S A A CHARITABLE TRUST,PUDUKKOTTAI vs. CIT(EXEMPTION), CHENNAI

At the outset, the Ld.AR of the assessee pointed out that the Ld.CIT(E) has rejected the application only on the ground that while filing online application in Form No.10AB seeking registration u/s.12AB of the Act, the assessee inadvertently mentioned the nature of the activity as “charitable trust’’ instead of ‘charitable-cum-religious’’ Trust in Column-3 of Form No.10AB.

We have heard both the parties and perused the materials available on record. According to the Ld.AR, the impugned action of the Ld.CIT(E) is erroneous. Brief facts are that assessee Trust was formed in the year 2001 and has been carrying on charitable and religious activities. The objects of the Trust are relief of the poor, education, medical relief, yoga, including religious purpose also. The assessee filed online application in From No.10AB seeking registration u/s.12AB of the Act and while doing so, the assessee inadvertently mentioned the nature of the activity in Column-3 of From No.10AB as “charitable trust”. The Ld CIT(E) taking note of the same as well as the objects of the assessee noted that religious purpose was also one of the object of assessee. Therefore, the Ld.CIT(E) gave show cause notice (SCN) dated 17.11.2023, wherein, he pointed out that assessee can be either charitable or charitable-cum- religious; and considering the objects for which it was created, it could not have applied as a ‘charitable trust’ and therefore, he asked assessee /Chny/2023 S A A Charitable Trust :: 3 ::

Pursuant to SCN, the assessee filed response dated 21.11.2023, wherein, it was explained that while filling Colum-3 in From No.10AB the nature of the activities was by oversight/inadvertent mistake declared as “charitable trust” but in the light of all the objects of the assessee, it admitted that it ought to have filled in Column-3 “charitable-cum- religious”. And that inadvertent error crept in due to the complexities while filling up the application in online portal and requested to condone the mistake and pleaded for grant of registration and cited case laws of Shri Balkrishna Shudhhadwait Sthanik Mahasabha v. CIT (Exemptions) reported in [2023] 154 taxmann.com 586 (Surat-Trib) [17.07.2023] and Arya Samaj Safdarjung Enclave v. CIT (ITA No.2810/Del/2022), wherein, Tribunal had observed that inadvertent mistake made by the assessee should not be a fetter in the way of substantial justice. However, the Ld.CIT(E) was of the opinion that processing of application and granting of registration are carried out in the ITBA portal and there is no functionality available in the system to change the nature of trust other than applied in the application filed in Form 10AB. According to him, the registration can be granted only on the basis of nature of trust mentioned in the application in Form 10AB, hence, the assessee’s request for granting registration as Charitable-cum-Religious trust as against Charitable Trust as applied in Form No.10AB was not accepted, which /Chny/2023 S A A Charitable Trust :: 4 :: action of the Ld.CIT(E) cannot be countenanced because the mistake which crept in Column-3 (Form 10AB) while filling up the electronic online portal, as “charitable” whereas the nature of activities carried out by it obliges it to be classified as “charitable-cum-religious”, cannot be a reasonable ground to deny registration u/s.12AB if otherwise eligible; and merely because it filled up Column-3 as charitable organization instead as “charitable-cum-religious”, because, it is a bona fide mistake which cannot change its character which as per its objectives is charitable as well as religious. Therefore, we set aside the impugned order of the Ld.CIT(E) and allow assessee to file a physical form of Form 10AB before the Ld.CIT(E) showing the nature of activity as “charitable-cum-religious” and the Ld.CIT(E) to consider the same, and examine the eligibility of it in accordance to law. In this context, we take note of the Hon’ble Supreme Court decision in the case of United Bank of India v. Naresh Kumar AIR 1997 SC 3, wherein, it was observed by their Lordships “as far as possible, a substantive right should not be defeated on account of a procedural irregularity which is curable” and in the case of Associated Journals Ltd. v. Mysore Paper Mills Ltd., reported in [2006] 69 SCL 311 (SC), it was observed by the Hon’ble Supreme Court -

In Owners & Parties interested in MV Vali Perov. Fernandeo Lopez AIR 1989 SC 2206, it was observed - Rules of procedure are not by themselves an end but means to achieve the ends of justice. Rules of procedure are tools forged to achieve justice and are not hurdles to obstruct the pathway to justice. Construction of a rule of procedure which promotes justice and prevents its miscarriage by enabling the Court to do justice in myriad situations, all of which cannot be envisaged, acting within the limits of permissible construction, must be preferred to that which is rigid and negatives the cause of justice. Procedure is meant to subserve and not rule the cause of justice

In the light of the discussion (supra), we direct the Ld.CIT(E) to consider the application as stated (supra) and decide on merits granting of registration in accordance to law after hearing the assessee.

In the result, appeal filed by the assessee is allowed for statistical purposes.