Loading judgment…
Facts
The assessee, Baroda Youth Federation, filed an application for registration under section 12A(1)(ac)(iii) of the Income Tax Act. The CIT(E) rejected the application, stating it was non-maintainable because a previous similar application was rejected and the present one was not covered by exceptions in a CBDT circular. The assessee contended that the previous rejection was due to an inadvertent error in selecting the wrong clause, and the current application also contained a technical error. The CIT(E) rejected the application without a show-cause notice or hearing.
Held
The Tribunal held that rejecting the application solely on the ground of incorrect clause selection in Form 10AB, especially without a show-cause notice or opportunity for hearing, violates the principles of natural justice. The Tribunal cited several precedents where similar issues involving inadvertent clause selection and technical glitches led to the matter being remanded.
Key Issues
Whether the rejection of the assessee's application for registration under Section 12A was justified without providing an opportunity of being heard, and whether the rejection of the 80G application was valid when the 12A registration was still under consideration.
Sections Cited
12A(1)(ac)(iii), 12A, 80G(5)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, AHMEDABAD
Before: SHRI SIDDHARTHA NAUTIYAL & SHRI NARENDRA PRASAD SINHA
O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
Both appeals have been filed by the Assessee against order passed by Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad order dated 19.09.2024 & 21.09.2024.
We shall first discuss the assessee’s appeal (in ITA No. 632/Ahd/2025)
The assessee has taken the following grounds of appeal:
“1. The learned Commissioner of Income Tax (Exemptions), Ahmedabad (“the CIT”) erred in fact and in law in rejecting the application made u/s. 12A(1)(ac)(iii) of the Income Tax Act., 1961.
2. The learned CIT erred in fact and in law in rejecting the application u/s. 12A of the Act merely on the ground that earlier application was rejected without going into the merits of the case which is bad in law.
3. The learned CIT erred in fact and in law in passing the order rejecting the application for registration u/s. 12A of the Act without giving a show cause notice for rejection to the Appellant.
& 633/Ahd/2025 Baroda Youth Federation vs. CIT(E) Asst. Years –N.A. - 2– 4. The learned CIT erred in fact and in law in passing the order rejecting the application for registration u/s. 12A of the Act without giving an opportunity of being heard. 5. The Appellant reserves the right to add, alter, amend, modify, delete all or any of the grounds of appeal either partially or completely.” Condonation of delay
3. The assessee has filed application for condonation of delay along-with an Affidavit for delay of 117 days in filing of the present appeal. Going into the contents of the application for condonation of delay filed by the assessee / applicant and smallness of delay causing no perceptible prejudice to the Revenue, we are hereby condoning the delay and admitting the appeal of the assessee/ applicant for adjudication on merits.
The brief facts of the case are that the assessee/applicant filed an application for registration under section 12A(1)(ac) of the Income Tax Act, 1961 (Act). Subsequently, CIT (Exemptions) issued a detailed questionnaire to the assessee / applicant on 02.07.2024 requesting submission of documents and information. Upon examination of the records, CIT (Exemptions) observed that the applicant had earlier filed a similar application under section 12A(1)(ac)(iii) in Form No. 10AB on 15.04.2023, which was already disposed of by way of a rejection order passed in Form No. 10AD bearing DIN: ITBA /EXM/F/EXM45/2023-24/1056884893(1) dated 09.10.2023. CIT (Exemptions) held that since the provisional registration granted earlier was cancelled and the present application is not covered by the exceptions provided under para 4.1 of CBDT Circular No. 07 of 2024 dated 25.04.2024, the present application is not maintainable. Accordingly, without entering into the merits of the case, CIT (Exemptions) held that the application dated 07.03.2024 was liable to be rejected as non-maintainable.
& 633/Ahd/2025 Baroda Youth Federation vs. CIT(E) Asst. Years –N.A. - 3–
The assessee is in appeal before us against the order passed by CIT (Exemptions) dismissing the application of the assessee. The ld. counsel for the assessee submitted that the assessee is a Section 8 Company incorporated under the Companies Act, 2013 and had filed an application for registration under section 12A(1)(ac)(iii) of the Income Tax Act, 1961 in Form 10AB on 07.03.2024 seeking recognition as a charitable trust. Pursuant to the said application, the Commissioner of Income Tax (Exemptions), Ahmedabad issued a notice under section 12A(1)(ac) seeking details relating to the trust, its objectives, and the activities undertaken. In response, the assessee duly submitted the requisite information along with supporting documents on 17.07.2024. However, it has been contended that the CIT (Exemptions), without examining the merits of the case, proceeded to reject the application vide order dated 19.09.2024 solely on the ground that a prior application had already been rejected, and therefore the present application was treated as non-maintainable. The ld. counsel for the assessee submitted that earlier a similar application had been filed by the assessee/applicant under clause (ii) inadvertently. The earlier application filed by the applicant was rejected on account of filing of application by the assessee / applicant under an incorrect clause. Accordingly, taking into account the extension of the deadline to 30.06.2024 by CBDT Circular No. 07/2024 dated 25.04.2024, the assessee / applicant filed another application, however, due to system error, the same was again filed in sub-clause (ii) instead of sub-clause (iii). Therefore, the assessee’ case is that due to a technical error on the portal, the application was again mistakenly submitted under clause (ii) instead of clause (iii). The ld. counsel for the assessee argued that such rejection merely on the basis of an earlier rejection, without any opportunity of hearing or issuance of a show cause notice, is arbitrary and against principles of natural & 633/Ahd/2025 Baroda Youth Federation vs. CIT(E) Asst. Years –N.A. - 4– justice. The ld. counsel for the assessee submitted that that while the CIT issued a notice seeking information on 02.07.2024, to which the assessee responded on 17.07.2024, the assessee was never put to notice that its application could be rejected as non-maintainable, nor was any opportunity granted to rebut such a ground. The impugned rejection order was received directly on 19.09.2024 without any preceding communication indicating that the application was liable to be summarily rejected.
In response, Ld. DR placed reliance on the observations made by CIT (Exemptions) in his order.
We have heard the rival contentions and perused the material on record. We observe that in the case of Modasa Ekda Visha Khadayata Kovadia Kelavani Mandal vs. Commissioner of Income-tax (Exemption) [2025] 176 taxmann.com 569 (Ahmedabad - Trib.)[16-07-2025], ITAT held that where assessee-trust inadvertently selected wrong clause in Form 10AB while applying for regular registration under section 80G, and Commissioner (Exemption) rejected application on ground that he lacked power to rectify error, matter was to be remanded with direction to treat application under correct clause and decide afresh if assessee was otherwise eligible. Again in the case of Modasa Ekda Visha Khadayata Modipunch Kelavani Mandal vs. Commissioner of Income-tax (Exemption) [2025] 177 taxmann.com 545 (Ahmedabad - Trib.)[14-08-2025], the ITAT held that where assessee trust inadvertently selected wrong section code while filing application for approval under section 80G(5) in Form 10AB, matter was to be remitted to Commissioner with a direction to consider application of assessee as filed under correct clause (iii) to second proviso to section 80G(5) and thereafter grant approval accordingly, if assessee was otherwise found eligible. In the case of Youth Service Centre, & 633/Ahd/2025 Baroda Youth Federation vs. CIT(E) Asst. Years –N.A. - 5– Vadodara vs. CIT(E) (ITA No. 585/Ahd/2025), the Tribunal remanded the matter back due to similar issues arising from system glitches and denial of opportunity. In the case of V-One Society vs. CIT(E), Ahmedabad (ITA No. 287/Ahd/2025), which also involved inadvertent clause selection and was remanded back for de novo consideration. Also in the case of Bhagwan Mahaveer Jain Relief Trust vs. CIT(E) [(2025) 171 taxmann.com 574], the Raipur Tribunal held that rejection without giving a show-cause notice violated natural justice; and Rotary Charity Trust vs. CIT(E) [(2025) 170 taxmann.com 797], where the Mumbai Tribunal remanded the matter due to inadvertent selection of the wrong clause and lack of opportunity to explain.
In view of the facts of the case, the submissions made by the assessee, and the judicial precedents cited, including the decisions of the coordinate benches of the ITAT in Youth Service Centre vs. CIT(E), V-One Society vs. CIT(E), Bhagwan Mahaveer Jain Relief Trust vs. CIT(E), Rotary Charity Trust vs. CIT(E), and more particularly the decisions in Modasa Ekda Visha Khadayata Kovadia Kelavani Mandal vs. CIT(E) [(2025) 176 taxmann.com 569] and Modasa Ekda Visha Khadayata Modipunch Kelavani Mandal vs. CIT(E) [(2025) 177 taxmann.com 545], we are of the considered view that the rejection of the assessee’s application under section 12A(1)(ac) merely on the ground of incorrect selection of clause in Form 10AB, especially in light of the technical difficulties and absence of opportunity of being heard, constitutes a violation of the principles of natural justice.
Accordingly, we set aside the impugned order passed by the CIT (Exemptions) and restore the matter to his file with a direction to treat the assessee’s application as one filed under correct clause. The CIT (Exemptions) is further directed to consider the application afresh on merits and pass a & 633/Ahd/2025 Baroda Youth Federation vs. CIT(E) Asst. Years –N.A. - 6– reasoned order in accordance with law after giving adequate opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
Now we come to the assessee’s appeal (in 11. The assessee has raised the following grounds of appeal:
“1. The learned Commissioner of Income Tax (Exemptions), Ahmedabad (“the CIT”) erred in fact and in law in rejecting the application made u/s.80G(5) of the Income Tax Act, 1961.
2. The learned CIT erred in fact and in law in passing the order rejecting the application for registration u/s. 12A of the Act without giving an opportunity of being heard.
The Appellant reserves the right to add, alter, amend, modify, delete all or any of the grounds of appeal either partially or completely.” Condonation of delay
12. The assessee has filed application for condonation of delay along-with an Affidavit for delay of 117 days in filing of the present appeal. Going into the contents of the application for condonation of delay filed by the assessee / applicant and smallness of delay causing no perceptible prejudice to the Revenue, we are hereby condoning the delay and admitting the appeal of the assessee/ applicant for adjudication on merits.
The brief facts of the case are that the assessee/applicant filed application in Form No. 10AB electronically seeking approval under clause (iii) of the first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961. However, upon perusal of the records, CIT (Exemptions) observed that the applicant’s earlier application for registration under section 12A(1)(ac)(iii) of the Act, also & 633/Ahd/2025 Baroda Youth Federation vs. CIT(E) Asst. Years –N.A. - 7– filed in Form 10AB on 07.03.2024, had already been rejected by an order dated 19.09.2024 bearing DIN No. ITBA /EXM/F/EXM45/2024-25/1068875381(1). Consequently, CIT (Exemptions) held that since the applicant does not hold any valid registration under section 12A or 12AB of the Act, either in Form No. 10AD or Form No. 10AC, which is a mandatory pre-condition for seeking approval under section 80G, the application for grant of registration u/s 80G is liable to be rejected. The CIT (Exemptions) placed reliance on the decision of the Hon’ble Gujarat High Court in the case of CIT (Exemptions) vs. Shree Tapeshwar Hanumanji Bajrang Charity Trust [122 taxmann.com 98], where it was held that registration under section 12A is a necessary pre-requisite for grant of approval under section 80G. In view of the fact that the applicant did not hold a valid registration under section 12A/12AB, the CIT (Exemptions) held that approval under section 80G could not be granted to the assessee / applicant.
In light of the above facts and circumstances, and considering that the issue of grant of registration under section 12A of the Act has already been restored to the file of the CIT (Exemptions) for de-novo consideration, we are of the considered view that the present matter pertaining to the application for approval under section 80G of the Act also deserves to be remanded back for fresh adjudication. Since a valid registration under section 12A/12AB is a statutory pre-condition for granting approval under section 80G, and the outcome of the pending proceedings for registration under section 12A would have a direct bearing on the eligibility for such approval, we deem it appropriate to set aside the impugned order passed by the CIT (Exemptions) and restore the matter to his file for de-novo consideration, in accordance with law. The CIT (Exemptions) shall decide the assessee’s application under section 80G afresh & 633/Ahd/2025 Baroda Youth Federation vs. CIT(E) Asst. Years –N.A. - 8– upon adjudication of the application under section 12A/12AB, after affording due opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes.
In the combined result, both the appeals of the assessee are allowed for statistical purposes. This Order is pronounced in the Open Court on 15/09/2025
Sd/- Sd/- (NARENDRA P. SINHA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 15/09/2025 TANMAY, Sr. PS TRUE COPY आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��थ� / The Respondent. 3. संबंिधत आयकर आयु� / Concerned CIT 4. आयकर आयु�(अपील) / The CIT(A)- 5. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,