2025 (2) TMI 912 - AT - Income Tax

Tribunal Corrects CIT's Rejection of Non-Profit's 12AA Application Due to Typo, Orders Reconsideration Under Section 12A(1)(ac)(iii).

Inclusive Recycling Foundation Versus CIT, Exemption, Pune

The Appellate Tribunal addressed the rejection of a non-profit company's application for registration under section 12AA of the Income Tax Act by the CIT, ... Rejection of application for registration u/s 12AA - 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) - assessee is a non-profit company registered u/s 8 of Companies Act - HELD THAT:- As relying on Raj Krishan Jain Charitable Trust [2024 (6) TMI 1400 - ITAT DELHI] 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 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. Appeal filed by the assessee is allowed for statistical purposes. The appeal before the Appellate Tribunal concerned the rejection of the assessee's application for registration under section 12AA of the Income Tax Act by the Commissioner of Income Tax (CIT), Exemption, Pune. The core issue revolved around the incorrect filing of the application under section 12A(1)(ac)(vi)(B) instead of the required section 12A(1)(ac)(iii) of the IT Act.The assessee, a non-profit company registered under section 8 of the Companies Act, contended that the rejection by the CIT was unjustified due to a typographical error in the application. The assessee argued that the error was inadvertent and should be considered a curable defect. The assessee cited precedents where similar errors were rectified by the Tribunal, emphasizing the decision in the case of Raj Krishan Jain Charitable Trust.The Revenue, represented by the Departmental Representative (DR), supported the CIT's decision to reject the application.Upon consideration of arguments from both sides and review of relevant case laws, the Tribunal found that the assessee indeed filed the application under the wrong section due to an inadvertent error. The Tribunal referred to the decision in the case of Raj Krishan Jain Charitable Trust, where a similar technical mistake was rectified by allowing the appeal and setting aside the CIT's order.The Tribunal noted that the circular issued by the Central Board of Direct Taxes (CBDT) after the filing of the application addressed the issue of mentioning wrong section codes as a common error. Additionally, since the CIT did not make any adverse findings on the merits of the case against the assessee, the Tribunal deemed it appropriate to set aside the CIT's order. The Tribunal directed the CIT to treat the application as filed under the correct section, i.e., section 12A(1)(ac)(iii) of the IT Act, and to decide the matter after providing a reasonable opportunity of hearing to the assessee.In conclusion, the Tribunal partly allowed the grounds of appeal filed by the assessee, directing the CIT to reconsider the application under the correct section and make a decision based on the facts and law. The appeal was allowed for statistical purposes.The judgment highlights the importance of rectifying technical errors in filings and the Tribunal's role in ensuring justice by correcting such mistakes without prejudice to the merits of the case.