FARMVILLE ENTERPRISE,,VADODARA vs. THE DY. CIT, CENTRAL CIRCLE-1,, VADODARA

There was delay of 28 days in filing the two appeals. The assessee had filed a condonation application along with an affidavit explaining the reason for delay. It is stated that the consultant of the -648/Ahd/2025 A.Y. NA House of Humanity Charitable Trust vs. CIT (Exemption) assessee was hospitalized for medical treatment which led to delay in filing this appeal. A medical certificate in this respect has also been filed. Considering the explanation of the assessee, the delay in filing the appeals is condoned.

The following grounds have been taken in the two appeals: - “On the facts in the circumstances of your appellant case and in law, the rejection of application u/s 12(A) by CIT(EXEMPTION) АНEMDABAD is bad in law, therefore we have objections against your observations for violating the existing provision:- The existing provision of section 12AB(1)(b) states that the assessing satisfying himself about genuineness of activities of trust and the actual activities conducted are material for the purpose of achieving its objects. "Genuineness of activities" refers to the Income Tax Department's (ITD) requirement to ensure that the trust's or institution's activities are truly charitable and not merely a facade for tax evasion. There is no intention of trust to evade the tax. The objection shown in our trust deed are purely of CHARITABLE NATURE ONLY. Specifically the objects are:-

Shri Kunal Rathod, the ld. counsel for the assessee submitted that the ld. CIT(E) had rejected the application filed by the assessee for the reason that the assessee Trust was not found eligible for registration under section 12A(1)(ac)(vi)-ITEM(B) of the Act. The Ld. AR explained that the trust was registered on 27th August, 2021 and a provisional approval u/s 12A of the Act was received on 10th March, 2022 for the period AY 2022-23 to AY 2024-25. Accordingly, return of income was filed claiming exemption u/s 11 of the Act. On expiry of the provisional certificate, the Trust had made fresh application for registration on 29th June, 2024. The Ld. AR submitted that while filing the application in Form 10AB, there was an inadvertent error as incorrect section code - item (B) of sub clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act was selected in place of the correct code, which was sub clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. The application for approval u/s 80G(5) of the Act was also rejected by the Ld. CIT(E ) for the reason that assesse was not having a valid registration u/s 12A of the Act. The Ld. AR submitted that the assessee is engaged in charitable activities and it may be allowed an opportunity to rectify the mistake in the -648/Ahd/2025 A.Y. NA House of Humanity Charitable Trust vs. CIT (Exemption) application and the matter may be set aside to the file of Ld. CIT(E) with a direction to re-adjudicate the issues.

Per contra, Shri Alpesh Parmar, the ld. CIT-D.R. submitted that the Ld. CIT(E) had rightly rejected the applications as filed by the assessee.

We have considered the submission of the assessee and perused the materials placed before us. The Ld. CIT(E) had rightly rejected the application filed by the assessee Trust u/s 12A(1)(ac)(vi) of the Act as non-maintainable for the reason that the conditions for such approval was not found satisfied. In fact, the Ld. CIT(E) had made certain queries in the course of the proceeding before him, which was complied by the assessee. However, the fact that there was a mistake in the application of the assessee was not brought to the notice of the Ld. CIT(E). The assessee has now submitted that there was a mistake in the application in quoting the section code under which the approval was sought. According to the assessee, the section code “Item (B) of sub-section (vi) of clause (ac) of sub-section (1) of section 12A” was wrongly quoted in the application in place of correct section code “sub-section (iii) of clause (ac) of sub-section (1) of section 12A” of the Act. A copy of order dated 03.10.2022 of the provisional registration allowed to the assessee has been brought on record. It is found there from that the assessee was allowed provisional registration under sub-section (vi) of clause (ac) of sub-section (1) of section 12A for the AY 2022-23 to AY 2024-25. When the provisional registration was allowed under sub-section (vi) of clause (ac) of sub-section (1) of section 12A of the Act, the assessee had rightly applied for regular registration under this provision only. The mistake on the part of the assessee, if any, had occurred in the 4 -648/Ahd/2025 A.Y. NA House of Humanity Charitable Trust vs. CIT (Exemption) application for provisional registration and not in the application for regular registration.

The contention of the assessee is that there was a mistake in wrong selection of section code in the application. We don’t find any such mistake in the regular registration application. Rather, the mistake was made at the time of filing the application for provisional registration. The moot issue to be considered here is, if the provisional registration was allowed under one sub-clause, whether the assessee could have made application for final registration under different sub-clause. For this purpose, we deem it proper to set aside the matter to the file of Ld. CIT(E) with a direction to first examine this issue and thereafter allow an opportunity to the assessee to rectify the application, if permissible as per the provisions of law. The assessee may also be allowed a proper opportunity of being heard in the matter. The assessee will also be free to make a fresh application under the correct provisions of the Act, if it so desires. The matter regarding approval u/s 80G(5) of the Act will be decided after first deciding the matter of registration u/s 12A of the Act.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.