Case Law Details
Conwest and Manjula S Badani Jain Vs CIT (Exemptions) (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, in the case of Conwest and Manjula S Badani Jain Vs CIT (Exemptions), restored an application for final approval under Section 80G(5) of the Income Tax Act to the Commissioner of Income Tax (Exemptions) (CIT(E)) for fresh consideration on merits. The ITAT ruled that the CIT(E)’s decision to reject the application solely because the applicant, a charitable trust, selected the wrong sub-clause in the online Form 10AB was an error, deeming the defect curable and non-fatal.
Case Details and Assessee’s Submissions
The assessee, a trust running a charitable institution including a hospital, had applied for final approval of its fund under Section 80G(5), which allows donors to claim tax deductions. During the application process, the assessee inadvertently selected sub-clause (ii) instead of the appropriate sub-clause (iii) of the first proviso to Section 80G(5) in the online Form 10AB. The CIT(E) rejected the entire application on this technical ground alone, without examining the case’s merits.
Appearing before the ITAT, the Authorized Representative (AR) for the assessee argued that this mistake was a bona fide and inadvertent error and that the assessee had fulfilled all requisite conditions and furnished all necessary details. The AR contended that since the CIT(E) had not provided a finding on the merits of the trust’s eligibility, the matter should be remanded for a proper decision. The AR also disclosed a 25-day delay in filing the original application (filed on October 25, 2024, instead of the September 30, 2021, deadline) and requested condonation of this delay, citing Tribunal and High Court precedents regarding bona fide reasons.
The Revenue’s representative countered that the issue of condonation of delay could not be raised at the ITAT stage since the CIT(E) had not yet examined or decided upon it. However, regarding the central issue of the wrong sub-clause selection, the Revenue suggested the assessee was free to file a fresh application. The assessee countered this, arguing that filing a fresh application would disrupt the continuity of the provisional approval, potentially causing difficulty in issuing tax-deductible receipts for bona fide donations from the date of the original application.
ITAT’s Holding and Judicial Precedent
The ITAT limited its consideration to the primary issue of whether rejection on the sole ground of incorrect sub-clause selection was justified. The Tribunal observed that in a “series of similar matter” concerning registration under Section 12AB or approval under Section 80G(5), it has been consistently held that such a defect is not fatal but a curable error.
The ITAT specifically cited its own decision in the case of Chamber of Small INDL Associations vs CIT(E) in ITA No. 4833 & 4835/Mum/2025 dated 15.09.2025, where a similar view was adopted, treating such procedural errors as non-justifiable grounds for outright rejection.
Based on this precedent and the principle that a technical or procedural error should not defeat a substantive application, the ITAT quashed the CIT(E)’s rejection order. The appeal was allowed for statistical purposes, and the matter was restored to the file of the CIT(E) with a clear direction to consider and decide the application under Section 80G(5) on its merits in accordance with law, after providing the assessee with an opportunity for a hearing.
Regarding the prayer for condonation of the 25-day delay, the ITAT noted that there was no adverse finding on this issue from the CIT(E) at that stage but expressed the expectation that the CIT(E) would take a sympathetic view if the matter of delay arose during the fresh consideration of the application.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
1. This appeal by assessee is directed against the order of ld. CIT(E) in rejecting application for approval of fund under section 80G(5). Though, the assessee has raised multiple grounds of appeal. However, as per our considered view, the substantial ground of appeal relates to rejection of application on account of selecting sub-clause (ii) instead of sub-clause (iii) of first proviso to section 80G(5) while applying for approval.
2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that due to bona fide and inadvertent error/mistake, the assessee trust while applying for approval of fund under section 80G(5) selected sub-clause (ii) instead of sub-clause (iii) of first proviso. Such inappropriate selection of sub-clause was not fatal. The ld. CIT(E) rejected the application on that ground alone. The ld. AR of the assessee submits that the assessee fulfilled on requisite conditions and furnished all details at the time of filing online application in Form 10AB. The ld. AR of the assessee in all his fairness submits that ld. CIT(E) has not given his finding on merit, therefore, matter may be restored back to the file of ld. CIT(E) to examine the case on merit and allow approval of fund to the assessee. The assessee is ready and willing to furnish all requisite details. The ld. AR further submits that there was a delay of 25 days in filing application under section 80G(5). Such delay may be condoned at this stage. The assessee in fact was required to file such application on or before 30.09.2021, however, the same was filed on 25.10.2024. There are decisions of Tribunal as well as High Courts that when delay in filing appeal is due to bona fide reasons, such delay may be condoned.
3. On the other hand, the learned Commissioner of Income Tax – Departmental Representative (CIT-DR) for the revenue, on the plea of condonation of delay in filing application before ld. CIT(E) submits that there is no finding of ld. CIT(E) on such issue and the assessee cannot hesitate such issue which has not been examined and decided by ld. CIT(E). Therefore, such submission is not tenable at this stage. However, on first submission of ld. AR of the assessee the ld. CIT-DR for the revenue would submit that the assessee is at liberty to file application afresh before ld. CIT(E) by selecting appropriate sub-clause.
4. In rejoinder submission, the ld. AR of the assessee submits that assessee is running charitable institution including hospital and in case the application for approval is not allowed from the date of application i.e. in continuity of provisional approval, the assessee may face difficulty in issuing receipts of bonafide donations. The ld. AR for the assessee prayed to restore the matter back with the direction to consider his application afresh.
5. We have considered the rival submissions of the parties and have gone through the order of ld CIT(E). We find that there is very limited issue for our consideration that assessee/ applicant while filing Form 10AB selected sub-clause (ii) instead sub-clause (iii) of first proviso to section 80G(5). We find that in a series of similar matter either for registration under section 12AB or 80G(5) when there was an error in selecting appropriate sub-clause, it has been consistently held that such defect is not fatal and error is a curable defect and rejection of application on such sole ground is not justified. Similar view was taken by this combination in Chamber of Small INDL Associations vs CIT(E) in ITA No. 4833 & 4835/Mum/2025 dated 15.09.2025. Thus, the appeal of assessee is restored back to the file of ld. CIT(E) with the direction to consider and decide the application of assessee under section 80G(5) on merit in accordance with law. Needless to direct that before passing order, the assessee be allowed opportunity of hearing.
6. So far as, other prayer of ld. AR of the assessee for condoning the delay is concerned, we find that there is no such adverse finding which may require our indulgence at this stage. However, the ld. CIT(A) is expected to take sympathetic view if such issue of delay, if any, is considered at the time of considering the application for approval of funds. In the result, ground of appeal of assessee is allowed for statistical purpose.
7. In the result, the appeal of the assessee is allowed for statistical purposes.
Order was pronounced in the open Court on 17/09/2025
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