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Facts
The appellant, Social Networking Forum, a Trust, applied for approval u/s 80G(5)(ii) of the Income Tax Act, 1961. The CIT (Exemptions) rejected the application as non-maintainable, citing the erroneous selection of a wrong section code in Form 10AB as a minor technical defect. The appellant sought an opportunity to rectify this defect.
Held
The Tribunal held that a wrong selection of a section code/clause in the application form should not be considered a fatal defect. It found that the CIT(E) should have granted an opportunity to the appellant to rectify the error. Therefore, the Tribunal set aside the CIT(E)'s order and remanded the matter back for de novo consideration, directing the CIT(E) to allow the appellant to file the correct application and decide the case on merits.
Key Issues
Whether an application for approval u/s 80G(5) can be rejected as non-maintainable due to a technical error in selecting the wrong section code in Form 10AB, and if the assessee should be granted an opportunity to rectify such a defect.
Sections Cited
80G(5), 80G(5)(ii), 80G, 10AB, 80G(5)(vi), 12A, 12AB, 12A(1), 12A(1)(ac)(iii), 12A(1)(ac)(iv)
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal at the instance of appellant is directed against the order dated 27.08.2024 framed by ld. Commissioner of Income Tax (Exemptions), Pune denying grant of approval u/s.80G(5) of the Income Tax Act, 1961 ( in short ‘the Act’).
When the appeal was called for, none appeared on behalf of the appellant despite due service of notice of hearing. Perusal of the impugned order indicates that assessee’s application for approval u/s.80G(5) of the Act has been rejected for minor technical defect in the application. We therefore proceed to dispose of the appeal with the able assistance from the ld. Departmental Representative and material available on record.
Appellant has raised following grounds of appeal :
1. On the facts and in circumstances of the case and in law, the learned CIT, Exemption erred in rejecting the registration asked u/s 80(G)(5) of the IT Act for the reason that trust has not submitted the copy of earlier approval u/s. 80G. Your appellant submits that necessary details are available and can be submitted and therefore appellant prays before this Hon'ble Bench for restoring the matter back to the file of CIT (Exemption) for reconsideration of the application made in form no. 10AB, and to submit the copy of such order. Your appellant prays for deletion of entire addition. Your appellant craves for to add, alter amend, modify, delete any or all grounds of appeal before or during the course of hearing.”
4. Succinctly, the facts of the case are that the appellant is a Trust, filed application for grant of approval u/s.80G(5)(ii) of the Act on 29.03.2024. In order to verify the genuineness of activities of the appellant, the ld. CIT (Exemptions) issued a notice through ITBA portal on 24.05.2024 calling upon the appellant to file certain information/clarification. The assessee furnished its compliance. Thereafter, Ld.CIT(E) issued another notice dated 16.07.2024 pointing out certain discrepancies in the details so furnished. The assessee filed its submissions. However, ld.CIT(E) rejected the application filed by the appellant as non- maintainable by holding as under :
“6. The present application is filed by the assessee under clause (ii) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961. The provisions of clause (ii) of first proviso to sub-section (5) of section 80G are related to application for renewal of regular approval of a trust or institution which is already having regular approval under section 80G(5)(vi) of the Act and the period of said registration is about to expire.
After verification of the submission made by the assessee in response to the initial notice, it is seen that the assessee has admitted the fact that while applying for regular approval erroneously wrong section code was selected.
In view of the above, the application filed by the assessee is treated as non-maintainable and hence, 'rejected' for statistical purposes without going into the merits of the case and no adverse inference is drawn against the assessee.”
Aggrieved appellant is now in appeal before the Tribunal in the present appeal assailing the impugned order denying grant of approval u/s.80G(5) of the Act.
We have heard the ld. Departmental Representative and perused the record placed before us. A perusal of the impugned order as well as the grounds of appeal filed by the appellant would reveal that application for approval u/s.80G(5) has been rejected on hyper-technical ground mainly on account of non selection of right section code as applicable to the assessee while filing the application on Form No.10AB. Therefore, the appellant in its grounds of appeal prayed for an opportunity for rectification of the same. Ld. Departmental Representative was fair enough in not opposing the request made by the assessee. We note that similar issue came up for adjudication before Coordinate Bench, Surat in the case of Shree Swaminarayan Gadi Trust Vadtal (SVG) Vs. CIT (Exemptions), Ahmedabad in & 370/Srt/2024, dated 13.05.2024 and the finding of the Tribunal reads as under :
“5. We have considered the submissions of both the parties and perused the record carefully. There is no dispute that the appellant applied for registration under Section 12A/12AB of the Act under Form 10AB on 28.09.2023. The ld. CIT(E) while considering the application of appellant noted that the application filed by appellant is not maintainable and accordingly, a show cause notice dated 02/11/2023 was issued for seeking clarification. The appellant responded to the show cause notice of ld CIT(E) vide their reply dated 15.12.2023. The contents of show cause notice and the reply thereof is not recorded by ld CIT(E) in his order. We find that the appellant vide their reply dated 15/12/2023 prayed to consider the application in appropriate sub- clause of section 12A(1). The ld CIT(E) held that he has no power to change/ amend or rectify Form-10AB. We find that it was an inadvertent mistake and the appellant has already explained the facts and prayed for correction before the ld. CIT(E). In our view the mistake in filing entry was not fatal and could be considered in appropriate sub-clause or clause of section 12A(1). Otherwise, the appellant has provided all the details and information in Form-10AB, while applying for registration under section 12A/12AB. Being first appellate authority, the plea of appellant for correction in Form-10AB is accepted and the order of ld CIT(E) is set-aside. The registry official of ld CIT(E) maintaining record of ITBA portal about the registration of trust under section 12A/12AB is directed either to correct such mistake or allow the appellant to rectify or amend the relevant clause/ sub-clause of section 12A(1). Considering the fact that the application of appellant was not considered on merit, therefore, we deem it appropriate to direct the ld. CIT(E) to treat the application of appellant under Section 12A(1)(ac)(iii) in place of Section 12A(1)(ac)(iv) of the Act and to consider the case on merit and pass the order in accordance with law. Needless to direct that before passing the order, the ld CIT(E) shall grant opportunity of hearing to the appellant. The appellant is also directed to furnish complete details to prove its object and activity and make all compliances as desired by the ld. CIT(E). In the result, the grounds of appeal raised by the appellant are allowed for statistical purposes only.”
7. In light of the above decision and having given our thoughtful consideration to the given facts and circumstances prevailing in the instant case, we are of the opinion that the ld. CIT(E) ought to have given an opportunity to the appellant to rectify the defect. Further we are of the view that wrong selection of section code/clause would not disentitle the appellant to its rightful claim. Selection of wrong clause by the appellant cannot be treated as fatal to the proceedings initiated after the filing of the application. We therefore in the interest of natural justice being fair to both the parties deem it appropriate to grant one more opportunity to the appellant, setting aside the impugned order to the file of ld. CIT(E). The ld.CIT(E) shall give an opportunity to the appellant to file the correct application and then decide the case on merits denovo. Appellant is also directed to remain vigilant and make satisfactory compliance to the notice(s) of hearing issued by ld.CIT(E). It should refrain from taking adjournments unless otherwise required for reasonable cause. Effective grounds of appeal raised by the appellant are allowed for statistical purposes.
8. In the result, the appeal of the appellant is allowed for statistical purposes.
Order pronounced on this 03rd day of June, 2025.