2025 (9) TMI 25 - AT - Income Tax

Trust allowed to correct Form 10AB/10AD errors; s.12AB and s.80G registrations cannot be denied for inadvertent pre-deadline mistake

Jiddu Krishnamurti Centre Versus The Commissioner of Income Tax (Exemptions), Hyderabad

Jiddu Krishnamurti Centre Versus The Commissioner of Income Tax (Exemptions), Hyderabad - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether an assessee-trust that existed and was registered under sections 12A/80G prior to 01.04.2021, but which filed Form 10AB (instead of Form 10A with the appropriate section codes) seeking regular registration under sections 12AB and 80G, may be denied consideration on the ground of filing an incorrect application form and section code when the error is asserted to be inadvertent and the application was filed within the prescribed period? 2. Whether the Commissioner (Exemptions) ought to have permitted rectification or directed re-filing of the correct form/codes or at least given an opportunity of hearing, instead of rejecting the Form 10AB application outright on technical grounds? 3. Whether the Tribunal should remit the matter to the Commissioner (Exemptions) for fresh consideration on merits, allowing filing of the correct form with effect from the original filing date where the initial filing was made before the statutory cut-off? ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of rejecting application filed in Form 10AB by an existing pre-1.4.2021 trust: Legal framework: The statutory scheme requires trusts seeking registration/renewal under the new regime to file the prescribed electronic forms (Form 10A or Form 10AB) with the appropriate section codes for registration under sections 12AB and 80G; timelines for filing as notified by the Board apply. Precedent Treatment: No specific judicial precedents are cited in the record; the Tribunal applies principles of statutory interpretation and administrative fairness to the facts. Interpretation and reasoning: The Tribunal accepts the undisputed facts that the trust existed before 01.04.2021, had provisional registration issued by CPC, and that the application was filed electronically within the prescribed due date. The Tribunal finds the Commissioner's sole ground for rejection was that Form 10AB and inapplicable section codes were used instead of Form 10A with the proper codes. The Tribunal treats the appellant's explanation that the filing mistake was a technical/inadvertent error compounded by ambiguity in the transitional regime as credible and material. Ratio vs. Obiter: Ratio - where an existing pre-1.4.2021 trust files an application within the notified period but uses an incorrect statutory form and codes due to a technical/ambiguous transitional regime, outright rejection without considering rectification or merits is impermissible. Obiter - observations on the precise nature of the ambiguity in transitional rules are ancillary. Conclusions: The Commissioner's rejection on purely technical grounds is not sustainable when the substantive eligibility and timely filing are not disputed; the application required consideration rather than absolute dismissal. Issue 2 - Duty to permit rectification or to afford opportunity to cure technical defects: Legal framework: Administrative-action principles require that an applicant be given an opportunity to cure defects or to be heard before a final adverse order is passed when the defect is procedural/technical and substantive entitlement is not controverted; applicability of prescribed forms must be construed in light of the right to be heard and avoidance of disproportionate hardship. Precedent Treatment: The Tribunal does not cite authorities but follows orthodox administrative law principles favouring rectification over permanent forfeiture where error is inadvertent and remedy is available. Interpretation and reasoning: Given the appellant's explanation and the fact that the provisional registration was granted by CPC, the Tribunal holds that the Commissioner ought to have either considered the application on merits or directed the trust to file the correct Form 10A with appropriate codes, rather than rejecting the application outright. Refusal to allow rectification would unjustly penalize the trust for a technical filing error and cause permanent deprivation of registration absent proof of mala fides or substantive ineligibility. Ratio vs. Obiter: Ratio - when a procedural error is shown to be inadvertent and substantive eligibility is undisputed, the authority must allow rectification or afford an opportunity to file the correct form rather than impose irreversible prejudice by rejection. Obiter - recommended approach to treat corrected filing as if it were made on the original date where timely filing is otherwise shown. Conclusions: The Tribunal directs that rectification must be permitted and that rejection on technical grounds, without offering remedy, is contrary to principles of fairness. Issue 3 - Remittal and treatment of corrected filing date: Legal framework: Administrative remittal is appropriate where the initial decision failed to consider merits or procedural cure; treating a corrected re-filing as effective from the original timely filing date is consistent with avoiding prejudice where the original filing was within the notified period and the error was technical. Precedent Treatment: No precedent is cited; the Tribunal exercises remedial powers to ensure merits-based adjudication and to prevent undue hardship from procedural mistakes. Interpretation and reasoning: The Tribunal remits the matter to the Commissioner (Exemptions) with directions to consider the application on merits after providing reasonable opportunity of hearing and to permit the assessee to file the correct Form 10A with the appropriate section codes. The Tribunal further directs that such corrected filing be treated as if filed on the original date of the incorrect filing (29.06.2024), thereby preserving the benefit of timely filing under the Board's notification. Ratio vs. Obiter: Ratio - where a timely initial filing in an incorrect form is shown to be an inadvertent technical error, the authority should allow re-filing and consider the corrected filing as having been made on the original timely date when remitting for merits consideration. Obiter - the precise circumstances under which back-dating should be refused are not examined. Conclusions: Remittal with directions to allow correction and to treat the corrected application as filed on the original date is ordered; the Commissioner must decide on merits after opportunity of hearing. Disposition and concluding point (administrative relief): Having found that the rejection was premised solely on a technical/formal defect, the Tribunal set aside the Commissioner's order, restored the matter for merits consideration, ordered permission to file the correct form with proper codes, and directed that such filing be treated as effective from the date of the original timely submission; appeals are allowed for statistical purposes and matter remitted for fresh decision after hearing.