2025 (3) TMI 757 - AT - Income Tax

Tribunal Overturns Trust's Registration Rejection Due to Typo, Emphasizes Substantive Justice Over Procedure Under Section 12AA

Mhalasakant Deosthan Mandir Versus CIT, Exemption, Pune

The Tribunal set aside the CIT, Exemption, Pune's rejection of the assessee trust's application for registration under section 12AA of the Income Tax Act, ... Rejecting the application for registration u/s 12AA - application was furnished u/s 12A(1)(ac)(vi)(B) of the IT Act instead of u/s 12A(1)(ac)(iii) - HELD THAT:- 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 [2024 (6) TMI 1400 - ITAT DELHI] held that the typographical error deserves to be corrected. Accordingly, the appeal deserves to be allowed. Thus, we deem it proper to set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to him with a direction 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. ISSUES PRESENTED and CONSIDEREDThe core legal issue considered in this judgment was whether the rejection of the application for registration under section 12AA of the Income Tax Act by the CIT, Exemption, Pune, due to an inadvertent error in the application form, was justified. The Tribunal also considered whether the mistake in the application could be rectified and whether the assessee trust should be given another opportunity to submit the correct application.ISSUE-WISE DETAILED ANALYSISRelevant Legal Framework and PrecedentsThe legal framework revolves around section 12A of the Income Tax Act, which deals with the registration of trusts for tax exemption purposes. Specifically, the issue pertains to the subsections of section 12A(1)(ac), which outline the procedural requirements for applying for registration. The Tribunal referenced precedents from similar cases, including decisions in 'Shree Swaminarayan Gadi Trust vs. CIT' and 'Raj Krishan Jain Charitable Trust,' where similar errors in application forms were deemed rectifiable.Court's Interpretation and ReasoningThe Tribunal interpreted the error in the application as a typographical or inadvertent mistake, which should not, by itself, lead to the rejection of the application. The Tribunal emphasized that the purpose of section 12A is to ensure the genuineness of the trust's activities and compliance with relevant laws, rather than to penalize technical mistakes in application forms.Key Evidence and FindingsThe key evidence presented was that the assessee trust was already registered under section 12A since 1974, indicating its longstanding compliance and genuine operations. The Tribunal noted that the application was filed without professional assistance, which contributed to the error. Additionally, the Tribunal considered the precedents where similar errors were corrected by allowing the filing of a revised application.Application of Law to FactsThe Tribunal applied the principles established in previous cases to the current facts, determining that the error in the application was curable. The Tribunal found that the trust had filed the application under the wrong clause due to a mistake and that this should not prevent consideration of the application on its merits.Treatment of Competing ArgumentsThe Tribunal considered the arguments from both sides. The appellant argued for leniency due to the inadvertent error, while the respondent supported the CIT's decision to reject the application based on procedural grounds. The Tribunal favored the appellant's argument, emphasizing the importance of substantive justice over procedural technicalities.ConclusionsThe Tribunal concluded that the rejection of the application based solely on a typographical error was unjustified. It decided to remand the matter back to the CIT, Exemption, Pune, with instructions to treat the application as filed under the correct clause and to provide the assessee trust with an opportunity to present its case.SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal ReasoningThe Tribunal stated, '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... is liable to be set aside.'Core Principles EstablishedThe Tribunal established that typographical or inadvertent errors in application forms for registration under section 12A should not lead to outright rejection if the trust's activities are genuine and compliant with the law. The Tribunal emphasized the importance of allowing applicants to correct such errors to ensure substantive justice.Final Determinations on Each IssueThe Tribunal set aside the CIT's order rejecting the application and remanded the matter for fresh adjudication. It directed the CIT to consider the application under the correct clause and to provide the assessee trust with an opportunity to present supporting documents and evidence. The Tribunal also instructed the assessee to respond promptly to notices from the CIT to facilitate the process.