Loading judgment…
Facts
The assessee, a charitable trust, applied for approval under Section 80G(5)(iv)(B) of the Income Tax Act. The CIT(Exemption) rejected the application as non-maintainable because the trust had claimed exemption under Section 11 in previous years, which made it ineligible under the chosen clause. The assessee admitted to a bona fide mistake in selecting the sub-clause.
Held
The Tribunal acknowledged the assessee's submission of a bona fide mistake in selecting the sub-clause for the application. Following a precedent, the Tribunal set aside the CIT's order and directed the CIT to consider the application under the correct provision (Section 80G(5)(ii)) and grant approval if otherwise eligible.
Key Issues
Whether the rejection of an application for approval under Section 80G(5)(iv)(B) was justified when the assessee claimed a bona fide error in selecting the sub-clause, and whether the matter should be remanded for consideration under the correct sub-clause.
Sections Cited
80G(5)(iv), 10(23C), 11, 12, 80G(5)(iv)(B), 80G(5)(ii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: SHRI SANJAY GARG & SHRI NARENDRA PRASAD SINHA
This appeal is filed by the assessee against the order dated 17.09.2024 passed by the Commissioner of Income Tax (Exemption) Ahmedabad, (in short ‘the CIT(Exemption)’), rejecting the application for approval u/s. 80G(5)(iv) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
There was a delay of 79 days in filing of this appeal. The assessee has filed an affidavit explaining the reason of delay. It has been submitted that the assessee and its trustees were not [M.P. Chaudhary Charitable Trust vs. CIT(E)] - 2 – conversant with Income-tax matters and had never faced any Income-tax litigation in the past. The assessee was unable to operate or login to the Income-tax portal. In the month of January, 2025, the assessee had come to know about rejection of registration u/s 12A/approval u/s 80G(5)(iv) of another trust through some other trustees of similar trust. On getting this information the matter was verified about pending approval under section 80G(5)(iv) the Act of the assessee and it was learnt that the said approval was already rejected. Thereafter, the matter was taken up with an advocate and on his advice the present appeal was filed and, in the process, there was delay of 79 days. The assessee has submitted that the delay in filing of the present appeal was not intentional and that there was no mala-fide intention on the part of the assessee. Considering the explanation of the assessee, the delay in filing the present appeal is condoned.
The brief facts of the case are that the assessee is a registered charitable trust and had made an application for approval u/s 80G(5)(iv)(B) of the Act by filing Form No. 10AB electronically. The ld. CIT(Exemption) observed that in order to avail the benefit of section 80G(5)(iv)(B) of the Act, it was necessary that the activities of the institution or funds shall be commenced and no income or part thereof has been excluded from the total income on account of applicability of section 10(23C) or section 11 or section 12 of the Act, for any previous year ending on or before the date of such application, at any time after the commencement of the activities of the trust. On verification of the data available on CPC portal, the ld. CIT(Exemption) found that the assessee had claimed exemption under section 11 of the Act in its returns for the A.Ys. 2021-22, 2022-23 and 2023- [M.P. Chaudhary Charitable Trust vs. CIT(E)] - 3 –
In view of this fact, the ld. CIT(Exemption) found that the assessee was not eligible for approval under section 80G(5)(iv)(B) of the Act. Therefore, the application of the assessee trust was rejected as non-maintainable.
Aggrieved with the order of the ld. CIT(Exemption) the assessee has filed the present appeal. The following grounds have been taken in this 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.
2. 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.
3. 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, altar, amend any ground of appeal.
5. Sri Mehul K Patel, ld. AR of the assessee submitted that ld. CIT(Exemption) was not correct in rejecting the application for approval under section 80G(5)(iv)(B) of the Act as non-maintainable. He submitted that the assessee, while submitting the application, had made a bona fide error in selecting the sub-clause (iv) instead of sub-clause (ii) of the proviso to section 80G(5) of the Act. He, therefore, requested that the matter may be set aside to the file of ld. CIT(Exemption) with a direction to consider the application of the assessee under the correct provision of section 80G(5)(ii) of the Act and decide the same on merits. The ld. AR relied on the decision of the Mumbai Bench of the Tribunal in the case of Rotary Charity Trust vs CIT(E) (2024) in dated 09.01.2025 in this regard and prayed for a similar direction.
[M.P. Chaudhary Charitable Trust vs. CIT(E)] - 4 –
Sh. R P Rastogi, the ld. CIT-DR on the other hand submitted that the ld. CIT(E) had 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). The ld. DR further submitted that the matter can be remitted back to the CIT(E) to consider the application afresh based on the claim of the assessee that wrong section had been inadvertently mentioned in the Form 10AB.
We have heard the parties and perused the material on record. As admitted by the assessee there was a bona fide mistake in the application filed by the assessee in Form 10AB. According to the assessee, the clause (iv) of first proviso to sub-section (5) of section 80G of the Act was wrongly selected in place of correct clause (ii) of first proviso to sub-section (5) of section 80G of the Act. Though the ld. CIT(E) had also allowed an opportunity to the assessee, this mistake was not clarified before him. Apparently, the clause (iv) of first proviso to sub-section (5) of section 80G of the Act was not applicable in the case of the assessee and there is merit in assessee’s submission that there was a bona fide mistake in the application in Form 10AB. Considering the fact that the assessee is a trust engaged in charitable activities and respectfully following the decision of the Mumbai Bench in the case of Rotary Charity Trust (supra), we deem it proper to set aside the matter to the file of ld. CIT(E), with a direction to consider the application of the assessee as under Clause (ii) to first proviso to section 80G(5) of the Act, and thereafter grant approval accordingly, if assessee is otherwise found eligible.
[M.P. Chaudhary Charitable Trust vs. CIT(E)] - 5 –
In the result, the appeal of the assessee is allowed for statistical purpose.
This Order pronounced on 21/05/2025
Sd/- Sd/- (SANJAY GARG) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 21/05/2025 आदेश की �ितिलिप अ�ेिषत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. ��थ� / The Respondent. 2. संबंिधत आयकर आयु� / Concerned CIT 3. 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,