Loading judgment…
Facts
The assessee, Wakeup Foundation, applied for registration under Section 12AB and 80G of the Income Tax Act. The applications were rejected by the CIT(E) due to alleged incorrect clauses and section codes used by the previous tax consultant. The assessee contended that these were inadvertent clerical errors and sought correction.
Held
The Tribunal held that the delay in filing the appeals was due to sufficient cause and condoned it. The Tribunal further found that the rejection of applications by the CIT(E) was based on technical grounds without proper opportunity for the assessee to rectify the errors.
Key Issues
Whether the rejection of applications for registration under Section 12AB and 80G based on technical defects, without providing an opportunity to rectify, is justified? Whether the delay in filing appeals due to a change in counsel and inadvertent errors by the previous consultant can be condoned?
Sections Cited
12AB, 80G, 253(3), 12A(1)(ac), 80G(5)
AI-generated summary — verify with the full judgment below
Before: SHRI PARESH M. JOSHI & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: These two appeals emanate from the common order dated 03.09.2024 passed by the learned Commissioner of Income-tax (Exemption), Bhopal [in short, ‘CIT(E)’], wherein CIT(E) rejected assessee’s applications for registration u/s 12AB of the Act were also rejected.
The grounds of appeal raised by the assessee in ITA No.898/Ind/2024 are as follows:
“1. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Exemption), Bhopal [hereinafter referred to as 'the Ld. CIT(E), Bhopal'] has erred in denying registration u/s. 12AB of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') without appreciating that the appellant society is a Charitable Foundation genuinely engaged in charitable activities. Thus, the Order of Rejection u/s. 12AB of the Act dated 03.09.2024 is liable to be set aside.
On the facts and in the circumstances of the case and in law, the Ld. CIT(E), Bhopal has erred in rejecting the application for registration u/s. 12AB of the Act merely on technical grounds without appreciating that benefit of the provisions of Section 12AB of the Act ought not to be denied merely on technical grounds due to clerical/ inadvertent mistakes, when the appellant society is duly engaged in genuine charitable activities. Thus, the Order of Rejection u/s. 12AB of the Act dated 03.09.2024 is liable to be set aside.
On the facts and in the circumstances of the case and in law, the Ld. CIT(E), Bhopal has erred in rejecting the application for registration u/s. 12AB of the Act without providing proper opportunity of being heard and without issuance of any Show Cause Notice for rejection of application which is against the provisions of the Act and principles of natural justice. Thus, the Order dated 03.09.2024 is liable to be set aside.
The appellant society craves leave to add, alter, amend or withdraw any of the grounds of appeal.”
The grounds of appeal raised by the assessee in ITA No.895/Ind/2024 are as follows:
“1. On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Exemption), Bhopal [hereinafter referred to as 'the Ld. CIT(E), Bhopal'] has erred in denying registration u/s. 80G of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') without appreciating that the appellant society is a Charitable Foundation genuinely engaged in charitable activities. Thus, the Order of Rejection u/s. 80G of the Act dated 03.09.2024 is liable to be set aside.
On the facts and in the circumstances of the case and in law, the Ld. CIT(E), Bhopal has erred in rejecting the application for registration u/s. 80G of the Act merely on technical grounds without appreciating that benefit of the provisions of Section 80G of the Act ought not to be denied merely on technical grounds due to clerical/ inadvertent mistakes, when the appellant society is duly engaged in genuine charitable activities. Thus, the Order of Rejection u/s. 12AB of the Act dated 03.09.2024 is liable to be set aside.
On the facts and in the circumstances of the case and in law, the Ld. CIT(E), Bhopal has erred in rejecting the application for registration u/s. 80G of the Act without providing proper opportunity of being heard and without issuance of any Show Cause Notice for rejection of application which is against the provisions of the Act and principles of natural justice. Thus, the Order dated 03.09.2024 is liable to be set aside.
& 898/IND/2024 Wakeup Foundation The appellant society craves leave to add, alter, amend or withdraw any of the grounds of appeal.”
4. Both the appeals filed by the assessee are barred by 46 days. The assessee has filed an affidavit for delays in filing of appeal before this Tribunal. In the affidavit, it has been stated that the appeals against the order were to be filed before the Tribunal within 60 days, i.e., on or before 02.11.2024, but the assessee-society filed both appeals on 18.12.2024. The assessee-society is registered under the Madhya Pradesh Societies Registrikaran Adhiniyam, 1973. The assessee-society had applied for renewal of registration u/s 12AB and 80G of the Act vide Form No.10AB on 29.03.2024 and the same was rejected on 03.09.2024 merely on technical grounds and without any deficiency or without any grounds on merits. The application was inadvertently filed under wrong section by the previous tax consultant and due to clerical/technical errors, the same was rejected. After rejection of the applications on 03.09.2024, the assessee-society had deposited appeal fees challan of Rs.500/- on 18.11.2024 for filling appeal before the Tribunal. Due to change in counsel, both appeals were filed on 18.12.2024 before the Tribunal, hence, delay of 46 days in filing appeal have occurred. The learned Authorized Representative (ld. AR) of the assessee- society submitted that there is no malafide intention to delay in filling both appeals and requested to condone the delay of 46 days in the interest of justice.
On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that assessee-society was negligent during the proceedings before CIT(E). He would, however, have no objection if the delay is condoned.
We have considered the reasons given by the appellant-society and perused with the accompanied documents along with the affidavit. It is seen that due to clerical/technical errors by the tax consultant, these applications were rejected by the CIT(E). Subsequently, the appellant-society had paid the challan fees on 18.11.2024 and appeal was subsequent filed on 18.12.2024 before the Tribunal. We find that the delay in filing these appeals was not deliberate and intentional. We are satisfied that there was sufficient cause for not presenting the appeal within the time allowed u/s 253(3) of the Act. Hence, we condone the delay and admit the appeal for hearing.
The facts of the case are that the assessee “Wakeup Foundation, PAN – AAAW9534A” had applied for registration under the new provisions of section 12AB and 80G of the Act. The CIT(E) was issued two notices on 02.08.2024 and 23.08.2024 and called for various documents to process the application and to verify the object and activities of the assessee-society. In response to the notices, the assessee-society had submitted its reply and required documents. The assessee-society applied registration under clause (ii) of section 12A(1)(ac) and under clause (ii) of section 80G(5) of the Act, which is applicable for assessee who is registered for 5 years under new scheme of section 12AB and 80G(5) of the Act and the period of registration is due to expire. This was not applicable in the instant case. The CIT(E)
concluded that the application of the assessee-society was not filed correctly and hence, the application of the assessee-society was rejected.
The learned Authorized Representative (ld. AR) submitted that the assessee-society is a charitable institution for providing education, healthcare and facilities to economically deprived students and patients. He submitted that the previous tax consultant of appellant-society filed application inadvertently under wrong clause and incorrect section codes.
The counsel was not aware of the exemption provisions and hence entered the wrong clause. Therefore, ld. AR requested that the order of CIT(E) may be set aside in the interests of justice and the CIT(E) may decide the application of the assessee on merit after removal of the defects.
On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue relied on the order of CIT(E). He would, however, have no objection, if the matter is remitted back to the file of the CIT(E) for fresh adjudication.
We have head both the parties and perused the materials available on record. There is no dispute that the assessee had applied for registration under new provisions of section 12AB and 80G of the Act. The CIT(E) issued two notices on 02.08.2024 and 23.08.2024. The assessee filed its reply and furnished required documents. However, the CIT(E) found that the assessee has made the application under incorrect clauses. Therefore, he rejected the application. He has not issued any show cause notice or clarification regarding the mistakes in the applications filed by the appellant. The ld. AR submitted that its earlier tax consultant was not familiar with exemption provisions and he entered the incorrect section codes while filing the application. We find that it was an inadvertent mistake and the assessee was not given any opportunity to explain or cure such defects by the CIT(E).
The assessee has explained the facts and prayed for correction in the application. In our view, the mistake in filing entry was not fatal and could be considered under the appropriate sub-clause or clause of sections 12AB and 80G of the Act. Otherwise, the assessee has provided all the details and information while applying for registration u/s 12AB and 80G of the Act.
Being first appellate authority, the plea of assessee for correction in Form is accepted and the order of CIT(E) is set aside. He is directed to allow the assessee to rectify or amend the relevant clause/ sub-clause of section 12AB and 80G of the Act. Considering the fact that the application of assessee was not considered on merit, we deem it appropriate to direct the CIT(E) to treat the application of assessee on merit and pass the order in accordance with law. Under similar circumstances, the Co-ordinate Benches of ITAT and Hon’ble Orissa High Court in the following cases have set aside the matter to the file of CIT(E) to decide the issue on merit; viz., (i) Rambha Charitable (ii) Shree Swaminarayan Gadi Trust Vadtal (SVG), in & 370/Srt/2024, (iii) Dinshaw Daboo Charity Trust vs. CIT(E), (iv) Mandava Foundation vs. ITO(E) and (v)
Parmeshwari Bai Memorial Trust vs. CIT(E), 161 taxmann.com 311 (Orissa).
Before passing the order, the CIT(E) shall grant reasonable and adequate opportunity of hearing to the assessee. The assessee is also directed to furnish complete details and make all compliances before CIT(E) by not seeking adjournment without any valid reasons. In the result, the grounds of appeal raised by the assessee are allowed for statistical purpose.
In the result, appeals filed by the assessee are allowed for statistical purposes.
Orders are pronounced under provision of Rule 34 of ITAT Rules, 1963 on 11 /06/2025.
Sd/- Sd/- (PARESH M. JOSHI) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore �दनांक/ Date: 11/06/2025 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Indore 6. Guard File
By Order
Assistant Registrar/Sr. PS/PS ITAT, Indore
Date Initial 1. Draft dictated on (dictation sheet is enclosed with main file.) 06.06.2025 } PS 2. Draft placed before author 06.06.2025 PS 3. Draft proposed & placed before the second member
Draft discussed/approved by Second Member.
Approved Draft comes to the Sr.PS/PS
Kept for pronouncement on
File sent to the Bench Clerk
Date on which file goes to the AR 9. Date on which file goes to the Head Clerk. 10. Date of dispatch of Order. 11. Draft dictation sheets are attached PS