2025 (3) TMI 987 - AT - Income Tax

ITAT allows revised section 80G application after clerical error in Form 10AB clause mention

Subharma Charitable Trust, C/o Sujay Hospital Pvt. Ltd. Versus CIT (Exemptions), ITO Exemption Ward, Mumbai

ITAT Mumbai set aside CIT(E)'s rejection of section 80G application due to clerical error where assessee incorrectly mentioned clause (ii) instead of ... Rejection of application u/s 80G - error regarding the relevant clause u/s 80G(5) - instead of mentioning clause (iii) of first proviso to section 80G(5) in the application in Form No.10AB, the assessee mentioned clause (ii) of first proviso to section 80G(5), which is applicable to the trusts which already have regular approval and the application is made for the renewal of the same HELD THAT:- We are of the considered view that the error committed by the assessee is merely inadvertent and clerical, as the facts and circumstances of the case only require filing the application under clause (iii) of first proviso to section 80G(5). We find that the impugned order is completely silent on any opportunity being granted to the assessee to rectify the error and file the revised application in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act. Accordingly, we restore the matter to the file of the learned CIT(E) to grant an opportunity to the assessee to file the revised application in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act and decide the same in accordance with law. With the above directions, the impugned order is set aside and grounds raised by the assessee are allowed for statistical purposes. ISSUES PRESENTED and CONSIDEREDThe core legal questions considered in this judgment are:Whether the Commissioner of Income Tax (Exemptions) erred in rejecting the Trust's application for revalidation under Section 80G of the Income Tax Act, 1961.Whether the Trust was provided with a reasonable opportunity to correct the application error regarding the relevant clause under Section 80G(5) of the Act.Whether the Trust's inadvertent clerical error in the application could be rectified to allow for the proper revalidation process under the correct statutory provision.ISSUE-WISE DETAILED ANALYSIS1. Rejection of Application for Revalidation under Section 80GRelevant Legal Framework and Precedents: Section 80G of the Income Tax Act provides for deductions in respect of donations to certain funds, charitable institutions, etc. The first proviso to Section 80G(5) outlines the conditions and manner for applying for approval or revalidation.Court's Interpretation and Reasoning: The Tribunal noted that the Trust had been provisionally approved under Section 80G and was required to apply for revalidation under clause (iii) of the first proviso to Section 80G(5). However, the Trust erroneously applied under clause (ii), which is applicable to trusts with regular approval seeking renewal.Key Evidence and Findings: The Trust was provisionally registered from 23/03/2022 to the assessment year 2024-25 and applied for revalidation on 11/05/2024, six months before the expiry of its provisional approval. The application was mistakenly filed under the wrong clause.Application of Law to Facts: The Tribunal found that the Trust met the timing requirements for revalidation under clause (iii) but applied under the incorrect clause due to a clerical error.Treatment of Competing Arguments: The Departmental Representative supported the rejection based on the application being filed under the wrong section. The Tribunal, however, focused on the clerical nature of the error and the lack of opportunity given to the Trust to correct it.Conclusions: The Tribunal concluded that the rejection was based on a clerical error and that the Trust should be allowed to correct this mistake.2. Opportunity to Correct the Application ErrorRelevant Legal Framework and Precedents: Principles of natural justice require that parties be given a fair opportunity to present their case and correct any inadvertent errors.Court's Interpretation and Reasoning: The Tribunal emphasized the importance of providing a fair opportunity to rectify errors, especially when they are clerical and do not affect the substantive rights or obligations under the law.Key Evidence and Findings: The Tribunal found no evidence that the Trust was given an opportunity to amend its application to reflect the correct clause under Section 80G(5).Application of Law to Facts: The Tribunal applied the principles of natural justice, determining that the Trust should be allowed to correct the clerical error in its application.Treatment of Competing Arguments: The Tribunal acknowledged the Department's position but prioritized the need for fair procedural conduct over strict adherence to the initial procedural error.Conclusions: The Tribunal decided to restore the matter to the Commissioner of Income Tax (Exemptions) to allow the Trust to file a revised application under the correct provision.SIGNIFICANT HOLDINGSPreserve Verbatim Quotes of Crucial Legal Reasoning: 'We are of the considered view that the error committed by the assessee is merely inadvertent and clerical, as the facts and circumstances of the case only require filing the application under clause (iii) of first proviso to section 80G(5) of the Act.'Core Principles Established: The Tribunal reinforced the principle that clerical errors should not preclude substantive rights and that parties should be given an opportunity to correct such errors in the interest of justice.Final Determinations on Each Issue: The Tribunal set aside the impugned order and remanded the case to the Commissioner of Income Tax (Exemptions) to allow the Trust to correct its application and proceed under the correct statutory provision.