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Facts
The assessee, Samadarshan Trust, filed an application for approval under section 80G(5)(iv)(B) of the Income Tax Act, 1961. The CIT(E) rejected the application as non-maintainable because the assessee had previously claimed exemption under sections 11/12. The assessee contended that they had inadvertently selected the wrong sub-clause and that the correct sub-clause applicable was 80G(5)(ii).
Held
The Tribunal noted that the assessee had indeed made a bona fide mistake in selecting the sub-clause, and that no proper opportunity for hearing was given by the CIT(E). Following precedent, the Tribunal restored the matter to the file of the CIT(E) for de novo consideration.
Key Issues
Whether the rejection of an application for approval under section 80G(5) solely on grounds of incorrect sub-clause selection, without providing an opportunity for hearing, is sustainable?
Sections Cited
80G(5)(iv)(B), 80G(5)(ii), 80G, 11, 12, 12AA, 10(23C)
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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
O R D E R
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Commissioner of Income Tax (Exemption), (in short “Ld. CIT(E)”), Ahmedabad vide order dated 20.08.2024.
2. The Assessee has taken the following grounds of appeal:-
“1. That on facts, and in law, the learned CIT (Exemption) has grievously erred in rejecting the application for approval u/s.80G (5)(iv)(B) of the act as non-maintainable.
That on facts and in law, the appellant made a bona fide error in selecting sub- clause (iv) instead of sub-clause (ii) of section 80G(5) of the Act.
That on facts, and in law, learned CIT (Exemption) be directed to consider the application under the correct provisions of section 80G(5)(ii) of the Act, and decide on merits.
4. The appellant craves liberty to add, alter, amend any ground of appeal
.”
3. The assessee has filed an application seeking condonation of delay of 109 days in filing the appeal against the order rejecting approval under section Samadarshan Trust vs. CIT(E) Asst.Year –N.A. - 2– 80G(5)(iv) of the Act. The delay has been explained through an Affidavit dated 04.02.2025 filed by Shri Kirit Mayashankar Adhvaryu, Trustee of the appellant Trust. It has stated in the Affidavit that the assessee Trust is unfamiliar with Income Tax proceedings and portal-related procedures, and had no prior experience in such matters. The assessee came to know about the rejection of the application only in January 2025, and thereafter immediately took steps to file the appeal. We find the explanation offered to be bona fide and supported by circumstances beyond the control of the assessee. In view of the same, and in the interest of justice, the delay of 109 days in filing the present appeal is hereby condoned.
4. The brief facts of the case are that the applicant filed an application electronically in Form 10AB seeking approval under sub-clause (B) of clause (iv) of the first proviso to section 80G(5) of the Income Tax Act, 1961 (Act). The Commissioner (Exemptions) examined the application in accordance with the procedural requirements under section 80G(5), as amended from 01.10.2023, and Rule 11AA of the Income Tax Rules. Upon scrutiny, CIT (Exemptions) issued notice seeking clarification on whether the assessee / applicant trust had claimed exemption under section 11 or section 12 or sub-clauses (iv), (v), (vi), or (via) of section 10(23C) at any time after the commencement of its activities. This query was made in view of the provision that under section 80G(5)(iv)(B), which provide that approval under section 80G can only be granted if the institution has commenced its activities and has not claimed any exemption under the aforesaid provisions for any year prior to the date of application. In response, the applicant submitted filed a reply, wherein it admitted that it had been claiming exemption under section 11 or 12 pursuant to registration earlier granted under section 12AA of the Act, and also provided a list of income tax Samadarshan Trust vs. CIT(E) Asst.Year –N.A. - 3– returns filed over the years since it had commenced activities on 01.05.1999. Based on this admission, the CIT (Exemptions) held that the applicant had already availed exemption for previous years falling within the scope of the prohibition contained in section 80G(5)(iv)(B) of the Act, as a result, the applicant failed to satisfy the basic eligibility criteria prescribed under the provision invoked in the application. Since the earlier claim of exemption under section 11 or 12 disqualifies the applicant from obtaining approval under this specific clause, the application was held to be non-maintainable in law by CIT (Exemption). Accordingly, the Commissioner (Exemptions) passed an order rejecting the application for approval under section 80G(5)(iv)(B) of the Act.
5. In appeal before us, the ld. counsel for the assessee /applicant trust submitted that the Commissioner (Exemptions) has erred in rejecting its application for approval under section 80G(5)(iv)(B) of the Act, on the grounds of non-maintainability. It was submitted that the rejection arose solely due to an inadvertent and bona fide mistake in selecting sub-clause (iv) of section 80G(5) while filing Form 10AB, whereas the correct provision applicable to the applicant was sub-clause (ii) of section 80G(5). The applicant has been claiming exemption under section 11/12 in prior years and was eligible to apply under the appropriate clause. Therefore, the error was purely technical in nature and not intended to mislead the Department. It was further submitted that the learned Commissioner (Exemptions) ought to have examined the application on merits under the correct applicable provision rather than dismissing it only on procedural grounds. In the interest of justice, the applicant requested that the matter be set aside and restored to the file of the Commissioner (Exemptions) for de novo consideration under the correct provision, i.e., section 80G(5)(ii), after granting due opportunity of being heard. The ld. counsel for the assessee Samadarshan Trust vs. CIT(E) Asst.Year –N.A. - 4– placed reliance on the case on Aatman Foundation vs. CIT(E) in vide order dated 26.05.2025 wherein on similar set of facts, the matter was directed to be set aside to the file of CIT (Exemptions) for de-novo consideration.
6. In response, Ld. DR placed reliance on the observations made order of CIT (Exemptions).
We have heard the rival contentions and perused the material on record. It would be useful to reproduce the relevant extracts of the decision in the case of Aatman Foundation (supra) for ready reference:
“5. The assessee is in appeal before us against the order passed by CIT(Exemptions). Before us, the counsel for the assessee submitted that there was an inadvertent error in filing of Form 10AB, wherein application was made under the incorrect sub-clause (B) of clause (iv) of the first proviso to subsection (5) of section 80G instead of clause (iii) of first proviso to subsection (5). Accordingly, it was submitted that the matter may be restored to the file of CIT(Exemptions) for de-novo consideration. The Counsel for the assessee placed reliance on the Mumbai ITAT decision in the case of Rotary Charity Trust, wherein on identical set of facts, the matter was restored to the file of CIT(Exemptions) for de novo consideration.
It would be useful to reproduce the relevant extracts of the decision of Rotary Charity trust in (vide order dated 09-01-2025), for ready reference: “3. Ld. AR submitted that assessee while filing Form for final registration in Form 10AB has inadvertently mentioned the wrong section as sub- clause (B) of clause (iv) of first proviso to subsection (5) of section 80G instead of clause (iii) of first proviso to subsection (5) of section 80G. He further submitted that assessee could not explain the error before the CIT(E) because the notice calling for details mentioned that proceedings under section 14A and that when the staff of the assessee approached the office of the CIT(E), it was advised that no action is required. Ld. AR, accordingly submitted that no proper opportunity was given to the assessee before rejecting the application for registration under section 80G. Ld. AR also drew our attention to the relevant provisions of section 80G to submit that the reason as quoted by the CIT(E) for rejecting the application is not applicable to the assessee. Therefore, ld. AR prayed that directions may be given to ld. CIT(E) to grant approval for registration under section 80G to the assessee. Ld AR relied on Samadarshan Trust vs. CIT(E) Asst.Year –N.A. - 5– the decision of the Kolkata Bench of the Tribunal in the case of North Eastern Social Research Centre vs CIT(E) [2024] 165 taxmann.com 12 (Kolkata Trib) in this regard and prayed for a similar direction as held hereunder – 6. The facts and issues involved in the case in hand being identical to that of the above referred to cases and in view of the findings given by the Coordinate Benches of the Tribunal, the appeal of the assessee is allowed accordingly and the ld. CIT(Exemption) is directed to grant final approval to the assessee under Clause (iii) to First Proviso to section 80G(5) of the Act, if the assessee is otherwise found eligible. It is directed that the Id. CIT(Exemption) will decide the application of the assessee for final approval as expeditiously as possible but not later than two months from the receipt of this order. It is further directed that, if the assessee is granted final approval by the ld. CIT(Exemption) then, the benefit of approval u/s 80G of the Act, if it was available to the assessee prior to the Amendment brought vide Amending Act of 2020, will be deemed to have been continued without any break. The assessee will not be deprived of the benefit during the time period falling between 31/03/2021 and the date of grant of provisional approval under clause (iv) i.e., 28/06/2022, due to technical errors occurred in making the application under the relevant provisions of the Act because of the confusion and misunderstanding on part of the assessee as well as on part of the ld. CIT(Exemption) in properly interpreting the relevant provisions.
Ld. DR on the other hand submitted that the CIT(E) has rejected the application based on the submission made by the assessee in Form 10AB stating that the application is made under section 80G(5)(iv)(B). Ld. DR further submitted that case can be remitted back to ld. CIT(E) to consider the application afresh based on the claim of the assessee that wrong section has been inadvertently mentioned in the Form 10AB.
We have heard the parties and perused the material on record. Before we proceed to examine the facts in assessee's case, it is important to first look at the relevant provisions of first proviso to subsection (5) of section 80G which read as under – Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval,- (i) where the institution or fund is approved under clause (vi) [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the Ist day of April, 2021; Samadarshan Trust vs. CIT(E) Asst.Year –N.A. - 6–
(ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period; (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier: [or] [(iv) [***] where activities of the institution or fund 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 approval is sought; (B) commenced [*** Jat any time after the commencement of such activities:] 6. Assessee, in terms of the above provisions, first applied for a provisional approval under sub-clause (B) of clause (iv) of first proviso to subsection (5) of section 80G within and subsequently (refer clause 2 in Form 10A) and was given the provisional registration up to AY 2024-25 on 04.04.2022. In the application for final approval in Form 10AB, it is noticed that assessee has once again mentioned same section i.e. sub-clause (B) of clause (iv) of first proviso to subsection (5) of section SOG whereas the correct section code under which the assessee ought to have selected is clause (iii) of first proviso to subsection (5) of section 80G. We also noticed that ld. CIT(E) has treated the application as one filed under sub-clause (B) of clause (iv) of first proviso to subsection (5) of section 80G and accordingly rejected the application for not fulfilling the stipulated conditions prescribed for filing application for approval in Form 10AB. 6.1. From the perusal of forms filed and the facts of the case, in our considered view, there is merit in claim of the ld. AR that assessee has selected the wrong section code inadvertently while filing the application for final registration in Form 10AB. Further, we notice that assessee did not have the opportunity of being heard before ld. CIT(E) due to incorrect course of action advised, which otherwise assessee might have explained the facts to avoid the impugned rejection. In view of these discussions and respectfully following the above decision of the Kolkata Bench in the case of North Eastern Social Research Centre (supra), we remit the issue back to the file of ld. CIT(E), with a direction to grant final approval to assessee under Clause (iii) to first proviso to section 80G(5) of the Act, if assessee is otherwise found eligible. We also direct ld. CIT(E) to decide the application of the assessee for final approval as quickly as possible before the expiry of the provisional approval granted in order to enable the assessee to have the benefit of section 80G without any break. It is ordered accordingly.
Samadarshan Trust vs. CIT(E) Asst.Year –N.A. - 7– 7. In the result, appeal of the assessee is allowed for statistical purposes.”
7. In view of the facts of the assessee’s case and in light of the judicial precedents referred to above, in interest of justice, the matter is hereby restored to the file of CIT(Exemptions), for de-novo consideration.
In the result, the appeal of the assessee is allowed for statistical purposes. ”
8. In the case of Aatman Foundation vs. CIT (Exemptions) [2025] 174 taxmann.com 1109 (Ahmedabad - Trib.)/[2025] 213 ITD 8 (Ahmedabad - Trib.), we note that under similar circumstances, the Tribunal restored the matter to the file of the CIT (Exemptions) for fresh consideration under the correct provision. The Tribunal, while referring to its own earlier decision in the case of Rotary Charity Trust vs. CIT (Exemptions) [2025] 170 taxmann.com 797/211 ITD 297 (Mumbai - Trib.), held that such technical errors in the selection of sub-clauses in Form 10AB should not result in outright rejection, especially when the assessee is otherwise eligible under the correct clause. The ITAT observed that the assessee ought to be provided with a fair opportunity to explain the situation and seek approval under the applicable provisions of law. We find that the facts of the present case are substantially similar. The assessee had previously obtained exemption under section 12AA of the Act and had been claiming exemption under section 11/12 of the Act. In our considered view, the error in selecting the wrong clause in Form 10AB is undisputedly a technical lapse and not an attempt to bypass the conditions of the law. We are also of the view that no opportunity of effective hearing was provided by the Commissioner (Exemptions) before rejecting the application. Hence, in the interest of justice and fair play, we consider it appropriate to set aside the impugned order.
Accordingly, we restore the matter to the file of the Commissioner (Exemptions) for de novo consideration of the assessee’s application for approval under section 80G(5) under the correct applicable provision, i.e., sub- Samadarshan Trust vs. CIT(E) Asst.Year –N.A. - 8– clause (ii) of the first proviso to section 80G(5), after affording due opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes. 10. This Order pronounced in Open Court on 11/08/2025
Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 11/08/2025 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 गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,