Baroda Youth Federation Vs CIT (Exemption) (ITAT Ahmedabad)
ITAT Ahmedabad Protects NGO: Technical Errors Can’t Override Eligibility for Exemption
Facts
The Assessee is a Section 8 Company engaged in charitable activities & Filed application in Form 10AB on 07.03.2024 seeking registration u/s 12A(1)(ac)(iii). CIT(E) issued questionnaire (02.07.2024) & Assessee furnished details (17.07.2024). However, CIT(E) rejected the application (19.09.2024), treating it as non-maintainable on the ground that an earlier application had already been rejected & present one was not covered by CBDT Circular No. 07/2024 dated 25.04.2024. Without examining merits, the application was dismissed; no show-cause notice or hearing was given. Similarly, the application for 80G(5) approval was also rejected (21.09.2024), since Assessee did not hold valid registration u/s 12A/12AB, which is a statutory pre-condition.
Assessee’s Contentions
- Wrong clause in Form 10AB was selected earlier due to portal/system error.
- Rejection only on technical grounds, without hearing, violates principles of natural justice.
- Cited various Tribunal decisions (Modasa Ekda Visha Khadayata Kovadia Kelavani Mandal, V-One Society, Youth Service Centre, Bhagwan Mahaveer Jain Relief Trust, Rotary Charity Trust) where similar rejections were remanded for fresh consideration.
ITAT’s Observations
- Rejection merely on earlier dismissal & clause-selection error, without considering merits or giving opportunity of being heard, is unsustainable.
- Precedents show that wrong clause selection due to inadvertence/system glitches should not defeat substantive rights if the trust is otherwise eligible.
- Denial of hearing amounts to violation of natural justice.
- Since 12A registration is a pre-condition for 80G approval, both matters must be reconsidered together.
Decision
- Order u/s 12A rejection set aside & Matter remanded to CIT(E) with direction to treat application under correct clause, examine merits afresh, and pass reasoned order after giving adequate opportunity of hearing.
- 80G application rejection also remanded & To be decided afresh after adjudication of 12A registration.
- Both appeals allowed for statistical purposes.
ITAT Ahmedabad held that wrong clause selection in Form 10AB due to portal/technical error cannot be the sole basis for rejecting 12A/80G applications. Authorities must provide hearing and decide on merits, upholding principles of natural justice
