National Association For The Blind Vs CIT, Exemption, Pune (ITAT Pune)
Summary: The Income Tax Appellate Tribunal (ITAT), Pune Bench “A”, in National Association For The Blind Vs CIT, Exemption, Pune, held that an inadvertent mistake in selecting the statutory clause while filing Form No. 10AB should not automatically result in rejection of an application for registration under Section 12A of the Income-tax Act, 1961. The Tribunal recognised that the assessee trust had inadvertently applied under Section 12A(1)(ac)(vi)(B) instead of the applicable Section 12A(1)(ac)(iii). Following the decision in Raj Krishan Jain Charitable Trust Vs CIT (Exemption), the Tribunal set aside the rejection order and directed the Commissioner of Income Tax (Exemption), Pune, to treat the application as filed under the correct statutory clause and decide it afresh after providing a reasonable opportunity of hearing.
The assessee, National Association For The Blind, Miraj, Sangli, filed two appeals challenging separate orders dated 18 September 2024 passed by the CIT(Exemption), Pune. The first concerned rejection of its Form No. 10AB application for registration under Section 12A, submitted on 19 March 2024 under Section 12A(1)(ac)(vi)(B). The second concerned rejection of its application dated 20 March 2024 for approval under Section 80G(5). Since both matters arose from the trust’s registration and approval proceedings, the Tribunal considered them together through a common order.
In the registration proceedings, the CIT(Exemption) issued a notice dated 15 May 2024 through the Income Tax Business Application (ITBA) portal seeking information relating to the genuineness of the trust’s activities and compliance with applicable laws relevant to achieving its objects. The assessee furnished the requested information. During verification, the Commissioner noticed that the registration application had been submitted under Section 12A(1)(ac)(vi)(B), whereas the applicable provision was Section 12A(1)(ac)(iii). A further notice dated 6 September 2024 sought clarification regarding the discrepancy. The Commissioner was not satisfied with the explanation and rejected the application.
Before the Tribunal, the assessee’s authorised representative, Shri Kishor B. Phadke, explained that the incorrect section code resulted from an inadvertent or typographical error. The application had been prepared and submitted by the trust itself without assistance from a tax professional. The representative emphasised that the assessee was an old charitable trust already registered under Section 12A and that its activities were genuine. According to the assessee, the mistake in selecting the applicable clause was a curable procedural defect rather than a substantive ground for denying registration. The trust therefore requested another opportunity to explain its case and sought directions requiring the Commissioner to consider the application under Section 12A(1)(ac)(iii).
The assessee relied on two judicial precedents. The first was Shree Swaminarayan Gadi Trust Vs CIT, [2024] 162 taxmann.com 772 (ITAT Surat), dated 13 May 2024, where a comparable error in the registration application was considered. The second was Raj Krishan Jain Charitable Trust, ITA No. 1553/Del/2024, dated 5 June 2024, in which the Delhi Tribunal recognised that an application filed under an incorrect clause could be corrected and reconsidered under the proper provision. The Departmental Representative, Shri Amol Khairnar, supported the Commissioner’s rejection order and requested its confirmation.
After considering the rival submissions and precedents, the Tribunal observed that the assessee was required to apply under Section 12A(1)(ac)(iii) but had inadvertently selected clause (vi). The Tribunal reproduced the relevant findings in Raj Krishan Jain Charitable Trust, where the Delhi Bench held that the technical mistake of applying under Section 12A(1)(ac)(ii), instead of Section 12A(1)(ac)(iii), deserved correction. That decision had set aside the Commissioner’s order and directed fresh adjudication after considering the amended application or obtaining a corrected application from the assessee.
Respectfully following the coordinate-bench decision and considering the totality of the circumstances, the Pune Tribunal set aside the order of the CIT(Exemption). It directed the Commissioner to treat the application already filed by the assessee as one made under Section 12A(1)(ac)(iii), instead of clause (vi), and decide it afresh in accordance with law after providing a reasonable opportunity of hearing. The assessee was directed to respond to notices and produce relevant supporting documents and evidence without seeking unnecessary adjournments. The Commissioner remained free to pass an appropriate order under law if the assessee failed to cooperate.
Regarding the separate appeal against denial of Section 80G(5) approval, the Tribunal observed that the issue was consequential to the assessee’s registration under Section 12A. Since the registration application had already been restored to the Commissioner for fresh adjudication, the Section 80G application was also restored for reconsideration. Accordingly, ITA No. 2390/PUN/2024 concerning Section 12A registration and ITA No. 2389/PUN/2024 concerning Section 80G approval were both allowed for statistical purposes. The Tribunal did not itself grant final registration or approval. The operative relief was restoration of both applications for fresh determination after consideration of the correct statutory provisions and relevant evidence.
Cases Discussed
1. Shree Swaminarayan Gadi Trust Vs CIT (ITAT Surat); [2024] 162 taxmann.com 772; 13/05/2024 — Relied upon by the assessee for the proposition that an inadvertent selection of an incorrect statutory clause while filing Form 10AB should not prevent consideration of an otherwise eligible trust’s registration application.
2. Raj Krishan Jain Charitable Trust Vs CIT (Exemption) (ITAT Delhi); ITA No. 1553/Del/2024; 05/06/2024 — Followed by the Pune Tribunal. The Delhi Bench held that the technical error of applying under Section 12A(1)(ac)(ii), instead of Section 12A(1)(ac)(iii), deserved correction and restored the registration application for fresh adjudication under the appropriate provision.
FULL TEXT OF THE ORDER OF ITAT PUNE
Both the above captioned appeals filed by the assessee are directed against the separate orders dated 18.09.2024 passed by Ld. CIT, Exemption, Pune rejecting the application for registration in Form No.10AB under section 12A(1)(ac)(vi)-ITEM(B) of the IT Act filed on 19.03.2024 and denying the application for approval in Form No.10AB under sub clause (B) of (iv) of first proviso to sub-section (5) of section 80G of the IT Act filed on 20.03.2024.
ITA No.2390/PUN/2024 :
2. The appellant has raised the following grounds of appeal :-
“1. The learned CIT (Exemption), Pune; erred in law and on facts in rejecting appellant’s application for registration u/s 12A of ITA, 1961.
2. The learned CIT (Exemption), Pune; erred in law and on facts in holding that activities of the appellant are not genuine.
3. The learned CIT(E) erred in law and on facts in holding that the Appellant ought to have applied for regular registration u/s 12A(1)(ac)(iii) whereas, Appellant has applied for regular registration u/s 12A(1)(ac) (vi)-ITEM(B) of ITA, 1961. Appellant contends that, learned CIT(E)’s incorrect selection the sub-section (as above) has resulted in incorrect decision.
4. Appellant contends that Appellant is keen to make all compliances and remain at better side of law.
5. Appellant craves leave to add, alter, clarify, explain, modify, delete any or all of the grounds of appeal, and to seek any just and fair relief.”
3. Facts of the case, in brief, are that the assessee is a trust applied for registration in Form 10AB u/s 12A(1)(ac)(vi)-ITEM(B) of the IT Act on 19.03.2024. 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 dated 15.05.2024 was issued through ITBA portal requesting the assessee to upload various information detailed in notice. In compliance to the above notice, desired information was furnished by the assessee trust. Ld. CIT, Exemption, Pune found that the application was furnished u/s 12A(1)(ac)(vi)(B) of the IT Act instead of u/s 12A(1)(ac)(iii) of the IT Act, accordingly a notice dated 06.09.2024 was issued to the assessee to submit clarification in this regard. Not being satisfied with the explanation furnished by the assessee in response to notice dated 06.09.2024, Ld. CIT, Exemption, Pune rejected the application for registration. It is this order against which the assessee is in appeal before this Tribunal.
4. 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 without help of any tax professional and due to this the above mistake occurred. Ld. Counsel further submitted that the assessee trust is genuine and an old trust registered u/s 12A of the IT Act. Accordingly, it was prayed before the Bench that mentioning of wrong section code in the application is curable defect and one opportunity may kindly be provided to the assessee trust to explain his case before Ld. CIT, Exemption, Pune. In support of above contention, Ld. AR relied on the decision passed by Co-ordinate Bench of this Tribunal in the case of Shree Swaminarayan Gadi Trust vs. CIT, [2024] 162 taxmann.com 772 (Surat-Trib.) order dated 13.05.2024 wherein under identical situation Tribunal was pleased to allow the appeal of the assessee. Ld. AR further relied on another 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 Ld. CIT, Exemption, Pune, to consider the application as filed under clause (iii) of section 12A(1)(ac) of the IT Act.
5. Ld. DR appearing from the side of the Revenue relied on the order passed by Ld. CIT, Exemption, Pune and requested to confirm the same.
6. 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 required 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 mistake 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 considered.
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.”
7. Respectfully following the above decision passed by the Co-ordinate Bench of this Tribunal (supra), & considering the totality of facts of the case & in the interest of justice, we deem it proper to set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction 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 application for registration without taking any adjournment under any pretext, 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.
8. In the result, the appeal filed by the assessee in ITA No.2390/PUN/2024 is allowed for statistical purposes.
ITA No.2389/PUN/2024 :
9. The instant appeal is against the order passed by Ld. CIT, Exemption, Pune denying grant of approval u/s 80G(5) of the IT Act. Since we have remanded the issue of grant of registration u/s 12A(1)(ac)(iii) of the IT Act to the file of Ld. CIT, Exemption, Pune for de novo adjudication, therefore, in the interest of justice, it would be appropriate to remit the issue of grant of approval u/s 80G(5) as well to the file of Ld. CIT, Exemption, Pune being consequential, for de novo adjudication.
10. In the result, the appeal filed by the assessee in ITA No.2389/PUN/2024 is allowed for statistical purposes.
11. To sum up, both the above captioned appeals filed by the assessee are allowed for statistical purpose.
Order pronounced on this 18th day of February, 2025.
