Rejection of Application for Registration under Section 12AA Set Aside Due to Typographical Error

Issue: Whether the rejection of an application for registration under Section 12AA of the Income-tax Act, 1961, is valid due to a typographical error in the application, even though the assessee otherwise fulfills the requirements for registration.

Facts:

The assessee, a non-profit company, applied for registration under Section 12AA.
The Commissioner (Exemption) rejected the application because it was filed under Section 12A(1)(ac)(vi), which was not applicable to the assessee.
The assessee claimed that the incorrect section was mentioned due to a typographical error, and they intended to file the application under Section 12A(1)(ac)(iii).

Decision:

The court held that the rejection of the application was not valid.
The court acknowledged that the assessee’s mistake was a typographical error and that they otherwise fulfilled the requirements for registration under Section 12AA.
The court directed that the application be treated as filed under the correct provision, Section 12A(1)(ac)(iii).
The order rejecting the application was set aside.

Key Takeaways:

This case highlights the importance of accuracy in filing applications for tax benefits and registrations.
However, the court also recognizes that genuine errors can occur, and taxpayers should not be penalized for minor mistakes, especially when they do not affect the substance of the application.
The decision emphasizes the need for a reasonable and flexible approach by tax authorities in dealing with such errors, ensuring that taxpayers are not denied benefits due to technicalities.

IN THE ITAT PUNE BENCH ‘A’

Inclusive Recycling Foundation

Commissioner of Income-tax, Exemption

Manish Borad, Accountant member
and Vinay Bhamore, Judicial Member

IT Appeal No. 2129 (PUN.) of 2024

JANUARY 27, 2025

Shashank A. Mehta for the Appellant. Chandra Vijay for the Respondent.

ORDER

Vinay Bhamore, Judicial Member. – 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 Companies 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 information 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 without 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 Swaminarayan Gadi Trust v. CIT 207 ITD 666 (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 him to consider 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 requested 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 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.”

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 assessee, 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.