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Facts
The assessee, a charitable institution, filed an application in Form 10AB for approval under Section 80G. The application was rejected by the CIT(Exemptions) for selecting an incorrect clause, deeming it non-maintainable. The appeal was filed with a delay of 2 days.
Held
The Tribunal held that the rejection of the application solely on the ground of selecting a wrong clause, without providing an opportunity to rectify, is not sustainable. Following judicial precedents, procedural defects are curable.
Key Issues
Whether rejecting an application for approval under Section 80G due to a procedural error in clause selection, without granting an opportunity to rectify, is legally sustainable.
Sections Cited
80G, 80G(5)(ii), 12AB, 12A(1)(b), 12A(1)(ac)
AI-generated summary — verify with the full judgment below
िनधा"रती की ओर से/Assessee by : Shri Anil Kumar Sood, C.A राज" की ओर से/ Revenue by : Smt. Kusum Bansal, CIT, DR (Virtual Mode) सुनवाई की तारीख/Date of Hearing : 27/05/2025 उदघोषणा की तारीख/Date of Pronouncement : 27/05/2025 आदेश/Order PER LALIET KUMAR, J.M:
This appeal is filed by the assessee against the order dated 13.08.2024 passed by the Ld. CIT (Exemptions), Chandigarh, whereby the assessee's application in Form 10AB filed under section 80G(5)(ii) of the Income Tax Act, 1961 was rejected as not maintainable on the ground that the application was filed under a wrong clause.
At the outset the Registry has pointed out that the present appeal is barred by limitation by 02 days.
After considering the condonation application filed by the assessee in the present appeal, we condone the delay for which sufficient cause is shown, and admit the appeal for adjudication.
The brief facts are that the assessee, a charitable institution registered under section 12AB of the Act, filed an application in Form 10AB on 06.04.2024 seeking approval under section 80G. The application was rejected by the Ld. CIT (Exemptions) on the ground that it was filed under the incorrect clause of the Form and, therefore, was not maintainable. The Ld. CIT (Exemptions) further noted that the application was required to be filed at least six months before the expiry of the earlier approval in accordance with section 80G(5)(ii).
During hearing, the Ld. AR submitted that the application was filed well within time, as the Central Board of Direct Taxes (CBDT) had extended the due date for filing applications for permanent registration under section 12A(1)(b) / section 12A(1)(ac) up to 30th June 2024. It was submitted that the selection of an incorrect clause in the online form was a procedural and curable defect, and the assessee ought to have been provided an opportunity to rectify the same.
On the other hand, the Ld. DR supported the impugned order and submitted that the application was correctly rejected under the law.
We have heard the rival submissions and carefully perused the material on record. We find merit in the contention of the assessee that the mere selection of a wrong clause while filing Form 10AB should not, in itself, result in the outright rejection of the application. We note that the application was filed within the extended timeline prescribed by the CBDT, and there is no allegation that the assessee failed to meet the substantive conditions of the law.
7.1 The Hon’ble Delhi and Bombay High Courts have, in several decisions, held that procedural defects such as selection of an incorrect clause in the prescribed form for approval under section 12A or section 80G are not fatal and are curable. Some of the relevant decisions are: DIT (Exemption) v. Guru Nanak Education Trust [(2014) 361 ITR 22 (Delhi)] – The Hon’ble Delhi High Court held that procedural lapses should not result in denial of approval under section 80G if the substantive conditions are satisfied. The authority must permit rectification. Khar Gymkhana v. DIT (Exemptions) [(2016) 385 ITR 162 (Bom)] – The Bombay High Court held that the rejection of an application under section 80G on technical grounds without affording an opportunity to rectify the defect is unjustified and opposed to principles of natural justice. CIT (Exemptions) v. Shri Vishwayat Gurukul Trust [2023 (Bom HC)] – The Court remanded the matter where the assessee had selected an incorrect clause, holding that such an error was procedural and could be cured. Society for Promotion of Education v. CIT (Exemptions) [2022 (Del HC)] – The Delhi High Court emphasized that procedural errors in online forms for exemption/registration should not be treated as fatal and that the applicant must be given an opportunity to rectify the mistake.
7.2 Respectfully following the above judicial precedents, we consider that rejecting the assessee's application on the sole ground of wrong clause selection, without granting opportunity to cure the defect, is not sustainable in law.
7.3 Accordingly, we set aside the impugned order dated 13.08.2024 passed by the CIT (Exemptions), Chandigarh, and remand the matter back to his file for Lenovo adjudication. The CIT (Exemptions) is directed to examine the application afresh after granting the assessee a reasonable opportunity to be heard and permitting it to rectify the procedural defect, including the selection of the correct clause in Form 10AB.