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Facts
The assessee, a public charitable trust, initially filed applications for registration under Section 12AB and approval under Section 80G using incorrect clauses. Upon realizing the error, fresh applications were filed under the correct clauses within an extended period. The CIT (Exemption) rejected these fresh applications as non-maintainable.
Held
The Tribunal held that the CIT's rejection of the fresh applications as non-maintainable was unsustainable. The Tribunal found that the assessee's second set of applications were bona fide curative filings intended to rectify a procedural defect and should have been examined on merits.
Key Issues
Whether the CIT (Exemption) was justified in rejecting the assessee's fresh applications for registration and approval as non-maintainable, or if they should have been considered on merits.
Sections Cited
12A(1)(ac)(iii), 12AB(1)(b)(ii), 80G(5)(iii), 12A, 80G
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: S/SHRI SANJAY GARG & MAKARAND V.MAHADEOKAR
PER MAKARAND V.MAHADEOKAR, AM: These two appeals filed by the assessee are directed against two separate orders dated 06.12.2024 passed by the CIT (Exemption), Ahmedabad, rejecting the applications filed by the assessee under section 12A(1)(ac)(iii) read with section 12AB(1)(b)(ii) and under section 80G(5)(iii) of the Income-tax Act, 1961 [hereinafter referred to as “the Act”], respectively.
Common Facts and Background
The assessee is a public charitable trust registered with the office of the Charity Commissioner, Gujarat, with effect from 04.12.2018. The trust is engaged in charitable activities in accordance with the objects set out in its trust deed. The assessee was granted provisional registration under section 12A(1)(ac)(vi) and provisional approval under section 80G(5)(iv) vide Form 10AC dated 07.04.2022, effective from A.Y. 2022-23 to A.Y. 2024-25. In compliance with the procedure for renewal, the assessee initially filed online applications in Form 10AB dated 21.03.2024, under section 12A(1)(ac)(vi) for registration under section 12AB, and clause (B) of proviso to section 80G(5)(iv) for 80G approval. However, it was later realised that the applications were made under incorrect clauses, i.e., for “re- approval” instead of “renewal”. Accordingly, the assessee filed fresh applications in Form 10AB on 03.06.2024 under the correct sub-clauses, namely, section 12A(1)(ac)(iii) for 12AB registration and clause (iii) of the first proviso to section 80G(5) for approval under section 80G. However, the CIT(Exemption), Ahmedabad, vide two separate orders both dated 06.12.2024, rejected the fresh applications treating them as non- maintainable, on the ground that earlier applications had already been rejected and that such rejection was not covered under paragraph 4.1 of the aforesaid CBDT Circular.
Aggrieved by the order of CIT(Exemption), Ahmedabad, the assessee is in appeals before us raising following grounds of appeal: In 1. The order passed under Section 12AB(1)(b)(ii) of the Act is bad in law.
2. The learned CIT (Exemption) has erred in law as well as on facts in rejecting the application for registration u/s 12A(1)(ac)(iii) by considering it as non-maintainable. In ITA No. 279/AHD/2025:
1. 1. The order passed under clause (ii)(b)(B) of second proviso to section 80G(5) of the Act is bad in law.
2. The learned CIT (Exemption) has erred in law as well as on facts in rejecting the application for registration u/s 80G(5) under clause (iii) of its first proviso by considering it as non- maintainable.
5. During the course of hearing, the Authorised Representative (AR) reiterated that the earlier applications were mistakenly filed under incorrect sub-clauses and the fresh applications were made under the correct clauses. It was further submitted that the CIT(Exemption) has misread the nature of the second application and erroneously treated it as appeal against the earlier rejected one. It was submitted that the CIT(E) ought to have examined the application on merits and granted registration if the conditions were satisfied, rather than rejecting it on technical grounds.
The learned Departmental Representative (DR), on being confronted with the facts, did not object to the proposal of setting aside the orders of the CIT(Exemption) and restoring the matter for decision on merits.
We have carefully considered the rival contentions and perused the materials available on record. The controversy in both the appeals revolves around the rejection of the assessee’s applications dated 03.06.2024 filed under the correct statutory provisions, which were treated by the CIT(Exemption) as non- maintainable, without adjudication on merits. It is a matter of record that the assessee initially filed online applications for registration under section 12A and for approval under section 80G on 21.03.2024, under incorrect clauses. This fact is not in dispute. Upon rejections and recognising that the earlier applications dated 21.03.2024 were filed under incorrect statutory clauses, the assessee filed corrected applications on 03.06.2024 under the appropriate provisions, namely:
• Section 12A(1)(ac)(iii) read with section 12AB(1)(b)(ii), and • Clause (iii) of the first proviso to section 80G(5) of the Act.
These applications were intended to rectify the procedural defect in the original filings and were submitted to ensure proper compliance with the statutory framework. They were not in the nature of appeals or representations against the rejection orders but were bona fide curative filings, made within the permissible time frame, to enable adjudication under the correct legal provisions.
The approach adopted by the CIT(Exemption) in treating the said applications as non-maintainable on the basis that the earlier applications were rejected, is not tenable in the facts and circumstances of the present case. The assessee had not filed a revision or appeal against the earlier orders. Instead, the second applications were made suo motu under the correct provisions within the prescribed extended window allowed for filing as specified in the CBDT Circular No. 07/2024 dated 25.04.2024. In such a situation, it was incumbent upon the CIT(Exemption) to treat the applications as fresh and standalone, and to examine the same on merits in accordance with law. The principle of fairness and natural justice required the authority to consider the substance of the matter rather than declining jurisdiction on procedural grounds. Furthermore, we find merit in the submission of the assessee that since the second applications were filed under the correct provisions and were within the extended compliance period stipulated by the CBDT, they ought to have been examined as if filed within time. The procedural context and the corrective conduct of the assessee establish its bona fides and entitle it to a fair adjudication on merits. In our considered opinion, the CIT(Exemption) failed to appreciate the distinction between a defective application and a curative application and improperly treated the second application as non-maintainable. The error in quoting a wrong sub-clause initially was procedural in nature, and the subsequent filing under correct provisions rectified the same. There was no bar in law or under the CBDT Circular for the assessee to file such fresh applications.
In view of the foregoing discussion, we hold that the orders dated 06.12.2024 passed by the CIT(Exemption), Ahmedabad, rejecting the assessee’s applications under section 12A(1)(ac)(iii) and clause (iii) of the first proviso to section 80G(5) of the Income- tax Act, 1961, as non-maintainable, are legally unsustainable and deserve to be set aside. The assessee had originally filed applications on 21.03.2024 under incorrect statutory clauses. Upon realising this, the assessee filed corrective applications on 03.06.2024 under the correct provisions, within the extended compliance period notified by CBDT. These subsequent applications were filed to rectify a procedural defect and were not in the nature of repetitive or infructuous filings. The CIT(Exemption), in our considered view, ought to have appreciated the rectificatory nature of the second set of applications and decided on merits.
Accordingly, the impugned orders passed by the CIT(Exemption), Ahmedabad in both appeals are hereby set aside, and the matters are restored to his file with following directions: i. The CIT(Exemption) shall treat the assessee’s applications dated 03.06.2024 in Form No. 10AB under section 12A(1)(ac)(iii) and section 80G(5)(iii) as valid, curative, and maintainable, and proceed to dispose of them on merits in accordance with law.
ii. The said applications shall be treated as having been filed within the period prescribed under the Act, taking into account the extended deadline allowed vide CBDT Circular No. 07/2024 dated 25.04.2024. iii. The CIT(Exemption) shall also restore the provisional registration and approval granted earlier under section 12A and section 80G, and treat the earlier orders dated 02.09.2024 (u/s 12A) and 03.09.2024 (u/s 80G) as non- operative, thereby enabling the consideration of the fresh applications on merits as if no cancellation had taken place.
The assessee is directed to fully cooperate in the proceedings before the CIT(Exemption) and to furnish all requisite information and documents as may be required to facilitate timely adjudication.
Both appeals filed by the assessee are allowed for statistical purposes.
Order pronounced in the Court on 25th June, 2025 at Ahmedabad.