Pragati Magaswargiya Mahila Sanstha Vs CIT (Exemption) (ITAT Nagpur)
Nagpur ITAT: Bona Fide Error in Selecting Wrong Clause in Form 10AB Cannot Defeat 80G Approval – CIT(E) Directed to Permit Fresh Application
In Pragati Magaswargiya Mahila Sanstha v. CIT(E), the Nagpur ITAT considered whether regular approval under section 80G(5) could be rejected merely because the assessee inadvertently selected the wrong clause while filing Form 10AB. The charitable institution, engaged in healthcare and social-welfare activities, already held provisional approval and filed Form 10AB for regular approval. However, it mistakenly selected clause (ii) instead of the appropriate clause (iv)(B) of the first proviso to section 80G(5).
The CIT(E) rejected the application as non-maintainable, since clause (ii) applied to institutions already enjoying regular approval, whereas the assessee possessed only provisional approval. The assessee explained that the error occurred while selecting the option from the drop-down menu on the e-filing portal and was merely technical and inadvertent.
The ITAT observed that the application had been rejected solely because of the incorrect clause selected electronically. Significantly, the CIT(E) had recorded no adverse finding regarding the genuineness of the assessee’s activities, charitable nature of its objects or its substantive eligibility for 80G approval. The Tribunal held that such a bona fide and technical procedural lapse should not, by itself, deny the assessee an opportunity to obtain regular approval.
Accordingly, the ITAT set aside the rejection and restored the matter to the CIT(E), directing that the assessee be given a reasonable opportunity to file a fresh Form 10AB under clause (iv)(B), or such other applicable provision. The CIT(E) was directed to examine the application afresh on merits and without being influenced by the earlier rejection, after considering the genuineness of activities and charitable objects.
Key takeaway: A technical mistake in selecting the applicable clause in Form 10AB should not extinguish substantive entitlement to seek section 80G approval. Where the mistake is bona fide, an opportunity to rectify it and have the application considered on merits should be provided.
FULL TEXT OF THE ORDER OF ITAT NAGPUR
This appeal filed by the assessee is directed against the order of Learned Commissioner of Income Tax (Exemption), Pune (for short, “ CIT(E)”), dated 18/07/2025; whereby regular approval u/s. 80G(5) has been rejected.
2. The main issue involved in the present appeal is whether the learned CIT(E) was justified in rejecting the assessee’s application for regular approval under section 80G(5) of the Income-tax Act, 1961, merely on the ground that an incorrect clause was mentioned in the application.
3. Brief facts of the case are that assessee is a charitable institution engaged in carrying out healthcare and social welfare activities. The assessee was granted provisional approval u/s. 80G(5)(vi) of the Act vide order dated 19.01.2023, which was valid up to the Assessment Year 2025-26. Thereafter, in accordance with the provisions of section 80G(5) of the Act, assessee filed an application in Form No.10AB on 2 4.02.2025 seeking regular approval u/s. 80G(5). However, while filing the online application, assessee inadvertently selected clause (ii) of the first proviso to section 80G(5) instead of the appropriate clause, namely clause (iv)(B) of the first proviso, which is applicable to an institution holding provisional approval and seeking regular approval. During the course of proceedings, the Ld. CIT(E) issued a notice calling upon the assessee to furnish certain details and documents, including a copy of the order granting regular approval u/s. 80G(5)(vi) of the Act. In response thereto, assessee filed requisite details and explained that it had only been granted provisional approval u/s. 80G(5)(vi). The assessee further clarified that selection of clause (ii) in Form No. 10AB was purely an inadvertent error arising from the drop-down menu in the online filing portal and that the application was intended to be one seeking regular approval under clause (iv)(B) of the first proviso to section 80G(5). Ld.CIT(E), however, was not convinced with the explanation furnished by the assessee. Proceeding on the basis that the application had been filed under clause (ii) of the first proviso to section 80G(5), which applies only to institutions already enjoying regular approval, Ld.CIT(E) held that the application was not maintainable since the assessee had failed to furnish a copy of the order granting regular approval. Accordingly, vide order dated 18.07.2025, Ld.CIT(E) rejected the assessee’s application as non-maintainable.
4. Aggrieved by the order of the Ld.CIT(E), assessee is in appeal before this Tribunal. Learned counsel for the assessee submitted that, at the time of filing Form No. 10AB on the e-filing portal, the option corresponding to clause (iv)(B) of the first proviso to section 80G(5) of the Act, under which the application for regular approval was required to be made, was not available in the drop -down menu. Consequently, owing to a technical limitation of the portal, the assessee inadvertently selected clause (ii) of the first proviso. It was contended that the incorrect selection of the clause was purely a procedural and technical error and did not reflect the true nature or purpose of the application. Learned counsel further submitted that the Ld.CIT(E) rejected the application solely on account of the erroneous selection of the clause in the electronic form and not on the merits of the assessee’s claim. It was argued that the genuineness of the activities carried on by the assessee, its charitable objects, and its eligibility for grant of regular approval u/s. 80G(5) have never been doubted by the Ld.CIT(E). Therefore, according to the learned counsel, the rejection of the application merely on account of a technical defect in the online filing process is contrary to the settled principle that procedural lapses should not defeat substantive rights. It was, therefore, prayed that the impugned order of the Ld.CIT(E) be set aside and appropriate directions be issued to grant regular approval u/s. 80G(5) of the Act with effect from 24.02.2025, being the date of filing of Form No. 10AB.
5. Per contra, learned Departmental Representative strongly supported the impugned order passed by the Ld.CIT(E). He submitted that the application filed by the assessee was liable to be examined strictly in accordance with the provisions of the Act and the particulars furnished in Form No. 10AB. Since the assessee had itself selected clause (ii) of the first proviso to section 80G(5) of the Act, Ld. CIT(E) rightly processed the application under the said clause. He contended that clause (ii) applies only to institutions already holding regular approval under section 80G, whereas the assessee admittedly possessed only provisional approval. In the abse nce of a regular approval order, the application filed under clause (ii) was not maintainable. He, therefore, submitted that the Ld.CIT(E) had committed no error in rejecting the application and prayed that the order of the Ld. CIT(E) be upheld.
6. We have heard the rival submissions and perused the material available on record. The short issue arising for our consideration is whether Ld.CIT(E) was justified in rejecting the assessee’s application for regular approval u/s. 80G(5) of the Act merely because an incorrect clause was selected in Form No. 10AB. It is an undisputed fact that assessee had been granted provisional approval u/s. 80G(5)(vi) of the Act vide order dated 19.01.2023 and had filed Form No. 10AB on 2 4.02.2025 with the intention of obtaining regular approval. It is also not in dispute that while filing the online application, the assessee inadvertently selected clause (ii) of the first proviso to section 80G(5) instead of clause (iv)(B), which is the appropriate provision applicable to an institution holding provisional approval and seeking regular approval. The impugned order reveals that Ld.CIT(E) rejected the application as non-maintainable solely on account of the incorrect clause selected in the electronic form. No adverse finding has been recorded with regard to the genuineness of the activities carried on by the assessee, the charitable nature of its objects, or its eligibility for grant of regular approval u/s. 80G(5) of the Act. Thus, the rejection is founded entirely on a procedural defect in the filing of the application. In our considered opinion, although the Ld.CIT(E) was justified in observing that the application filed under clause (ii) was not maintainable in the absence of a regular approval, the ends of justice would have been better served by affording the assessee an opportunity to rectify the procedural defect. The mistake in selecting the incorrect clause appears to be bona fide and technical in nature. A procedural lapse of this nature should not, by itself, result in denial of an opportunity to seek regular approval under the provisions of the Act.
7. Considering the totality of the facts and circumstances of the case, we deem it appropriate to set aside the impugned order and restore the matter to the file of the Ld. CIT(E). The Ld. CIT(E) is directed to afford the assessee a reasonable opportunity to file a fresh application in Form No. 10AB under the appropriate clause, namely clause (iv)(B) of the first proviso to section 80G(5) of the Act, or such other applicable provision as may be prescribed under law. Upon receipt of such application, the Ld. CIT(E) shall examine the assessee’s claim on its own merits, in accordance with law, subject to his satisfaction regarding the genuineness of the activities carried on by the assessee and the charitable objects of the trust/institution, and without being influenced by the earlier rejection, after providing adequate opportunity of being heard to the assessee. Accordingly, the impugned order is set aside, and the matter is restored to the file of the Ld. CIT(E) for fresh adjudication in the light of the above observations. The grounds raised by the assessee are allowed for statistical purposes.
8. In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 10.08.2026 under Rule 34 of Income Tax (Appellate Tribunal) Rules, 1963
