2025 (3) TMI 803 - AT - Income Tax

Rejection of application for registration u/s 12AA - 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) - HELD THAT - We find that under identical situations in the case of Raj Krishan Jain Charitable Trust 2024 (6) TMI 1400 - ITAT DELHI wherein held typographical error deserves to be corrected. 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.

1. ISSUES PRESENTED and CONSIDERED

The core legal issue considered in this judgment is whether the rejection of the application for registration under Section 12AA of the Income Tax Act by the Commissioner of Income Tax (Exemption), Pune, was justified given the typographical error in the section under which the application was filed. Specifically, the application was submitted under Section 12A(1)(ac)(vi)(B) instead of Section 12A(1)(ac)(iii).

2. ISSUE-WISE DETAILED ANALYSIS

Relevant legal framework and precedents: The legal framework involves the provisions of Section 12A of the Income Tax Act, which pertains to the registration of trusts for tax exemption purposes. The relevant subsections, 12A(1)(ac)(iii) and 12A(1)(ac)(vi), dictate the procedural requirements for such registration. The Tribunal also considered precedents from similar cases, notably the decisions in Shree Swaminarayan Gadi Trust vs. CIT and Raj Krishan Jain Charitable Trust, where typographical errors in the application process were deemed curable.

Court's interpretation and reasoning: The Tribunal interpreted the error in the application as a curable defect, emphasizing the importance of substance over form. The Tribunal noted that the assessee trust had a long-standing registration under Section 12A since 1988, indicating its genuine status. The Tribunal reasoned that denying registration based solely on a typographical error would be unjust, especially when the trust was otherwise compliant with the requirements.

Key evidence and findings: The Tribunal found that the trust had inadvertently filed the application under the wrong subsection due to a typographical error, as it was prepared without professional assistance. The trust's longstanding compliance and previous registration were significant factors in the Tribunal's consideration.

Application of law to facts: Applying the law, the Tribunal determined that the error in the application was not substantive enough to warrant outright rejection. The Tribunal applied the principles from the cited precedents, which allowed for correction of such errors, and concluded that the application should be considered under the correct subsection.

Treatment of competing arguments: The Tribunal considered the Revenue's argument, which supported the rejection of the application based on the procedural error. However, it found the assessee's argument more compelling, given the precedents and the nature of the error. The Tribunal emphasized fairness and the trust's compliance history in its decision.

Conclusions: The Tribunal concluded that the rejection of the application by the Commissioner was not justified. It set aside the Commissioner's order and remanded the matter for reconsideration, instructing the Commissioner to treat the application as filed under Section 12A(1)(ac)(iii) and to provide the trust an opportunity to correct the error and present its case.

3. SIGNIFICANT HOLDINGS

Preserve verbatim quotes of crucial legal reasoning: The Tribunal quoted from the Raj Krishan Jain Charitable Trust case, emphasizing the curable nature of the typographical error: "In consonance with the decision rendered by the co-ordinate Bench, the typographical error deserves to be corrected."

Core principles established: The judgment reinforces the principle that procedural errors, such as typographical mistakes in applications, should not overshadow the substantive compliance and genuine status of an applicant. It underscores the importance of allowing applicants to correct such errors, especially when they have a history of compliance.

Final determinations on each issue: The Tribunal determined that the application should be reconsidered under the correct provision, Section 12A(1)(ac)(iii), and remanded the case for fresh adjudication. It directed the Commissioner to provide a reasonable opportunity for the trust to present its case and correct the error, while also mandating the trust to cooperate fully in the process.

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