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Facts
The assessee, Sabudh Foundation, applied for Section 12A registration and Section 80G(5) approval. Provisional registrations were granted, but the regular Section 12A registration was granted under an incorrect sub-clause (Sec. 12A(1)(ac)(i) instead of (iii)) due to an unintentional manual error in Form 10A. The CIT(E) suo-moto cancelled the regular Section 12A registration and subsequently rejected the Section 80G(5) application, leading to these appeals.
Held
The Tribunal held that the suo-moto cancellation of the Section 12A registration was unjustified. It observed that the assessee had acted in good faith and a mere technical error in selecting the incorrect sub-clause should not deprive legitimate claims, especially without an opportunity to rectify. The impugned orders were set aside, and the applications were restored to the CIT(E) for fresh consideration after providing an opportunity of hearing to the assessee.
Key Issues
Whether the suo-moto cancellation of Section 12A registration and subsequent rejection of Section 80G(5) approval were justified, given a technical error in selecting the incorrect sub-clause of Section 12A(1)(ac) during application and the lack of opportunity to rectify it.
Sections Cited
80G(5), 80G(5)(iii), 12(1)(ac)(vi), 12A(1)(ac)(i), 12A(1)(ac)(iii), 12AA
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, CHANDIGARH
Before: HON’BLE SHRI LALIET KUMAR, JM & HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM
आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aggrieved by rejection of twin applications seeking registration / approval u/s 80G(5) vide impugned orders dated 12-11-2024 & 22-11- 2024 of Ld. Commissioner of Income Tax (Exemption), Chandigarh, [CIT(E)], the assessee is in further appeal before us. 2. First, we take up Form No.10AC and sought registration u/s 80G(5)(iii). It transpired that the assessee was granted provisional registration by CPC u/s 12(1)(ac)(vi) on 27-05-2021 for three years (AYs 2021-22 to AY 2023- 24) and regular registration u/s 12A(1)(ac)(i) on 24-11-2021 for 5 years (AYs 2022-23 to 2026-27). As per Act, regular registration could be granted only to those applicants who already had regular registration u/s 12AA prior to 01-04-2021. However, the assessee was not having such registration. In the absence any reply forthcoming from the assessee, the regular registration granted by CPC on 24-11-2021 was suo-moto cancelled by Ld. CIT(E) vide order dated 12-11-2024. Consequently, the application seeking registration u/s 80G(5) was rejected vide separate order dated 22-11-2024 which is subject matter of ITA No.45/Chandi/2025. Aggrieved, the assessee is in further appeal before us.
From case records, it emerges that the assessee applied for 12A registration under old regime on 26-03-2021 which was granted by CPC on 27-05-2021 for three years. Subsequently, the assessee applied for regular registration on 17-11-2021 within stipulated period of 6 months which was also granted by CPC on 24-11-2021 for 5 years. The assessee applied for 80G provisional registration on 16-11-2021 which was also granted on 23-11-2021 from 23-11-2021 to AY 2024- 25. The assessee then applied for regular registration u/s 80G on 14- 05-2024 which has been rejected by impugned order dated 22-11-2024 primarily due to the fact that the regular registration granted u/s 12A(1)(ac)(i) on 24-11-2021 for 5 years was held to be irregular and consequently, cancelled by registration authority.
The prime argument of Ld. AR is that suo-moto cancellation is bad-in-law. The Ld. AR urged that due to unintentional manual error, while filing Form 10A for getting final registration u/s 12A, inadvertently, Sec.12A(1)(ac)(i) was selected instead of correct Sec.12A(1)(ac)(iii). The said error was not pointed out by registration authority and the assessee was accorded approval on 24-11-2021 for 5 years. No chance was granted to the assessee to rectify the same which is in violation of principles of natural justice. The Ld. AR also pointed out the final registration was granted by Pr. CIT/ CIT and not by CPC. The Ld. AR stated that the assessee acted in good faith and relied on the valid approvals as granted by statutory authority.
From the above stated facts, it could be culled out that the assessee has been granted provisional registration as well as regular registration u/s 12A by appropriate authority. The assessee has also been granted provisional approval u/s 80G. No violation of any the registration condition has been noted. In our considered opinion, mere technical errors could not deprive the assessee of its legitimate claims. The assessee has acted in good faith and relied on valid successive approvals as granted by the appropriate authority from time to time. The suo-moto cancellation of registration, therefore, could not be held to be justified. On these facts, we set aside the impugned orders and restore the applications back to the file of Ld. CIT(E) for fresh consideration after affording opportunity of hearing to the assessee. Any technical mistake / error that have occurred due to new regime coming into force w.e.f. 01-04-2021 may reasonably be overlooked. The assessee is directed to plead and prove its case forthwith.
Both the appeals stand allowed for statistical purposes. Order pronounced on 18-08-2025.