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Facts
The assessee, a charitable trust, filed appeals against the denial of approval under Section 12A(1)(ac)(vi)(B) and rejection of approval under Section 80G(5). The delay in filing the appeals was condoned due to the assessee's consultant's hospitalization.
Held
The Tribunal set aside the matter to the file of the CIT(E) with a direction to examine the issue of whether the assessee could apply for final registration under a different sub-clause than the one under which provisional registration was granted. The assessee was also granted an opportunity to rectify the application or make a fresh one.
Key Issues
Whether the CIT(E) rightly rejected the applications for registration under Section 12A and approval under Section 80G due to an incorrect section code mentioned in the application. Whether the assessee should be allowed an opportunity to rectify the mistake.
Sections Cited
12A(1)(ac)(vi)(B), 80G(5), 12A, 11, 12AB(1)(b), 12A(1)(ac)(vi)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: Shri TR Senthil Kumar & Shri Narendra Prasad Sinha
Assessee by: Shri Kunal Rathod, A.R. Revenue by: Shri Alpesh Parmar, CIT-D.R. Date of hearing : 09-07-2025 Date of pronouncement : 10-07-2025 आदेश/ORDER PER BENCH: These two appeals are filed by the assessee against the denial of approval u/s. 12A(1)(ac)(vi)(B) of the Income Tax, 1961 [in short “the Act”] and rejection of approval u/s 80G(5) of the Act vide separate orders dated 02/12/2024 and 03/12/2024 respectively, passed by the Commissioner of Income Tax (Exemption), Ahmedabad [in short the CIT(E)].
There was delay of 28 days in filing the two appeals. The assessee had filed a condonation application along with an affidavit explaining the reason for delay. It is stated that the consultant of the -648/Ahd/2025 A.Y. NA House of Humanity Charitable Trust vs. CIT (Exemption) assessee was hospitalized for medical treatment which led to delay in filing this appeal. A medical certificate in this respect has also been filed. Considering the explanation of the assessee, the delay in filing the appeals is condoned.
The following grounds have been taken in the two appeals: - “On the facts in the circumstances of your appellant case and in law, the rejection of application u/s 12(A) by CIT(EXEMPTION) АНEMDABAD is bad in law, therefore we have objections against your observations for violating the existing provision:- The existing provision of section 12AB(1)(b) states that the assessing satisfying himself about genuineness of activities of trust and the actual activities conducted are material for the purpose of achieving its objects. "Genuineness of activities" refers to the Income Tax Department's (ITD) requirement to ensure that the trust's or institution's activities are truly charitable and not merely a facade for tax evasion. There is no intention of trust to evade the tax. The objection shown in our trust deed are purely of CHARITABLE NATURE ONLY. Specifically the objects are:-
1. 1. To providing food and shelter to the poor and needy people.
2. Improving standard of living of women and children in the society.
3. To carry out the necessary activities to educate the poor children and providing better educational facilities.
4. To carry out all necessary social welfare activities.
5. To provide medical facilities to poor and needy people. Further, the actual activities conducted by trust are purely for achieving the charitable purposes. On verification of the audited statements, it seems that the actual expenses incurred are for providing food to poor and needy people (tiffin’s to patients in SSG hospitals), providing sanitary napkins and clothes to children and women, distributing notebooks and stationary kit to orphan & needy children, Giving other items like firecrackers on festivals to Orphans, needy & poor children to fill their lift with happiness. From the above stated para, it clearly states that trust has no intention of tax evasion. Therefore, we request you to consider our application for registration u/s 12A. Your appellant graves leave to add to amend or to modify the ground in above raised.”
On the facts in the circumstances of your appellant case and in law, the rejection of application u/s 80G by CIT (EXEMPTION) AHEMDABAD is bad in law. We have -648/Ahd/2025 A.Y. NA House of Humanity Charitable Trust vs. CIT (Exemption) objections against the rejection u/s 80G. We have filed an appeal for rejection of registration u/s 12(A). The copy is enclosed for your reference and record. As soon as we will receive the approval for section 12(A), we will inform you immediately. For your information we have to state that our trust is running for charitable purpose only and has no intension to evade the tax. The actual activities conducted by trust are purely for achieving the charitable purposes only. On verification of the audited statements, it seems that the actual expenses incurred are for providing food to poor and needy people (tiffin's to patients in SSG hospitals), providing sanitary napkins and clothes to children and women, distributing notebooks and stationary kit to orphan & needy children, Giving other items like firecrackers on festivals to Orphans, needy & poor children to fill their life with happiness. Therefore, we request you to consider our application for registration u/s 80G on approval of registration u/s 12(A). Your appellant graves leave to add to amend or to modify the ground in above raised.
Shri Kunal Rathod, the ld. counsel for the assessee submitted that the ld. CIT(E) had rejected the application filed by the assessee for the reason that the assessee Trust was not found eligible for registration under section 12A(1)(ac)(vi)-ITEM(B) of the Act. The Ld. AR explained that the trust was registered on 27th August, 2021 and a provisional approval u/s 12A of the Act was received on 10th March, 2022 for the period AY 2022-23 to AY 2024-25. Accordingly, return of income was filed claiming exemption u/s 11 of the Act. On expiry of the provisional certificate, the Trust had made fresh application for registration on 29th June, 2024. The Ld. AR submitted that while filing the application in Form 10AB, there was an inadvertent error as incorrect section code - item (B) of sub clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act was selected in place of the correct code, which was sub clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. The application for approval u/s 80G(5) of the Act was also rejected by the Ld. CIT(E ) for the reason that assesse was not having a valid registration u/s 12A of the Act. The Ld. AR submitted that the assessee is engaged in charitable activities and it may be allowed an opportunity to rectify the mistake in the -648/Ahd/2025 A.Y. NA House of Humanity Charitable Trust vs. CIT (Exemption) application and the matter may be set aside to the file of Ld. CIT(E) with a direction to re-adjudicate the issues.
Per contra, Shri Alpesh Parmar, the ld. CIT-D.R. submitted that the Ld. CIT(E) had rightly rejected the applications as filed by the assessee.
We have considered the submission of the assessee and perused the materials placed before us. The Ld. CIT(E) had rightly rejected the application filed by the assessee Trust u/s 12A(1)(ac)(vi) of the Act as non-maintainable for the reason that the conditions for such approval was not found satisfied. In fact, the Ld. CIT(E) had made certain queries in the course of the proceeding before him, which was complied by the assessee. However, the fact that there was a mistake in the application of the assessee was not brought to the notice of the Ld. CIT(E). The assessee has now submitted that there was a mistake in the application in quoting the section code under which the approval was sought. According to the assessee, the section code “Item (B) of sub-section (vi) of clause (ac) of sub-section (1) of section 12A” was wrongly quoted in the application in place of correct section code “sub-section (iii) of clause (ac) of sub-section (1) of section 12A” of the Act. A copy of order dated 03.10.2022 of the provisional registration allowed to the assessee has been brought on record. It is found there from that the assessee was allowed provisional registration under sub-section (vi) of clause (ac) of sub-section (1) of section 12A for the AY 2022-23 to AY 2024-25. When the provisional registration was allowed under sub-section (vi) of clause (ac) of sub-section (1) of section 12A of the Act, the assessee had rightly applied for regular registration under this provision only. The mistake on the part of the assessee, if any, had occurred in the 4 -648/Ahd/2025 A.Y. NA House of Humanity Charitable Trust vs. CIT (Exemption) application for provisional registration and not in the application for regular registration.
The contention of the assessee is that there was a mistake in wrong selection of section code in the application. We don’t find any such mistake in the regular registration application. Rather, the mistake was made at the time of filing the application for provisional registration. The moot issue to be considered here is, if the provisional registration was allowed under one sub-clause, whether the assessee could have made application for final registration under different sub-clause. For this purpose, we deem it proper to set aside the matter to the file of Ld. CIT(E) with a direction to first examine this issue and thereafter allow an opportunity to the assessee to rectify the application, if permissible as per the provisions of law. The assessee may also be allowed a proper opportunity of being heard in the matter. The assessee will also be free to make a fresh application under the correct provisions of the Act, if it so desires. The matter regarding approval u/s 80G(5) of the Act will be decided after first deciding the matter of registration u/s 12A of the Act.
In the result, both the appeals filed by the assessee are allowed for statistical purposes.