2025 (1) TMI 1049 - AT - Income Tax

Rejection of the application for registration u/s 12A on tecnical error - denying the application for approval in Form No.10AB under clause (ii) of first proviso to sub-section (5) of section 80G - HELD THAT - We find that the assessee trust was required to file the application for registration u/s 12A of the IT Act in Form No.10AB u/s 12A(1)(ac)(iii) of the IT Act but due to typographical error the application was filed in Form No.10AB u/s 12A(1)(ac)(ii) of the IT Act. Respectfully following the decision of Vir Sewa Mandir 2024 (9) TMI 1510 - ITAT DELHI we find force in the arguments of assessee and accordingly deem it appropriate to set-aside the order passed by CIT Exemption Pune and remand the matter back to him with a direction to decide the issue afresh after treating the original application as filed by the assessee under correct/desired section i.e. section 12A(1)(ac)(iii) of the IT Act. The assessee is also hereby directed to respond to the notices issued by Ld. CIT Exemption Pune in this regard and produce specific documents/evidences desired by CIT Exemption Pune in support of application for registration u/s 12A without taking any adjournment. Thus the grounds of appeal raised by the assessee in this appeal are partly allowed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The legal judgment addresses the following core issues:

a. Whether the rejection of the application for registration under Section 12A of the Income Tax Act by the Commissioner of Income Tax (CIT), Exemption, Pune, due to a typographical error in the application form, was justified.

b. Whether the denial of approval under Section 80G(5) of the Income Tax Act by the CIT, Exemption, Pune, was appropriate, given the circumstances surrounding the Section 12A registration application.

2. ISSUE-WISE DETAILED ANALYSIS

a. Rejection of Application for Registration under Section 12A

Relevant Legal Framework and Precedents:

The relevant legal framework involves Section 12A of the Income Tax Act, which deals with the registration of trusts for tax exemption purposes. The case also references previous tribunal decisions, such as "Help For Children In Need Foundation vs. CIT, Exemption, Pune" and "Vir Sewa Mandir vs. CIT (Exemption)," which dealt with similar issues of typographical errors in application forms.

Court's Interpretation and Reasoning:

The tribunal acknowledged that the application was mistakenly filed under Section 12A(1)(ac)(ii) instead of the correct Section 12A(1)(ac)(iii) due to a typographical error. The court recognized that the CIT, Exemption, Pune, rejected the application based solely on this technical error without drawing any adverse inference on the merits of the case.

Key Evidence and Findings:

The tribunal's findings were based on the acknowledgment that the application was filed under an incorrect section due to a typographical error. The tribunal noted that the CIT, Exemption, Pune, did not address the merits of the application.

Application of Law to Facts:

The tribunal applied the principle that technical errors, such as typographical mistakes, should not impede the substantive rights of the appellant. The tribunal emphasized the need to focus on the merits of the case rather than procedural technicalities.

Treatment of Competing Arguments:

The appellant argued that the error was typographical and requested the tribunal to consider the application under the correct section. The respondent, representing the Revenue, supported the CIT's decision. The tribunal found merit in the appellant's argument, citing similar precedents where such errors were rectified.

Conclusions:

The tribunal set aside the CIT's order and remanded the matter for fresh adjudication, directing the CIT to treat the application as filed under the correct section, Section 12A(1)(ac)(iii).

b. Denial of Approval under Section 80G(5)

Relevant Legal Framework and Precedents:

Section 80G(5) of the Income Tax Act pertains to the approval of donations to certain funds, charitable institutions, etc., for tax deduction purposes. The tribunal considered the interrelation between the approval under Section 80G(5) and the registration under Section 12A.

Court's Interpretation and Reasoning:

The tribunal noted that the denial of approval under Section 80G(5) was consequential to the rejection of the Section 12A registration. Since the Section 12A issue was remanded for reconsideration, the tribunal deemed it appropriate to remit the Section 80G(5) issue as well.

Key Evidence and Findings:

The tribunal found that the denial of approval under Section 80G(5) was directly linked to the Section 12A registration status, which was under reconsideration.

Application of Law to Facts:

The tribunal applied the principle that the approval under Section 80G(5) should be reconsidered in light of the remanded decision on Section 12A registration.

Treatment of Competing Arguments:

The appellant contended that the denial of Section 80G(5) approval was unjustified, given the pending reconsideration of Section 12A registration. The tribunal agreed, noting the consequential nature of the two issues.

Conclusions:

The tribunal remanded the Section 80G(5) approval issue to the CIT, Exemption, Pune, for de novo adjudication, contingent upon the outcome of the Section 12A registration reconsideration.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"It is evident that the appellant/ assessee had committed a technical mistake in preparing the application under Section 12A(1)(ac)(ii) instead of 12A(1)(ac) of the Act."

Core Principles Established:

The tribunal established that typographical errors in application forms should not override the substantive merits of a case. Procedural technicalities should not impede the rights of the appellant when the merits of the application are not in question.

Final Determinations on Each Issue:

The tribunal allowed both appeals for statistical purposes. It remanded the Section 12A registration issue to the CIT, Exemption, Pune, for fresh adjudication, treating the application as filed under the correct section. Consequently, the Section 80G(5) approval issue was also remanded for reconsideration.