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Facts
The assessee trust applied for re-registration under Section 12AB of the Income Tax Act. Due to a technical error in filling the section code in Form 10AB, the CIT(E) rejected the application without providing an opportunity to rectify the mistake.
Held
The Tribunal held that the rejection of the application was a violation of natural justice as the assessee was not given an opportunity to correct the technical error. The Tribunal emphasized that the substance of the application is more important than minor form errors.
Key Issues
Whether the CIT(E) was justified in rejecting the registration application due to a technical error without providing an opportunity to rectify it, thereby violating principles of natural justice.
Sections Cited
253, 12AB, 12A, 10(23C)
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT & SHRI PARESH M JOSHI
is aggrieved by the order bearing No.ITBA/EXM/F/EXM45/ 2024-25/1068282596(1) dated 03.09.2024 passed by CIT (E) which has rejected the request for registration under the Page 1 of 8 hereinafter referred to as the “impugned order”.
FACTUAL MATRIX 2.1 That the assessee is a Trust registered u/s 12A of the Act.
2.2 That in pursuance to the amendment in the Finance Act, 2020 all existing charitable or religious trusts or institutions registered u/s 12A or 12AA of the Act were required to apply for re-registration under the newly substituted Section 12AB in Form 10A within due date (subsequently extended). The designated authority would grant registration u/s 12AB or 10(23C) for a period of 5 years.
2.3 That pursuant to the amendment ,the assessee trust filed Form 10A on 14.12.2021 along with all supporting documents including registration certificate u/s 12A obtained on 12.06.2001. However due to wrong filling of section code i.e. 02-Item(A) of Sub clause (vi) of Clause (ac) of Sub Section (1) of Section 12A in Form 10A instead of correct section code 01-sub clause(1) of clause(ac) of Sub section(1) of Section 12A.
2.4 That the assessee trust initially got provisional registration for three years i.e. Assessment Year 2022-23 to 2024-25 in Page 2 of 8 existing trusts/institution registered u/s 12A & 12AA of the Act is of five years.
2.5 That the assessee trust after getting the provisional registration filed Form 10AB on 15.03.2024 for final/regular registration as per the amended provision of the Act.
2.6 That the Ld. CIT(Exemption), Bhopal issued a notice dated 02.08.2024 whereby the assessee trust was asked to provide various informations/documents which was duly complied by the assessee trust vide letter dated 16.08.2024.
That however in the letter/notice (supra) the Ld. CIT(E), Bhopal however had not pointed out that the application for registration in Form 10AB is filed under wrong sub-clause i.e. filed up section code 01-sub clause(ii) of clause(ac) of Sub Section (1) of Section 12A instead of correct code 01, sub clause (I) of Section 12A(1)(ac) of the Act and thereby did not allow any opportunity whatsoever to correct the technical error which was committed by the assessee trust and rejected the application for registration as and by way of “impugned order”.
Page 3 of 8 as and by way of the “impugned order” the assessee has filed the present appeal in Form No.36 and has raised the following grounds of appeal against the “impugned order” which grounds are stated as below:-
S.No. Particulars Tax Effect
1 That impugned order passed by the Ld. CIT (Exemption) is bad in law, without jurisdiction, and without allowing proper and reasonable opportunity to make correction in the application form for re-registration. 2.1 That on the facts and in the circumstances of case and in law, the Ld. CIT (Exemption) erred in rejecting the application for re-registration without providing reasonable opportunity to correct technical mistake of section code in form 10AB filed for re-registration of Trust. 2.2 That on the facts and in the circumstances of case and in law, the Ld. CIT (Exemption) failed to appreciate the facts that the issue in question was highly technical, thus the CBDT also appreciated the genuine hardship of the institutions/ Trust and allowed opportunity to submit fresh application by filing correct section code, but the Ld. CIT (Exemption) has not provided such opportunity to the Trust.
Record of Hearing 3.1 The hearing in the present appeal took place before this Tribunal on 28.04.2025 when the Ld. AR for and on behalf of the assessee appeared before us and interalia submitted that the “impugned order” is bad in law, illegal and not proper. It is Page 4 of 8 deserves to be set aside. It was emphatically contended that while it is true and fact that the assessee claimed final registration of Trust under “Section code-01-Sub clause(ii) of clause (ac) of sub-section(1) of Section 12A in Form No.10AB dated 15.03.2024” which Ld. CIT(E) has rightly held to be in- applicable in the “impugned order” but the Ld. CIT(E) ought to have given assessee trust at least an opportunity to rectify such a mistake. Admittedly no such opportunity was given to the assessee trust to correct such a mistake, consequently the “impugned order” came to be passed. The Ld. AR contended that Ld. CIT (E) ought not to have adopted such a “highly technical mistake” as gross error vitiating the registration process, as the assessee trust is very old trust originally incorporated in year 1921 on 9th June ( page 13 of paper book).
It was also contended that the Ld. CIT (E) had in fact issued a notice dated 02.08.2024 which was duly complied by the assessee trust vide their reply dated 16.08.2024 and that the same was accepted by the Ld. CIT (E) without finding any deficiency/error. The Ld. CIT (E) therefore ought to have given the Page 5 of 8 was not given. Such error or mistake was not even pin pointed in notice dated 02.08.2024, which was issued for making compliance only. Per contra Ld. DR for an on behalf of the Revenue interalia stated very fairly that Ld. CIT (E) ought to have given an opportunity to the assessee trust to rectify such error or mistake which perse appears to be a bonafide and genuine one.
Under these peculiar facts and circumstances of the case it would be “just and fair” that the “impugned order” be set aside and remanded back to the file of CIT (E).
Observations,findings & conclusions.
4.1 We now have to decide the legality, validity and the proprietary of the “Impugned Order” basis records of the case and rival contentions canvassed before us.
4.2 We have carefully perused the records of the case.
4.3 We basis records of the case and after hearing and upon examining the rival contentions are of the considered opinion that “Impugned order” is in violation of the principles of natural
Page 6 of 8 assessee trust to rectify the mistake which opportunity was not given. We also hold that it is substance which is of importance and not the Form or clauses mentioned therein. Mistake/error is not that serious enough which should result in rejection of an application for final registration which was made bonafidely.
There is no finding in the “impugned order” that it was made willfully and/or deliberately with intention to make a wrongful gain. Under these facts and circumstances we set aside the “impugned order” back to the file of CIT (E) with a direction to reexamine the case for final registration afresh and thereafter pass a fresh order on denovo basis. We direct the assessee to rectify the mistake which has occurred and quote correct provision of law as soon as possible before Ld. CIT (E) take up the case on denovo basis in relevant form. We direct CIT (E) to pass a detailed order on merits, basis information and documents provided by the assessee trust for the purpose of final registration.
Order 5.1 The impugned order is set aside as and by way of remand back to the file of Ld. CIT(E) on denovo basis.
5.2 Appeal of the assessee is allowed for statistical purpose.
Order pronounced in open court on 05.05.2025.