Curable defect in tax approval filings: misclassification of clause does not bar merits review and warrants remittal for reconsideration.

An application for final approval under section 80G(5) filed under an incorrect clause due to inadvertent selection of the wrong clause is a curable defect where the applicant held provisional approval at filing; the applicable provision is clause (iii) of the first proviso to subsection (5) and eligibility under that clause may be examined on merits. Prior decisions support that misclassification without prejudice and without denying opportunity to explain does not justify rejection. The matter is remitted to the Commissioner to decide the final-approval application under the correct clause if the applicant is otherwise eligible.

---

---

Issues: Whether an application for final approval under section 80G(5) of the Income-tax Act, 1961 filed under an incorrect clause of the first proviso (due to inadvertent selection of wrong section code) is a curable defect and whether the matter should be remitted to the Commissioner for consideration under clause (iii) of the first proviso to subsection (5) of section 80G.

Analysis: The assessment of the issue rests on the statutory scheme of the first proviso to subsection (5) of section 80G of the Income-tax Act, 1961, which distinguishes applications by reference to the approval status (including provisional approval) and prescribes timelines and forms for final approval. The application in the present case was filed while the applicant held provisional approval; therefore clause (iii) of the first proviso to subsection (5) of section 80G is the provision applicable to the application for final approval. The application was, however, inadvertently filed under an incorrect clause. Prior decisions of co-ordinate benches and a High Court decision recognise that filing under a wrong provision can be a curable defect where no prejudice is caused and where the applicant was not afforded an opportunity to explain the position before rejection. Applying that principle, the incorrect clause selection is an inadvertent and curable error and does not preclude consideration on merits where eligibility under the correct clause can be examined.

Conclusion: The application filed under the incorrect clause is a curable defect; the matter is remitted to the Commissioner to decide the application for final approval under clause (iii) of the first proviso to subsection (5) of section 80G of the Income-tax Act, 1961, if the applicant is otherwise found eligible. The appeal is allowed for statistical purposes.

---