Case Law Details
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
This appeal filed by the assessee is directed against the order dated 22.07.2024 passed by Ld. CIT, Exemption, Pune rejecting the application for registration u/s 12AA of the IT Act.
2. Facts of the case, in brief, are that the assessee is a non-profit company registered u/s 8 of Com-panies Act has applied for registration in Form 10AB u/s 12A(1)(ac)(vi)-ITEM(B) of the IT Act on 19.01.2024. With a view to verify the genuineness of activities of the assessee and compliance to requirements of any other law for the time being in force by the trust/institution as are material for the purpose of achieving its objects, a notice was issued through ITBA portal requesting the assessee to upload various information detailed in notice. In compliance to the above notice, desired infor-mation was furnished by the assessee trust. Subsequently, Ld. CIT, Exemption, Pune found that the application was furnished u/s 12A(1)(ac)(vi)(B) of the IT Act which is not applicable to the assessee since deduction u/s 11 was claimed by the assessee. After considering the reply, Ld. CIT, Exemption, Pune rejected the application filed by the assessee. It is this order against which the assessee is in appeal before this Tribunal.
3. Ld. AR appearing from the side of the assessee submitted that the rejection order passed by Ld. CIT, Exemption, Pune is unjustified. It was submitted that due to a typographical/inadvertent error the application was filed u/s 12A(1)(ac)(vi)(B) whereas the assessee was required to file application u/s 12A(1)(ac)(iii) of the IT Act. It was further submitted that application was filed by its own with-out help of any tax professional and due to this the above mistake occurred. Accordingly, it was prayed before the Bench that mentioning of wrong code in the application is curable defect and Ld. CIT, Exemption, Pune, should have had accepted the request of the assessee to treat the application as filed under clause (iii) of section 12A(1)(ac) of the IT Act. In support of the above contention, Ld. AR relied on the decision passed by Co-ordinate Bench of this Tribunal in the case of Shree Swamina-rayan Gadi Trust vs. CIT, [2024] 162 772 (Surat-Trib.) order dated 13.05.2024 wherein under identi-cal situation Tribunal was pleased to allow the appeal of the assessee. Ld. AR further relied on anoth-er decision of the Co-ordinate Bench of this Tribunal in the case of Raj Krishan Jain Charitable Trust in ITA No.1553/Del/2024 order dated 05.06.2024, wherein under similar circumstances, the Tribunal was pleased to allow the appeal of the assessee. Accordingly, Ld. AR requested before the Bench to set-aside the order passed by Ld. CIT, Exemption, Pune and further requested to direct him to con-sider the application as filed under clause (iii) of section 12A(1)(ac) of the IT Act.
4. Ld. DR appearing for the Revenue relied on the order passed by Ld. CIT, Exemption, Pune and re-quested to confirm the same.
5. We have heard Ld. Counsels from both the sides and perused the material available on record and also copy of case laws relied on by the assessee. We find that admittedly, the assessee trust was re-quired to file application under clause (iii) of section 12A(1)(ac) of the IT Act but due to inadvertent error the application was filed under clause (vi) of section 12A(1)(ac) of the IT Act and for this reason alone Ld. CIT, Exemption, Pune rejected its application for registration. We find that under identical situations, a Co-ordinate Bench of this Tribunal in the case of Raj Krishan Jain Charitable Trust (supra) allowed the appeal of the assessee by observing as under :-
“9. As contended the appellant has committed a technical mis-take in making the application under Section 12A(1)(ac)(ii) instead of clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. As pointed out the appellant has filed revised form 10AB for seeking registration under the correct provision i.e. Section 12A(1)(ac)(iii) which can also be consid-ered.
10. In consonance with the decision rendered by the co-ordinate Bench, the typographical error deserves to be corrected. Accordingly, the appeal deserves to be allowed and impugned order dated 15.03.2024 of Ld. CIT (E) is liable to be set aside. Hence, the appeal is allowed and we set aside the order of Ld. CIT(E) dated 15-03-2024 and remand the matter back to the file of the CIT(E) for fresh adjudication by considering amended application of the appellant under Section
12A(1)(ac)(iii) of the Act, or he can call for amended application from the appellant.
11. In the result, the appeal filed by the assessee is allowed for statistical purpose.”
6. Respectfully following the above decision passed by the Coordinate Bench of this Tribunal (supra) and in the light of the circular no 7/2024 issued by CBDT on 25-04-2024, i.e. after the filing of application by the assessee wherein the issue of mentioning wrong section code has been addressed / considered as a common & frequent error and also observing the fact that in the instant case Ld. CIT, Exemption, Pune has not given any adverse finding on merits of the case, against the as-sessee, accordingly considering the totality of facts of the case and in the interest of justice we deem it fit to set-aside the order passed by Ld. CIT, Exemption, Pune and direct him to treat the application already filed by the assessee as under clause (iii) of section 12A(1)(ac) of the IT Act instead of under clause (vi) of section 12A(1)(ac) of the IT Act and decide the same as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT, Exemption, Pune in this regard and produce supporting documents/evidences in support of grounds of appeal, otherwise, Ld. CIT, Exemption, Pune shall be at liberty to pass appropriate order as per law. Thus, the grounds of appeal filed by the assessee are partly allowed.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 27th day of January, 2025.
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