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Facts
A charitable trust, having provisional registration, applied for permanent registration in Form 10AB but inadvertently cited the wrong sub-section (Section 12A(1)(ac)(iv) instead of 12A(1)(ac)(iii)). The Ld. CIT(E) mechanically rejected the application on this technical ground, despite the assessee admitting the mistake and requesting consideration under the correct provision, and without providing a speaking order or personal hearing.
Held
The Tribunal found that the Ld. CIT(E)'s rejection was based on a technical ground and was a mechanical rejection without considering the merits or the assessee's explanation. Citing prior judgments, the Tribunal held that such a minor technical error should not be fatal. It directed the Ld. CIT(E) to reconsider the application on merits, either treating it under the correct provision or allowing the assessee to amend the form, and to grant a personal hearing.
Key Issues
Whether the Ld. CIT(E) was justified in rejecting an application for permanent registration under Section 12A(1) solely due to the assessee citing an incorrect sub-section, despite the error being technical and the assessee seeking rectification.
Sections Cited
12A, 12AB, 12A(1)(ac)(iii), 12A(1)(ac)(iv), 12A(1)(ac)(vi)
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Income Tax Appellate Tribunal, COCHIN BENCH : COCHIN
Before: SHRI INTURI RAMA RAO & SHRI SOUNDARARAJAN K.
ORDER PER SOUNDARARAJAN K., JUDICIAL MEMBER
This is an appeal filed by the assessee challenging the order of the Ld.CIT(E), Kochi dated 29/05/2024 in which the application filed u/s. 12A(1)(ac)(iv) of the Act in form 10AB was rejected.
The brief facts of the case are that the assessee is a charitable trust and also got the provisional registration in form 10A upto Assessment Year 2025-26. Thereafter, the assessee filed an application in form 10AB on 14/11/2023 for permanent registration and also enclosed the various documents which are required for, under the provisions of the Act. The Ld.CIT(E) after going through the said application had issued a show cause notice informing the assessee trust that they have obtained provisional registration u/s. 12A(1)(ac)(vi) of the Act in form 10AC on 28/02/2023 whereas the present application for registration was filed u/s. 12A(1)(ac)(iv) of the Act instead of filing the application under the correct provision 12A(1)(ac)(iii) of the Act and informed that the present application is filed under the wrong provision. The assessee filed their reply on 06.05.2024 in which they admitted the mistake committed by them and requested the Ld.CIT(E) to treat the said application was filed under the correct provision 12A(1)(ac)(iii) of the Act. The Ld.CIT(E) had mechanically rejected the application on the ground that the application in form 10AB was filed under the wrong provision. As against the said order, the assessee is in appeal before this Tribunal.
At the time of hearing, the Ld.AR submitted that the application was filed in form 10AB electronically and while selecting the appropriate head in dropdown list provided in the portal, some error has been committed by the staff of the trust and prayed that the said error can be rectified based on the reply filed by the assessee to the show cause notice. The Ld.AR further submitted that the Ld.CIT(E) had rejected the application in a single line without considering the reply filed by the assessee and also without considering the fact that the assessee had complied with all the conditions prescribed u/s. 12A for getting the registration. Further relied on the two Tribunal orders of Kolkata and Surat Benches in support of their claim.
The Ld.DR relied on the order of the Ld.CIT(E) and prayed to dismiss the appeal.
We have heard the arguments of both sides and perused the materials available on record.
6. It is not in dispute that the assessee is a charitable trust and got the provisional registration in form 10AC on 28/02/2023 granting the provisional registration upto A.Y. 2025-26. Therefore the department originally considered the application filed by the assessee for provisional registration u/s. 12A(1)(ac)(vi) of the Act and after satisfying themselves, the provisional registration was granted. Thereafter, the assessee trust also complied with the conditions mentioned in the provisional registration and also no violation has been pointed out by the authorities. In such circumstances, the assessee applied for registration in form 10AB. The only mistake pointed out by the Ld.CIT(E) is that the assessee had not chosen the correct provision and therefore he has rejected the application filed in form 10AB. It is also to be noted that the assessee had properly audited their books of accounts and all the financial statements were also furnished before the Ld.CIT(E) on which there is no dispute raised by any of the authorities. But the Ld.CIT(E) had rejected the said application in form 10AB on technical grounds i.e. quoting the wrong provision in form 10AB application and on that score the Ld.CIT(E) had rejected the said application even though the assessee had submitted that the correct provision may be taken up while deciding the application in form 10AB. The Ld.CIT(E) without pointing out any other defects and violations, had rejected the said application on technical ground that too without passing a speaking order.
We have also considered the order of the Kolkata Tribunal relied on by the assessee, reported in 2024 (6) TMI 1050 in the case of People for Animals vs. CIT(E) in which the Kolkata Tribunal had observed as follows: “6. We find that the assessee had intimated ld. CIT (Exemption) about the inadvertent mistake committed at its end and also about the revised Form 10AB filed for the final registration. However, it seemed that ld. CIT (Exemption) failed to take note of the same and failed to provide opportunity to the assessee. We therefore, under the given facts and circumstances of the case, in the interest of justice and being fair to both the parties, restore this issue of final registration to the file of ld. CIT (Exemption) with a direction that the date of application for final registration should be considered as 26.05.2023.
However, the final registration should be granted as per the revised application filed by the assessee incorporating the correct Section code. Needless to mention that proper opportunity of being heard should be provided to the assessee. The assessee is also directed to remain vigilant and file necessary documents, if considered necessary, in support of its grounds of appeal and should not take adjournment, unless otherwise required for reasonable cause. In case after providing sufficient opportunity to the assessee, there is no compliance by the assessee, then ld. CIT (Exemption) can pass a speaking order in accordance with law. Accordingly, all the grounds of appeal raised by the assessee are allowed for statistical purposes.”
We have also perused the order of the Surat Tribunal reported in 2024 (6) TMI 527 in the case of Shree Swaminarayan Gadi Trust Vadtal (SVG) vs. CIT(E) in which the Surat Bench of the Tribunal had held as follows: “5. We have considered the submissions of both the parties and perused the record carefully. There is no dispute that the assessee applied for registration under Section 12A/12AB of the Act under Form 10AB on 28.09.2023. The Id. CIT(E) while considering the application of assessee noted that the application filed by assessee is not maintainable and accordingly, a show cause notice dated 02/11/2023 was issued for seeking clarification. The assessee responded to the show cause notice of Id CITE) vide their reply dated 15.12.2023. The contents of show cause notice and the reply thereof is not recorded by Id CIT(E) in his order. We find that the assessee vide their reply dated 15/12/2023 prayed to consider the application in appropriate sub-clause of section 12A(1). The Id CIT(E) held that he has no power to change/ amend or rectify Form-10AB. We find that it was an inadvertent mistake and the assessee has already explained the facts and prayed for correction before the Id. CIT(E). In our view the mistake in filing entry was not fetal and could be considered in appropriate sub-clause or clause of section 12A(1). Otherwise, the assessee has provided all the details and information in Form-10AB, while applying for registration under section 12A/12AB. Being first appellate authority, the plea of assessee for correction in Form-10AB is accepted and the order of Id CIT(E) is set-aside. The registry official of Id CIT(E) maintaining record of ITBA portal about the registration of trust under section 12A/12AB is directed either to correct such mistake or allow the assessee to rectify or amend the relevant clause/ sub-clause of section 12A(1). Considering Id. CIT(E) to treat the application of assessee under Section 12A(1)(ac)(iii) in place of Section 12A(1) (ac)(iv) of the Act and to consider the case on merit and pass the order in accordance with law. Needless to direct that before passing the order, the id CIT(E) shall grant opportunity of hearing to the assessee. The assessee is also directed to furnish complete details to prove its object and activity and make all compliances as desired by the Id. CIT(E). In the result, the grounds of appeal raised by the assessee are allowed for statistical purposes only.”
9. We find that similar issues were raised in the above appeals in which the Tribunals had set aside the order of the Ld.CIT(E) since the same was passed on technical grounds and also the orders are non-speaking orders. The Surat Tribunal also held that the mistake is not a fatal and could be considered in appropriate sub-clause of section 12A(1) of the Act. The Surat Tribunal further gave a direction to the ITBA portal either to correct such mistakes or allow the assessee to rectify or amend the relevant clause / sub- clause of section 12A(1). In the present case also, the only mistake committed by the assessee is that instead of mentioning the provision 12A(1)(ac)(iii), the assessee had mentioned the provision as 12A(1)(ac)(iv) and the assessee also explained the reason for committing such mistake while filing the application through online. Further the Ld.CIT(E) had not offered any personal hearing to the assessee before rejecting the application in form 10AB of the Act.
We are satisfied that the earlier orders relied on by the assessee equally applies to the facts and circumstances of the case on hand. We are therefore following the above orders of the Kolkata as well as the Surat Tribunal orders and set aside the order of the Ld.CIT(E) with a direction to the Ld.CIT(E) to consider the application filed by the assessee in the correct provision or allow the assessee to amend the said form 10AB filed on 14/11/2023 and decide the same on merits and also in accordance with the principles laid down in the above said orders of the Kolkata and Surat
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 11th March, 2025.