SWARAJ FOUNDATION,VISAKHAPATNAM vs. INCOME TAX OFFICER (EXEMPTION WARD), VISAKHAPATNAM

Facts

The assessee, Swaraj Foundation, a public charitable trust, applied for permanent registration/approval under Sections 12AB and 80G(5) of the Income-tax Act, 1961, following revalidation requirements introduced by the Finance Act, 2020. During its initial provisional registration application in Form 10A, it inadvertently selected an incorrect section code. Despite this technical error, the CPC, Bangalore, granted provisional registration, but the Commissioner of Income-Tax (Exemptions) subsequently rejected the applications for permanent registration in Form 10AB as non-maintainable, citing no provision for rectification of the initial error.

Held

The Tribunal held that procedural mistakes or technical errors that are curable and do not affect the core eligibility of a charitable institution should not be grounds for rejecting registration applications. Since the CPC had already granted provisional registration despite the initial error, the CIT(Exemptions) should not have rejected the permanent registration applications on technical grounds. The matter was remanded to the CIT(Exemptions) with directions to examine both applications afresh on merits, providing the assessee a reasonable opportunity of being heard, and adopting a liberal and pragmatic approach.

Key Issues

Whether a charitable trust's applications for permanent registration/approval under Section 12AB and Section 80G(5) can be rejected solely due to an inadvertent, curable technical error in selecting a section code in the prior provisional registration application, especially when provisional registration was already granted by the department.