2025 (2) TMI 1131 - AT - Income Tax

Trust wins appeal after 80G registration wrongly rejected for filing Form 10AB under incorrect clause despite typographical error

Jal Minocher Mistry Memorial Foundation Versus CIT (Exemption), Mumbai

The ITAT Mumbai allowed the assessee trust's appeal against CIT(E)'s rejection of 80G registration approval. The trust had inadvertently filed Form 10AB ... Rejecting approval u/s 80G - Application filled under the wrong clause - 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 - HELD THAT:- 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 14A-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 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. As gone through the cited decision of Torna Rajgad Parisar Samajonnati Nyas [2025 (1) TMI 1473 - ITAT PUNE] 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 CIT (Exemption). 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. CIT(E) was not justified in dismissing assessee’s application for registration merely on a technical ground. 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 - Appeal of the assessee is allowed for statistical purposes. The appeal in this case was filed by the assessee against the rejection of approval under section 80G of the Income-tax Act, 1961 by the Commissioner of Income-tax (Exemptions), Mumbai. The core issues presented in the appeal were related to the rejection of the application under section 80G(5) and the grounds of objection based on law. The key legal questions considered were whether the rejection of the application under section 80G(5) was correct, whether the rejection should be reconsidered based on merits, and whether the order passed by the Commissioner was contrary to legal provisions.The facts of the case involved the assessee trust filing an application seeking approval under section 80G of the Act, which was rejected by the Commissioner on the grounds that the trust had already claimed exemption and filed the application under the wrong clause. The trust had previously obtained 80G approval under the erstwhile provisions and had received provisional registration under the new provisions. However, due to a typographical error, the application was filed under the wrong clause, leading to the rejection.During the hearing, the authorized representative argued that the rejection was unjustified and that the mistake was inadvertent. The representative cited a decision by the Pune Bench where a similar technical mistake was rectified, and the matter was remanded for fresh adjudication. The Tribunal in that case allowed the appeal based on the doctrine of substantial compliance, emphasizing the importance of correcting technical errors that do not affect the substance of the application.The Tribunal, after considering the arguments and precedents cited, found that the rejection of the application on technical grounds was not justified. The Tribunal referred to the Supreme Court's decision on the Doctrine of Substantial Compliance, highlighting the importance of substantial compliance with regulatory requirements, especially in cases seeking benefits or exemptions under fiscal statutes. The Tribunal held that the Commissioner erred in dismissing the application solely on a technical ground and directed the Commissioner to reconsider the application and provide a reasonable opportunity for the assessee to present supporting documents.In conclusion, the Tribunal allowed the appeal of the assessee for statistical purposes, setting aside the Commissioner's order and directing a fresh adjudication based on fact and law. The Tribunal emphasized the importance of correcting technical errors that do not impact the substance of the application and highlighted the principle of substantial compliance in fiscal statutes.The significant holdings of the Tribunal in this case include the application of the Doctrine of Substantial Compliance, the importance of correcting technical errors, and the requirement for regulatory compliance in seeking benefits or exemptions under fiscal statutes. The final determination was to allow the appeal of the assessee and direct a reconsideration of the application by the Commissioner.