A show-cause notice must be issued before rejecting an application under section 80G.

ORDER

Prabhash Shankar, Accountant Member.- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Exemptions),Mumbai[hereinafter referred to as “CIT(E)”] rejecting approval u/s 80G of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 16.10.2024.The assessee has raised the following grounds of appeal:

“General

The Assessing Officer has erred not considering that Assessee Trust already had an 80G approval under the erstwhile provisions of 80G and hence the 80G approval should not have been rejected.

2. Ground of objection Based on law.

2.1 The rejection of the application under Section 80G(5) is incorrect and unlawful.

2.2 The rejection of the application under Section 80G(5) should be reconsidered based on merits.

2.3 The order passed by the CIT(E) is alleged to be bad in law and contrary to legal provisions.

3. Additional Grounds The Assessee craves leave to add, alter, amend, substitute and/or modify in any manner whatsoever all or any of the foregoing grounds at or before or at the time of appeal, to decide the application according to law.”

2. Facts in brief are that the assessee a trust filed an application in Form 10AB under clause(iv)(B) of 1^st proviso to section 80G(5) seeking approval u/s 80G of the Act. However, the same was rejected by the ld.CIT(Exemption) on the ground that as the trust was already incorporated on 24.02.2006 and had claimed exemption, it was not correct in filing Form 10AB under clause(iv)(B) which was meant for those trust which did not claim exemption in Previous years. Therefore, he rejected the application.

3. In the course of hearing before us, the ld. Authorised Representative has submitted that the assessee trust already had an 80G approval under the erstwhile provisions dated 15/12/2009 bearing reference no DIT(E)/MC/80G/2784/2009-10.Under the new provisions pertaining to 80G, the new provisional registration was received vide registration number AAATJ8684KF20212 dated 24-09-2021. The said provisional registration was from 24-09-2021 to AY 2024-2025. Renewal was to be made prior to the end of the assessment year till which it was valid. However, the Assessee Trust realized this late and filed application after the end of the relevant assessment year. In the application under 10AB which was lodged on 25-May-2024, the section for registration which was selected was i4A-Sub-clause (B) of clause (iv) of first proviso to sub-section (5) of section 80G, instead of clause (iii) of the said section since period of the provisional registration had already expired. There was an extension provided by CBDT for filing the applications of Trust upto 30 June 2024. The said form was filed on 25 May 2024. The assesse authorised representative appeared before the Officer with a prayer to consider the inadvertent error and process the same as under clause (iii) of the said section. The officer however did not consider the same and passed the order for rejection of 80G application as the application was filed under section 80G(5) (iv) (B) and no such change was possible in the system. It was pleaded that the mistake was inadvertent and occurred due to technical glitch. In this regard, she also placed reliance on the decision of coordinate bench of Pune ITAT on the case of Torna Rajgad Parisar Samajonnati Nya (Pune – Trib.) (Pune).Per Contra, the ld.DR has vehemently relied on the order of the Revenue authorities.

4. We have carefully perused the facts of the case, considered rival submission and also the provisions of law in this regard. We find that admittedly, the assessee trust was required to file application under 10AB which was lodged on 25-May-2024 but the section for registration which was selected was i4A-Sub-clause (B) of clause (iv) of first proviso to sub-section (5) of section 80G, instead of clause (iii) of the said section due to inadvertent error in the application. It is not disputed that the assessee trust already had an 80G approval under the erstwhile provisions. Under the new provisions pertaining to 80G, the new provisional registration was received vide registration number AAATJ8684KF20212 dated 24-09-2021 and the said provisional registration was from 24-09-2021 to AY 2024-2025.In such a situation, the only mistake committed by the assessee was mentioning the relevant clause(iii) in place of clause(iv).Evidently, it is a typographical, inadvertent but a bonafide mistake only which is subject to correction.

4.1 We have also gone through the cited decision of hon’ble Pune Bench in the case of Torna Rajgad Parisar Samajonnati Nyas (supra) where also such a technical mistake was involved in the case of a trust. The hon’ble Bench set aside and restored the matter back to the ld.CIT(Exemption).Relevant parts of the order are extracted below for ready reference:

“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 28.03.2024. With a view to verify the genuineness of the activities of the assessee and compliance to requirement 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 on 21.05.2024 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 and the assessee trust has claimed exemption u/s 11 of the IT Act, therefore said provisions of section 12A(1)(ac)(vi)(B) is not applicable in the assessee’s case, accordingly the application filed by the assessee was rejected by him. 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 before the Bench 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 since it was an old trust already registered u/s 12 of the IT Act and was required to get registration under the new provisions of the IT Act. It was further submitted that application was filed by its own without the help of any tax professional and due to this the above mistake occurred. Ld. Counsel further submitted that the assessee trust is genuine and was already registered u/s 12A w.e.f. 09.07.2002. Accordingly, it was submitted before the Bench that Ld. CIT, Exemption, Pune ought to have allowed further opportunity to the assessee trust to furnish reply in this regard. But, Ld. CIT, Exemption, Pune erred in not providing reasonable opportunity to the assessee to submit the clarification in this regard. 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, 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……………

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 Co- ordinate Bench of this Tribunal (supra), we find force in the arguments of Ld. Counsel of the assessee that Ld. CIT, Exemption, Pune erred in dismissing the application for registration merely on a technical ground and accordingly we deem it proper 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 application for registration, 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”.

4.2. In this regard, it may be relevant to refer to the Hon’ble Supreme Court, in the case of Dilip Kumar (2018) 9 SCC, wherein while deciding the Doctrine of Substantial Compliance held as under: “33. A fiscal statute generally seeks to preserve the need to comply strictly with regulatory requirements that are important, especially when a party seeks the benefits of an exemption clause that are important. Substantial compliance with an enactment is insisted, where mandatory and directory requirements are lumped together, for in such a case, if mandatory requirements are complied with, it will be proper to say that the enactment has been substantially complied with notwithstanding the non-compliance of directory requirements. In cases where substantial compliance has been found, there has been actual compliance with the statute, albeit procedurally faulty. The doctrine of substantial compliance seeks to preserve the need to comply strictly with the conditions or requirements that are important to invoke a tax or duty exemption and to forgive non-compliance for either unimportant and tangential requirements or requirements that are so confusingly or incorrectly written that an earnest effort at compliance should be accepted.”

6.2 The authorities below failed to appreciate that if the failure to consider the claim of option to discharge tax under Section 115BAA on the ground of failure on the fact of the petitioner to file Form 10-IC within the period stipulated under Section 115BAA would cause genuine hardship to the assessee.

5. Respectfully following the cited decisions (supra), we hold that the ld.CIT(E) was not justified in dismissing assessee’s application for registration merely on a technical ground. Accordingly, the impugned order is set aside with a direction to him to treat the application already filed by the assessee decide the same as per fact and law after providing reasonable opportunity of hearing to the assessee who would produce supporting necessary documents/evidences in support of its application for registration.

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