A fresh application filed under a beneficial circular to correct an error is valid.

Issue

Is a taxpayer entitled to the benefit of a CBDT circular that extends the time for filing a fresh application to correct a “wrong section code,” even if their original, incorrect application was ultimately rejected by the tax department for a different reason (such as non-prosecution)?

Facts

An assessee-trust filed an application in Form 10AB for registration under Section 80G(5) but inadvertently mentioned a wrong section code in the form.
Subsequently, the CBDT issued Circular No. 7 of 2024 on April 25, 2024. This circular extended the deadline for filing Form 10AB and, importantly, allowed taxpayers to file a fresh application if their original one had been rejected due to mentioning a wrong section code.
Acting on this, the assessee filed a fresh application with the correct section code on June 4, 2024, which was well within the extended deadline provided by the circular.
Much later, on September 3, 2024, the Commissioner (Exemptions) first rejected the original, incorrect application, citing non-participation by the assessee in the proceedings.
Following this, the Commissioner also rejected the fresh, corrected application. The reason given was that since the original application was rejected for “non-prosecution” and not explicitly for a “wrong section code,” the assessee was not covered by the beneficial circular.

Decision

The Tribunal ruled in favour of the assessee.

It held that the Commissioner’s interpretation of the circular was incorrect and overly technical.
The undisputed fact was that the original application did contain a wrong section code, which is precisely one of the situations the circular was intended to provide relief for.
The assessee had proactively filed a fresh application to rectify this very error, and they did so within the extended time frame that the circular allowed. This second, correct application should have been considered the valid one.
The court concluded that the assessee was fully entitled to the benefit of the extended time prescribed in the CBDT circular, and the rejection of their application was incorrect.
The Commissioner’s rejection order was set aside, and the matter was sent back for a fresh decision on the merits of the application.

Key Takeways

Beneficial Circulars Should Be Interpreted Liberally: Circulars issued by the CBDT to grant relief to taxpayers, such as extending deadlines or allowing for the correction of common errors, should be interpreted in a liberal and purposive manner to ensure the intended benefit is not denied on hyper-technical grounds.
Substance Over Form: The court prioritized the substance of the matter—that the assessee made an error covered by the circular and corrected it within the given time—over the procedural technicality of the exact reason noted in the rejection order for the first, faulty application.
Proactive Correction Shows Good Faith: The assessee’s action of filing a fresh, correct application even before the first one was formally rejected demonstrated their bona fide intent to comply, which is a factor that weighs in favour of the taxpayer.
Spirit of the Law: The purpose of the circular was clearly to help taxpayers who made specific, common errors. The assessee’s case fell squarely within the spirit and intent of that circular, and denying them the benefit would have defeated its purpose.

IN THE ITAT AHMEDABAD BENCH ‘C’

Radhe Krushna Gau Sala Trust

CIT (Exemption)

Sanjay Garg, Judicial Member
and Ms. Annapurna Gupta, Accountant Member

IT Appeal No. 280 (Ahd) of 2025

SEPTEMBER 16, 2025

Vimal Desai, A.R. for the Appellant. Rignesh Das, CIT-D.R. for the Respondent.

ORDER

Annapurna Gupta, Accountant Member.- The present appeal has been filed by the Assessee against the order of the Ld. Commissioner of Income Tax (Exemptions), (hereinafter referred to as “CIT(E)”), dated 1 1.12.2024, rejecting assessee’s application in Form 10AB seeking registration u/s. 80G(5) of the Income Tax Act, 1961 (hereinafter referred to as the “Act”).

2. The grounds raised by the assessee read as under:-

“1. The order passed under clause (ii)(b)(B) of second proviso to section 80G(5) of the Act is bad in law.

2. The learned CIT (Exemption) has erred in law as well as on facts in rejecting the application registration u/s 80G(5) under clause (iii) of its first proviso by considering it as non-maintainable.”

3. The order of the ld. CIT(E) reveals that he rejected assessee’s application noting that the assessee had earlier also filed an application which stood rejected vide order dated 03-092024 and the said earlier rejection order was not covered by para 4.1 of CBDT Circular No. 7 of 2024 dated 25-04-2024, so as to entitle the assessee to file a fresh application within the extended date provided by the said circular. The assessee’s application accordingly was held non-maintainable.

Before us, the ld. counsel for the assessee on the other hand contended that this application filed within the extended time provided by the afore-stated Circular was covered by para 4.1 of the said Circular and the Ld.CIT(E) had wrongly rejected the same as non-maintainable. In this regard, he drew our attention to the contents of the CBDT Circular no. 7 of 2024 dated 25-04-2024. Copy of which was placed at paper book page no. 46 to 47. The contents of the same read as under:-

“Sub: Extension of due date for filing of Form No. 10A/10AB under the Income-tax Act, 1961-reg

On consideration of difficulties reported by the taxpayers and other stakeholders in the electronic filing of Form No. 10A/10AB, the Central Board of Direct Taxes (the Board) in exercise of its powers under section 119 of the Income-tax Act, 1961 (the Act) extended the due date for filing Form No 10A to 31.08 2021 by Circular No. 12/2021 dated 25.06.2021 to 31.03.2022 by Circular No. 16-2021 dated 29.08.2021 to 25.11.2022 by Circular No. 22/2022 dated 01.11.2022 and further to 30.09.2023 by Circular No. 6/2023 dated 24.05.2023 and extended the due date for filing Form No 10A 30.09.2022 by Circular No. 8/2022 dated 31.03.2022 and further to 30.09.2023 by Circular No 6/2023 dated 24.05 2023

2. Representations have been received in the Board with a request to condone the delay in filing Form No. 10A/10AB, as the same could not he filed in such cases within the last extended date, i.e. 30.09.2023.

3. On consideration of the matter with a view to avoid and mitigate genuine hardship in such cases, the Board, in exercise of the powers conferred under section 119 of the Act, hereby extends the due date of making an application/ intimation electronically in-

(i)

Form No. 10A, in case of an application under clause (i) of the first proviso to clause (23C) of section 10 or under sub-clause (1) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5) of section 80G or in case of an intimation under fifth proviso of sub section (1) of section 35 of the Act till 30.06.2024;

(ii)

Form No. 10AB, in case of an application under clause (1) of the first proviso to clause (23C) of section 10 or under sub-clause (ii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act till 30.06.2024;

4. It may be also noted that extension of due date as mentioned in paragraph 3(ii) shall also apply in case of all pending applications under clause (iii) of the first proviso to clause (23C) of section 10 or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act as the case may be. Hence, in cases where any trust institution or fund has already made an application in Form No 10AB under the said provisions on or before the issuance of this Circular and where the Principal Commissioner or Commissioner has not passed an order before the issuance of this Circular the pending application in Form No. 10AB may be treated as a valid application.

4.1 Further, in cases where any trust, institution or fund has already made an application in Form No 10AB, and where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular solely on account of the fact that the application was furnished after the due date or that the application has been furnished under the wrong section code it may furnish a fresh application in Form No 10AB within the extended time provided in paragraph 3(ii) i.e. 30.06.2024.

5. It is also clarified that if any existing trust, institution or fund who had failed to file Form No 10A for AY 2022-23 within the due date as extended by the CBDT circular no. 6/2023 dated 24.05.2023 and subsequently applied for provisional registration as a new trust, institution or fund and has received Form No 10AC, it can avail the option to surrender the said Form No. 10AC and apply for registration for AY 2022-23 as an existing trust, institution or fund in Form No. 10A within the extended time provided in paragraph (1) the 30.06.2024

6. Hindi version to follow.

Referring to the above, he pointed out that the CBDT vide afore-stated Circular had extended the due date of filing Form 10AB/10A, which earlier could be filed upto the extended due date of 24-05-2023, to the 30^th June, 2024. The said extension was made, he pointed out from the Circular, noting the requests and representations received by the Board in this regard and with the view to avoid and mitigate hardship. Ld. counsel for the assessee pointed out from para 4 of the Circular, that the CBDT made it clear that the extended time would apply even to those applications which were pending for approval on the date of the issuance of the Circular i.e. 24-05-2024 before the Pr. CIT(E) and who had not passed order on the same till then. The ld. counsel for the assessee contended that in substance, vide the said Circular all assessees were given an extended time for filing application in Form 10AB upto 30^th June, 2024 and all applications filed upto to the said date or considered by the relevant authority for approval upto to the said date were to be treated as validly filed within the prescribed time limit.

Thereafter, he drew our attention to para 4.1 of the said Circular and pointed out that it allowed fresh applications to be filed within the extended time limit where the original application stood rejected in specified circumstances only i.e. where the application was furnished after due date or the application had been furnished under the wrong section code.

Having stated so, the ld. counsel for the assessee pointed out that in the facts of the present case, the original application filed by the assessee in Form 10AB mentioned the incorrect section code and realizing this error therefore the assessee filed another application within the extended time given. He pointed out that the second application was filed even before the first application was rejected by the Ld.CIT(E).

He drew our attention to the facts of the case pointing out that the first application was dated 23-03-2024 and was rejected by the CIT(E) vide his order dated 03-09-2024. That the fresh/second application, mentioning the correct section code, was filed by the assessee i.e. on 04-06-2024, before the rejection order of the Ld.CIT(E) on the first application filed dated 03-0924. He pointed out that while in the first application the assessee had mentioned the section code as “sub-clause (B) of clause (iv) of the first proviso to sub-section 5 “of section 80G(PB-29), the second application, impugned before us, mentioned the correct section code i.e.” clause (iii) of first proviso to sub-section 5 of section 80G “.

He therefore stated that the original application having mentioned the wrong code and the revised application correcting that mistake, that too within the extended time given for filing application as per CBDT Circular, the assessee’s case stood squarely covered by para 4.1 of the CBDT Circular, which granted extended time for filing fresh applications where original application stood rejected on account of incorrect section code mentioned therein. He contended that the Ld. CIT(E)’s order rejecting the application as non-maintainable citing para 4.1, was therefore incorrect.

The ld. D.R. however supported the order of the Ld. CIT(E) pointing out that the assessee’s earlier application was not rejected for any of the reasons specified in para 4.1 of the Circular and therefore the assessee was rightly denied benefit of extended time for filing form 10AB by the Ld.CIT(E).

4. We have considered the contentions of both the parties and also perused the order of the Ld. CIT(E). The assessee’s application in From 10AB seeking final approval u/s. 80G(5) of the Act has been rejected holding it as filed delayed, beyond time prescribed, and not entitled to benefit of extended time given for filing such application by CBDT Circular No. 7 of 2025. The benefit of the CBDT Circular has been denied stating that the assessee’s case does not qualify as per para 4.1 of the said Circular. The said para allows assessees to file applications afresh within the extended time given by the Circular, where their earlier applications were rejected for being filed delayed or on account of mentioning wrong section code. In the assessee’s case, the earlier application was rejected since the assessee did not participate in the proceedings before the Ld.CIT(E) and he therefore was unable to verify the genuineness of activities carried out by the assessee as also the fulfillment of other conditions prescribed in law.

We have perused the contents of the CBDT Circular No.7 dated 25-04-24, which extends time limit for filing applications in Form 10AB not filed upto the date of the issuance of the said Circular, upto 30-06-24. Applications pending for approval on the date of issuance of the Circular, i.e. 25-04-24, were also to be treated as valid.

Since time limit was extended, therefore those assessees whose earlier applications were rejected as delayed were allowed to file fresh applications within extended time, vide Para 4.1 of the Circular. The said para also allowed assesses whose earlier applications were rejected on account of incorrect section code mentioned, to file fresh applications within extended time limit.

Thus, the CBDT Circular extended time for filing Form 10AB and also allowed filing of fresh form within the extended time in circumstances where original Form stood rejected for delayed filing or for mentioning incorrect section code.

In the facts of the present case, the assessee had mentioned wrong code in the original application filed on 23-0324 and rectified the same by filing another form 10AB on 04-0624, within the time extended by CBDT Circular 07 dated 25-0424 and even before the original Form was considered and order passed by Ld.CIT(E) on 02-09-24.

Clearly when the CBDT Circular itself gives assessee benefit of extended time to file fresh applications for rectifying their errors of mentioning wrong section code on account of which their earlier application stood rejected, in the facts of the present case where the assessee rectified this error even before detection by the Ld.CIT(E), the assessee stands on a better footing. This new application, rectifying the error in the earlier application of wrong section code, filed before the original application was considered for approval and order passed therein, is to be considered as original application, and being filed within extended time, the assessee’s application, we hold, is squarely covered by CBDT Circular No.7 dated 25-04-24. The assessee we hold is entitled to benefit of extended time prescribed in the said Circular and the rejection of the same by the Ld.CIT(E) as not covered by the CBDT Circular, is incorrect.

In view of the above the order of the Ld.CIT (E) is set aside and he is directed to consider assessee’s application seeking approval u/s 80G(5) of the Act and pass order following due process of law.

5. In the result, the appeal of the assessee is allowed for statistical purposes.