ANANDCARE CHARITABLE TRUST,THANE vs. CIT, EXEMPTION CIRCLE, PUNE, PUNE

Facts of the case in brief are that on receipt of assessee’s application along with annexures thereto, with a view to verify the genuineness of the activities of the assessee and fulfillment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act, a notice was issued through ITBA portal on 24.06.2024 requesting the assessee to upload certain information/clarification contained therein. The assessee was requested to submit the compliance by 09.07.2024. The notice was duly served on the assessee through e-portal/email. The assessee responded to the said notice and on verifying the details furnished by the assessee, the Ld. CIT(E) found certain discrepancies and asked for their clarification which were communicated to the assessee by issue of another show cause notice on 15.10.2024 seeking compliance by 22.10.2024. It was specifically asked by the Ld. CIT(E) to show cause along with the supporting documents as to why the application should not be rejected and why the provisional registration granted earlier under section 80G(5) should not be cancelled as the application is filed u/s 80G(5)(iv)(B) of the Act but the same is not applicable to the assessee’s case. The assessee furnished its reply to the said notice on 22.10.2024 contending as under: “6. The assessee responded to the said notice through e-portal on 22/10/2024. The assessee's contention is reproduced hereunder for ready reference: "we would like to submit the following: Clarification on Application under Clause (ii) of First Proviso to Section 80G(5): At the time of filing our application on 22/05/2024, we intended to apply under Clause (ii) of the first proviso to sub-section (5) of section 80G, as we believe that this is the appropriate provision applicable to our trusts case. However, due to a limitation in the system during the filing process, the only option available for selection was Sub-clause (B) of clause (iv) of the first proviso to sub-section (5) of section 80G. As a result, we inadvertently applied under this clause. Request for Consideration Under Clause (ii) of Section 80G(5): We kindly request that you please consider our application under Clause (ii) of the first proviso to sub-section (5) of section 80G, as this was our original intent. We apologize for the confusion caused by the system constraint during the application process and seek your kind intervention in granting the approval under the correct clause.”

The above submission of the assessee was not found to be acceptable by the Ld. CIT(E) who proceeded to pass the impugned order rejecting the application of the assessee by observing as under : “7. The contention of the trust is duly considered. However, the same is not found to be acceptable. It has been contended that the trust intended to apply under Clause (ii) of the first proviso to sub-section (5) of section 80G and due to system issue filed under Sub-clause (B) of clause (iv) of the first proviso to sub-section (5) of section 80G. 7.1 It may be noted that the provisions of section 80G(5)(ii) of the Act pertains 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 due to expire. In the instant case, however, the applicant does not have any regular approval and has, in fact, applied under sub clause (B) of (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 seeking approval u/s 80G(5)(vi) of the Act. Therefore, the provisions of clause (ii) of first proviso to section 80G(5) of the Act are not applicable in its case. Also the applicant's request to consider said application as filed under section 80G(5)(ii) can also not be accepted since the application filed u/s 80G(5)(iv)(B) of the Act cannot be considered under another clause. 8. The present application is filed by the assessee u/s 80G(5)(iv)(B) of the Act. The extract of the said provision is reproduced herewith for ready reference: "80G(5)(iv) - in any other case, where activities of the trust or institution have- (A) .....; (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 subclause (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," 8.1 It can be thus seen that the provisions of said section applies to a case where activities of the trust or institution have '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 subclause (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. In the light of said provision, the submission of the assessee trust has been verified. It is seen that the assessee trust has claimed deduction u/s 11 in its past AYs. For e.g. it has claimed deduction of Rs. 15.76 Lakhs u/s 11 in the A.Y. 2022-23. Thus, the assessee's income pertaining to previous years has been excluded from the total income on account of applicability of section 11 which ocurres after the commencement of such activities. 9. Considering the above, and since its activities were already commenced at the time of filing the present application, the assessee trust is not eligible to file application u/s 80G(5)(iv) (B) of the Income-tax Act, 1961. Therefore, the application filed by the assessee is liable to be rejected. 10. In view of the above, the application dated 22/05/2024 under sub clause (B) of (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 filed by the assessee is hereby rejected.”

Dissatisfied, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.

The Ld. AR submitted that the assessee has used wrong section code in Form 10AB inadvertently/ mistakenly due to system issue. He relied on the decision of the Co-ordinate Bench of the Pune Tribunal in the case of Kimaya Ashram Charitable Trust Vs. CIT (Exemption) in & 2034/PUN/2024, dated 23.12.2024 and submitted that the Tribunal in this case under the similar set of facts as that of the assessee, has set aside the matter to the file of the Ld. CIT(E) with a direction to treat the application of the assessee as filed under the correct/desired section. He therefore requested that the order of the Ld. CIT(E) may be set aside with a direction to treat decide the matter afresh after affording an opportunity of hearing to the assessee as the assessee is in a position to substantiate its case before the Ld. CIT(E) to his satisfaction by filing all the relevant details for deciding the issue afresh.

The Ld. DR, on the other hand, supported the order of the Ld. CIT(E).

We have heard the Ld. Representatives of the parties and perused the material available on record and the decision of the Co-ordinate Bench of the Pune Tribunal (supra) relied upon by the Ld. AR. The main grievance of the assessee agitated in this appeal is the selection of wrong section code by the assessee in its application for regular registration other than Clause (ii) of the first proviso to sub-section (5) of section 80G of the Act. We find that this issue is no more res-integra and covered in favour of the assessee by catena of decisions of the various benches of the Tribunal involving similar set of facts as that of the assessee in the present appeal. In our view, wrong selection of section code/clause would not disentitle the assessee to its rightful claim and cannot be treated as fatal to the proceedings initiated after the filing of the application. Support may be drawn from the decision of the Pune Bench of the Tribunal in the case Help For Children In Need Foundation Vs. CIT (Exemption), Pune in dated 09.12.2024 wherein the order of the Ld. CIT(E) has been set aside with a direction to decide the application afresh by treating the same as filed under the correct/desired section. Similar view has been taken by the Pune Tribunal in the case of Kimaya Ashram Charitable Trust (supra).

Respectfully following the decision(s) of the Co-ordinate Bench (supra) and considering the given facts and circumstances in the present case and also that the Ld. CIT(E) has not given any adverse findings on merits of the case, we deem it fit and proper, in the interest of justice, to grant an opportunity to the assessee to substantiate its case before the Ld. CIT(E) by setting aside the matter to the file of Ld. CIT(E). We, therefore, set aside the impugned order of the Ld. CIT(E) who shall give an opportunity to the assessee to file the correct application/ treat the original application as filed under the correct section and then decide the case on merits denovo as per facts and law, after granting reasonable opportunity of hearing to the assessee. The assessee is also directed to remain vigilant in respect of the notice(s) of hearing issued by Ld. CIT(E) and submit the details/ documents as may be called upon by the Ld. CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(E) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

In the result, the appeal of assessee is treated as allowed for statistical purposes.