld.AR of the assessee that incorrect sub-clause was mentioned in the application.
10. As far as the inadvertent error of mentioning the wrong sub- clause is concerned, various Benches of the Tribunal has held that it is not a grave mistake and ld.CIT(Exemption) should consider the existing application under the appropriately correct sub-clause.
On identical issue, the ITAT Pune in the case of National Association for the Blind Vs. CIT(Exemption) in has held as under : “6. We have heard Ld. Counsels from both the sides and perused the material available on record and also copy of case laws relied on by the assessee. We find that admittedly, the assessee trust was required to file application under clause (iii) of section 12A(1)(ac) of the IT Act but due to inadvertent error the application was filed under clause (vi) of section 12A(1)(ac) of the IT Act and for this reason alone Ld. CIT, Exemption, Pune rejected its application for registration. We find that under identical situations, a Co-ordinate Bench of this Tribunal in the case of Raj Krishan Jain Charitable Trust (supra) allowed the appeal of the assessee by observing as under :-
“9. As contended the appellant has committed a technical mistake in making the application under Section 12A(1)(ac)(ii) 8 & 217/PUN/2025 [A] instead of clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. As pointed out the appellant has filed revised form 10AB for seeking registration under the correct provision i.e. Section 12A(1)(ac)(iii) which can also be considered.
In consonance with the decision rendered by the co-ordinate Bench, the typographical error deserves to be corrected. Accordingly, the appeal deserves to be allowed and impugned order dated 15.03.2024 of Ld. CIT (E) is liable to be set aside. Hence, the appeal is allowed and we set aside the order of Ld.CIT(E) dated 15-03-2024 and remand the matter back to the file of the CIT(E) for fresh adjudication by considering amended application of the appellant under Section 12A(1)(ac)(iii) of the Act, or he can call for amended application from the appellant.
11. In the result, the appeal filed by the assessee is allowed for statistical purpose.”
Respectfully following the above decision passed by the Coordinate Bench of this Tribunal (supra), & considering the totality of facts of the case & in the interest of justice, we deem it proper to set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction to treat the application already filed by the assessee as under clause (iii) of section 12A(1)(ac) of the IT Act instead of under clause (vi) of section 12A(1)(ac) of the IT Act and decide the same as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT, Exemption, Pune in this regard and produce supporting documents/evidences in support of application for registration without taking any adjournment under any pretext, otherwise, Ld. CIT, Exemption, Pune shall be at liberty to pass appropriate order as per law. Thus, the grounds of appeal filed by the assessee are partly allowed.
11.1 Similar view has been taken by ITAT Pune in the case of 9 Connecting Trust vs. CIT(Exemption) in ITA No.2437/PUN/2024.
ITA Nos.216 & 217/PUN/2025 [A]
The facts of the present case and National Association for the Blind are identical, therefore, respectfully following the Coordinate Bench decisions(supra), we set-aside the order of ld.CIT(E) to ld.CIT(E) for denovo adjudication, we direct the ld.CIT(E) to consider the already filed application by the Assessee to consider under the Correct Sub-Clause of Section 12A of the Act. The Assessee shall be provided opportunity of hearing. The Assessee shall file necessary documents before the ld.CIT(E). Accordingly, Grounds of appeal raised by the Assessee are allowed for statistical purpose.
In the result, appeal of the Assessee in is allowed for statistical purpose.
– 80G : 14. Assessee‟s application for registration u/.s.80G(5) was rejected on identical grounds as mentioned in rejection order for registration u/s.12A of the Act. Since we have already set-aside the order u/s.12A for denovo adjudication above, we set-aside the order u/s.80G(5) for denovo adjudication. Assessee shall be provided & 217/PUN/2025 [A] opportunity of hearing. Accordingly, grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeal of the Assessee in is allowed for statistical purpose.
To sum up, both appeals of the assessee are allowed for statistical purpose. Order pronounced in the open Court on 30 September, 2025.