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Facts
The assessee, AVI Foundation, applied for registration under Section 80G of the Income Tax Act, 1961. The CIT(E) rejected the application and cancelled the provisional approval, citing that the trust commenced its activities before obtaining provisional registration, making the applied section inapplicable.
Held
The Tribunal held that the assessee made a technical mistake by applying under a wrong clause of Section 80G due to inadvertence, which should not be a basis for denying registration. The assessee is directed to file a fresh application.
Key Issues
Whether the technical mistake in mentioning the wrong section in the application for registration under Section 80G warrants denial of registration, given that the trust commenced activities prior to provisional approval.
Sections Cited
80G(5)(iii)(A), 80G(5)(iv)(A), 80G(5)(i)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 04/02/2025 Date of Order – 25/02/2025
O R D E R PER V. DURGA RAO, J.M.
Assessee’s appeal is emanating from the impugned order dated 05/08/2024, passed by the learned Commissioner of Income Tax (Exemption), Pune, [“learned CIT(E)”].
2. In its appeal, the assessee has raised following grounds:–
“1. On the facts and circumstances of the law, the CIT (Exemption), Pune is refusing the exemption and registration of the trust u/s 80G. 2. Any other ground of appeal to be raised at the time of hearing with prior approval of the Hon'ble Authority.”
2 AVI Foundation ITA no.478/Nag./2024 3. The assessee filed application in Form no.10AB under clause (iii) of first proviso to sub–section (5) of section 80G of the Income Tax Act, 1961 (for short “the Act”), on 14/02/2024. Such application was carefully perused and considered along with its annexures. The learned CIT(E) rejecting the application and cancelled the provisional approval which was granted on 09/02/2024, under sub–clause (A) of clause (iv) of first proviso to sub– section (5) of section 80G of the Act. The reason for such cancellation of registration is that the assessee has made mistake and applying wrong section in its application. The observations of the learned CIT(E) are as under:– “4. On verification of the details submitted by the assessee in response to the said notice and the documents submitted along with the application, various discrepancies were noticed. Another notice was then issued to the assessee on 15/07/2024 and the discrepancies were duly communicated to it as reproduced below: "(i) The trust has obtained provisional registration in form 10AC under item (A) on 09/02/2024. However, as per submission the trust activities has been commenced from the date of registration i.e. 29/07/2020 i.e. before the date of provisional registration. Therefore, said provisions of sec.80G(5) (iii) (A) of the Act are not applicable to your case. Please clarify with supporting documents."
The assessee was requested to show cause as to why the application should not be rejected and why the approval granted under section 80G(5) of the Income Tax Act, 1961 should not be cancelled. The assessee was also given opportunity of being heard vide the said notice. The assessee was specifically informed that in the event of failure to comply by the due date, the application shall be liable to be rejected and the approval shall also be liable to be cancelled. The compliance to the said notice was due on 22/07/2024. The notice was duly served on the assessee through e-portal and email.
After verification of the submission made by the assessee it is found that the assessee vide its reply dated 21/07/2024 has admitted the fact that the trust has commenced its activities before obtaining provisional registration in Form 10AC under Item (A). Based on facts furnished by the assessee, since the activities of the trust had commenced before the date of provisional registration hence the said provision of section 80G(5) (iv)(A) is not applicable to the assessee’s case.
In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 09/02/2024 under Sub-
3 AVI Foundation ITA no.478/Nag./2024 clause (A) of clause (iv) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961, is hereby cancelled.”
We have heard the rival arguments, perused the material available on record and gone through the orders of the authorities below. After perusing the facts on record, it is noted that the assessee has simpliciter made a technical mistake in applying under section 80G(5)(i) of the Act which is not applicable since the activities were already commenced at the time of filing the application and hence the assessee was not eligible for provisional approval under section 80G(iv)(A) of the Act. We are of the considered opinion that mentioning of wrong clause in the application for registration under section 80G out of inadvertence is no basis to deny registration. Consequently, the assessee is directed to file a fresh application before the learned CIT(E). The learned CIT(E) is directed to consider fresh application to be filed and grant registration in accordance with law. Thus, all the grounds raised by the assessee are allowed, but for statistical purposes.
In the result, assessee’s appeal stands allowed for statistical purposes. Order pronounced in the open Court on 25/02/2025