PRAVINBHAI PURANRAJ STHANAKVASI FOUNDATION,AHMEDABAD V. CIT(EXEMPTION), AHMEDABAD

ITA 1890/AHD/2024

AI Insights

The case involves the Pravinbhai Puranraj Sthanakvasi Foundation, which appealed against the decision of the Commissioner of Income Tax (Exemption), Ahmedabad, rejecting their application for approval under section 80G(5)(iii) of the Income Tax Act, 1961. The foundation argued that the rejection was based on an inadvertent error in citing the wrong sub-clause in their application, which should have been under sub-clause (iv) of the same section. The Tribunal found that the Commissioner had erred in rejecting the application without allowing the foundation an opportunity to correct the mistake, thus violating the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 25313 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: misc
• Other Referred Cases: Uttar Gujarat Shikshan Seva Trust in ITA No.1090/Ahd/2023 dated 05.04.2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A P SINGH
• Assessee Lawyers: PARIN SHAH
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice
• Section: 80G

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 1890/Ahd/2024 (Ǔनधा[रण वष[ / Assessment Year: NA) Pravinbhai Puranraj Sthanakvasi Foundation 9,10, Manichandra Society, Nr. Surdhara Circle, Thaltej, Ahmedabad 380054 Gujarat बनाम/ Vs. Commissioner of Income Tax (Exemption), Ahmedabad. èथायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAOCP4545J (Appellant) .. (Respondent) अपीलाथȸ ओर से /Appellant by : Sh Parin Shah, AR Ĥ×यथȸ कȧ ओर से/Respondent by : Shri A P Singh, CIT-DR Date of Hearing 23/12/2024 Date of Pronouncement 06/01/2025 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the assessee against the order dated 19.10.2024 passed by the Commissioner of Income Tax (Exemption) Ahmedabad, (in short ‘the CIT(Exemption)’), rejecting the application for approval u/s. 80G(5)(iii) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). ITA 1890/Ahd/2024 [Pravinbhai Puranraj Sthanakvasi Foundation vs. CIT(E)] A.Y. NA - 2 – 2. The application for approval of the Trust under clause (iii) of first proviso to sub-section (5) of Section 80G of the Income Tax Act, 1961 was filed by the assessee in Form No.10AB electronically. The ld. CIT(Exemption) observed that the assessee should be provisionally approved prior to filing of application for obtaining regular approval under clause (iii) of first proviso to sub-section (5) of Section 80G of the Act. Since no order of provisional approval was filed by the assessee, the ld. CIT(Exemption) held that the application of the assessee for regular approval was premature and non-maintainable. Therefore, the application of the assessee was rejected. 3. Aggrieved with the order of the ld. CIT(Exemption) the assessee is in appeal before us. The following grounds have been taken in this appeal: 1. The order passed by CIT (Exemption) is bad in law and required to be quashed. 2. Ld. CIT(Exemption) erred in law and on facts in rejecting registration by observing that regular approval was not provided ignoring fact that same has been already submitted to him. 3. Ld. CIT(Exemption) ought to have considered the fact that filing an application under wrong clause of proviso does not alter the objects or activities of trust and its procedural error or technical error and accordingly he ought to have granted registration. 4. Ld. CIT(Exemption) ought to have considered the fact that procedural or technical error does not take away fundamental rights which are otherwise available to the applicant. 5. Ld. CIT(Exemption) erred in law and on facts in not confronting opportunity of being heard and thus violated principle of natural justice. 4. Sh. Parin Shah, the ld. Counsel of the assessee submitted that the assessee trust was incorporated on 06.02.2024 and this ITA 1890/Ahd/2024 [Pravinbhai Puranraj Sthanakvasi Foundation vs. CIT(E)] A.Y. NA - 3 – was the first year of activity. The trust was formed with the object of relief to poor, education and advancement of any other object of public utility. The trust had undertaken the project of construction of girl’s hostel at Navarangpura. The ld. AR submitted that the trust had applied for final registration as the activity had commenced immediately after incorporation and that the registration u/s 12AB(1)(b) was granted on 01/08/2024 for the years 2024-25 to 2028-29. The ld. AR submitted that there was an inadvertent error in the application filed by the assessee as the application was made under subclause (iii) of the proviso to section 80G(5) whereas the application should have been made under sub-clause (iv) of the said proviso. According to the ld. AR the ld. CIT (Exemption) was not correct in rejecting the application of the assessee for this inadvertent mistake without allowing any opportunity of being heard to the assessee. He submitted that the assessee was not allowed any opportunity to rectify the mistake in the application, The ld. AR relied upon the decision of coordinate bench of this Tribunal in the case of Uttar Gujarat Shikshan Seva Trust in ITA No.1090/Ahd/2023 dated 05.04.2024 and submitted that the assessee should have been allowed an opportunity to rectify its application. 5. Per contra the ld. CIT-DR, Sri A P Singh, appearing for the Revenue supported the order passed by the ld. CIT (Exemption) and submitted that since the application was filed by the assessee under wrong provision the Revenue had no option to rectify the mistake. Therefore, he requested to uphold the order passed by ITA 1890/Ahd/2024 [Pravinbhai Puranraj Sthanakvasi Foundation vs. CIT(E)] A.Y. NA - 4 – the ld. CIT (Exemption). He further submitted that the assessee was free to make a fresh application under the correct provisions of the Act. 6. We have given thoughtful consideration to the rival submissions and perused the materials available on the record. The only reason for rejecting the registration u/s. 80G(5) of the Act was that the assessee had wrongly filed the application under sub-clause (iii) of the proviso to section 80G(5) of the Act. The said proviso is reproduced for sake of easy comprehension: Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval,— (i) where the institution or fund is approved under clause (vi) [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020], within three months from the 1st day of April, 2021; (ii) where the institution or fund is approved and the period of such approval is due to expire, at least six months prior to expiry of the said period; (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier; 6[or] 7[(iv) 8[***] where activities of the institution or fund have-- (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said approval is sought; (B) commenced9[***]at any time after the commencement of such activities:] 7. As rightly held by the ld. CIT (Exemption) the application could have been filed under sub-clause (iii) of the proviso only in the case where the institution or fund was provisionally approved. In the present case the assessee was not granted provisional approval when the present application ITA 1890/Ahd/2024 [Pravinbhai Puranraj Sthanakvasi Foundation vs. CIT(E)] A.Y. NA - 5 – was filed by it. In the case of the assessee sub-clause (iv)(B) of the proviso was applicable since the trust had had already commenced its activities and the application for approval was filed thereafter. The fact that the activity of the trust had commenced immediately after incorporation on 06.02.2024 and, therefore, sub-clause (iv) of the proviso was applicable, was apparent from the reply of the assessee filed before the ld. CIT (Exemption). Under the circumstances the ld. CIT (Exemption) should have allowed an opportunity to the assessee to rectify its application. The rejection of the application by the ld. CIT (Exemption) without allowing any opportunity to the assessee was against the principle of natural justice. It is undisputed fact that the assessee was carrying out the charitable activities and the genuineness of the activities were not under doubt. The denial of registration only for wrong mention of the sub-clause in the application certainly affects the charitable activities carried out by the trust. 8. An identical issue was involved in the case of Uttar Gujarat Shikshan Seva Trust (Supra) wherein the Coordinate Bench of this Tribunal had set aside the matter to the ld. CIT (Exemption) with a direction to pass order on merits after the rectified application was filed by the assessee. In that case the assessee had filed application u/s 80G(5)(ii) of the Act instead of u/s 80G(5)(iii) of the Act. 9. Respectfully following the decision of the Coordinate Bench, the present impugned order of ld. CIT (Exemption) is hereby set aside with a direction to pass order on merits on the rectified application to be filed by the assessee. Needless to mention, the assessee should file the application for ITA 1890/Ahd/2024 [Pravinbhai Puranraj Sthanakvasi Foundation vs. CIT(E)] A.Y. NA - 6 – registration under the correct sub-clause of proviso to section 80G(5) of the Act before the ld. CIT (Exemption). 10. In the result, the appeal filed by the assessee is allowed for statistical purpose. This Order pronounced on 06/01/2025 Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 06/01/2025 S. K. SINHA True Copy आदेश कȧ ĤǓतͧलͪप अĒेͪषत/Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant 2. Ĥ×यथȸ / The Respondent. 3. संबंͬधत आयकर आयुÈत / Concerned CIT 4. आयकर आयुÈत(अपील) / The CIT(A)- 5. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड[ फाईल / Guard file. आदेशानुसार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलȣय अͬधकरण, अहमदाबाद / ITAT, Ahmedabad "