Inclusive Recycling Foundation Vs CIT (ITAT Pune)
The ITAT Pune recently addressed the issue of Section 12AA registration for Inclusive Recycling Foundation, a non-profit organization registered under Section 8 of the Companies Act. The organization’s application for registration under the Income Tax Act was rejected by the CIT (Exemption), Pune, due to an inadvertent error in mentioning the applicable clause. This appeal sheds light on the necessity of fair adjudication and judicial precedent in cases of technical errors.
The non-profit had mistakenly filed its application under Section 12A(1)(ac)(vi)(B) instead of the applicable Section 12A(1)(ac)(iii). The foundation argued that the mistake was typographical and occurred because the application was submitted without professional assistance. Despite providing all required information and evidence supporting its genuine activities, the CIT (Exemption), Pune, rejected the application solely on this technicality. The appellant emphasized that such an error is curable and cited judicial precedents, including Shree Swaminarayan Gadi Trust v. CIT and Raj Krishan Jain Charitable Trust v. CIT, where similar appeals were allowed by ITAT benches.
The ITAT Pune observed that denying registration based on a typographical error contradicted the principles of natural justice. The Tribunal noted that the CIT (Exemption) did not raise any adverse findings on the organization’s activities or eligibility under Section 12AA. Drawing from precedents, including the above cases, and Circular No. 7/2024 issued by CBDT, which acknowledges such errors as common, the Tribunal deemed it appropriate to set aside the rejection order.
The Tribunal remanded the case to the CIT (Exemption) for reconsideration, directing them to treat the application under the correct section. It also instructed the CIT (Exemption) to allow a reasonable opportunity for the appellant to present its case. The organization was advised to respond promptly to any further notices and provide supporting evidence to substantiate its claim for registration.
FULL TEXT OF THE ORDER OF ITAT PUNE
