SHRI RAM EK DHARMADA TRUST,MUMBAI V. CIT (EXEMPTION), MUMBAI, MUMBAI

ITA 4543/MUM/2025

AI Insights

The case involves Shri Ram Ek Dharmada Trust appealing against the order of the Commissioner of Income Tax (Exemption), Mumbai, which rejected the Trust's application for permanent approval under Section 80G of the Income-tax Act, 1961. The rejection was based on a clerical error where the Trust mistakenly filed under sub-clause (ii) instead of (iii) of the first proviso to Section 80G(5). The Tribunal found that the rejection was procedurally unfair and violated the principles of natural justice, as the Trust was not given an opportunity to rectify the mistake before the rejection was made.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779188 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: misc
• Appeal Filed On: 16-07-2025
• Other Referred Cases: Rotary Charity Trust vs. CIT(E), Celebrate Life vs. CIT(E)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMA SHANKAR PRASAD
• Assessee Lawyers: NIRAJ SHETH
• Keywords: Set aside; Opportunity of being heard; Bonafide belief; Principle of natural justice; Charitable institution
• Section: 80G

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL“D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.4543/MUM/2025 (A.Y. 2025-26) Shri Ram Ek Dharmada Trust 9, Babulnath Road, Chowpatty Road, Mumbai 400 007, Maharashtra v/s. बनाम Commissioner of Income Tax (Exemption), Mumbai, 601, 6th Floor, Cumballa Hill, MTNL TE Building, Peddar Road, Dr. Gopalrao Deshmukh Marg, Cumballa Hill Mumbai 400026, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AAHTS2280D Appellant/अपीलार्थी .. Respondent/प्रतिवादी Appellant by : Shri Niraj Sheth, Adv. Respondent by : Shri Umashankar Prasad, (CIT DR) Date of Hearing 16.09.2025 Date of Pronouncement 14.10.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Exemptions), CIT(E), Mumbai [hereinafter referred to as “CIT(E)”] pertaining to the order passed u/s. 80G of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 24.09.2021 for the Assessment Year [A.Y.] 2025-26. Printed from counselvise.com P a g e | 2 ITA No. 4543/Mum/2025 A.Y. 2025-26 Shri Ram Ek Dharmada Trust 2. In various grounds of appeal, it is contended the Trust registered as Public charitable Trust had been granted provisional approval under clause (ii) of the first proviso to Section 80G(5) of the Act for a period of three years, valid up to A.Y. 2024-25. In accordance with the provisions under the Act, the Trust was required to apply for permanent approval by filing Form 10AB. The said form was filed on 25.10.2024.The ld.CIT (Exemptions) erred in law and on facts in rejecting the application filed in Form 10AB on the alleged ground that it was filed “under the wrong section”, whereas the application was correctly filed under Section 80G(5) of the Act, albeit under the wrong sub-clause [(ii) instead of (iii)] of the first proviso, which is a minor procedural error.The rejection is based on a clear factual mistake, as there is no dispute that the application was made under the correct legal provision (Section 80G(5). The only error, if any, is in the selection of the sub-clause, which is not a sufficient ground for rejection.The Ld.CIT(E) failed to appreciate that the error in selecting sub-clause (ii) instead of (iii) was a bona fide, clerical mistake and did not affect the eligibility, merit, or substance of the application. 3. Facts of the case are that the ld.CIT(E)on perusal of the From 10AB filed by the applicant noted that it had applied under clause Printed from counselvise.com P a g e | 3 ITA No. 4543/Mum/2025 A.Y. 2025-26 Shri Ram Ek Dharmada Trust (ii) of the first proviso of section 80G(5) of the Act which was valid only for trusts already having regular approval for five years and is seeking renewal of regular approval which is due to expire. The applicant, having provisional approval for three years did not qualify to make the application under clause (ii) of the first proviso of section 80G(5) of the Act.Accordingly,he rejected the application filed in Form 10AB on the alleged ground that it was filed “under the wrong section”. 4. Before us, the ld.DR has relied on the order of the CIT while the ld.AR has contented that due to a bonafide oversight, the assessee selected sub-clause (ii) in the form instead of sub-clause (iii) of the first proviso to Section 80G(5). However, the form was still filed under the correct section, i.e., Section 80G(5) of the Act.The first notice was issued by the department on March 17, 2025, requesting certain information, which was duly submitted on March 24, 2025. There was no mention or objection at this stage regarding the selected clause.The application was complete in all respects and all required documents and information were submitted in the given time frame in good faith.The application was later rejected which incorrectly stated that the application was filed under the “wrong section”, when in fact it was filed under the correct section [Section 80G(5)] but under the wrong sub-clause, a minor Printed from counselvise.com P a g e | 4 ITA No. 4543/Mum/2025 A.Y. 2025-26 Shri Ram Ek Dharmada Trust clerical error. The rejection, therefore, is factually incorrect, procedurally unfair, and legally untenable. It is pleaded that the order has been passed on a ground never communicated to the assessee at any stage of the proceedings.The rejection is contrary to the spirit of the law and principles of natural justice, and is in conflict with several judicial precedents that advocate substance over form, particularly in beneficial legislations like Section 80G of the Act.It is requested to condone the minor clerical error as well as the delay in filing, set aside the rejection order and direct the ld.CIT(E) to process the application on merits under the correct sub-clause (iii) of Section 80G(5) of the Act. 5. We have heard the rival contentions and carefully perused the records. We note that the application of the assessee for approval u/s 80G of the Act has been rejected only on account of technical reasons. In fact, instead of straightway rejecting the application, ld. CIT(E) was supposed to give opportunity to the assessee to rectify the mistake.There is no whisper in the order of ld.CIT(E) about any query or show cause to the assessee about the ineligibility of assessee. Taking an action against the assessee without confronting it about the reasons for such rejection clearly amounts to violation of the principle of natural justice as the Printed from counselvise.com P a g e | 5 ITA No. 4543/Mum/2025 A.Y. 2025-26 Shri Ram Ek Dharmada Trust assessee was not afforded reasonable opportunities of being heard to submit its contentions in defence to the basis of rejection of application. 5.1 It is a case of the assessee that due to inadvertent mistake and bonafide belief it had correctly applied Form 10AB under Section 80G(5)(iii), which has not been taken into consideration by the ld.CIT(E) in its proper prospective and neither the assessee being heard by him and rejected the case thereafter. Before we proceed to examine the facts in assessee's case, it is important to first look at the relevant provisions of first proviso to subsection (5) of section 80G of the Act which read as under - 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 Ist 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: [or] [(iv) [***] 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) commenced Printed from counselvise.com P a g e | 6 ITA No. 4543/Mum/2025 A.Y. 2025-26 Shri Ram Ek Dharmada Trust 5.2 From the facts of the case, in our considered view, there is merit in claim of the ld. AR that assessee has selected the wrong clause inadvertently while filing the application for final registration in Form 10AB. Further, we notice that assessee did not have the opportunity of being heard before ld. CIT(E) which otherwise assessee might have explained the facts to avoid the impugned rejection. It is not denied that the assessee had already been granted provisional approval u/s.80G(5) of the Act and the correct clause in which the application ought to have been moved by the assessee was sub-clause (iii) of First Proviso to section 80G of the Act. All these facts were there on record before the ld. CIT(E) is also not denied. In fact, the provisional registration was granted to the assessee by the ld. CIT(E) himself. It is abundantly clearly, therefore, the assessee's application seeking approval u/s.80G(5) of the Act has been denied merely for an inadvertent mistake of mentioning incorrect sub-clause in which the application was made, which ld. CIT(E) himself could have corrected and considered in the light of the fact that he was aware of the fact and situation in which the application was filed by the assessee. We, therefore, find merit in the contention of the ld. AR for the assessee that the ld. CIT(E) ought not to have rejected the assessee's application but should have considered it in the light of the correct provisions of law. Printed from counselvise.com P a g e | 7 ITA No. 4543/Mum/2025 A.Y. 2025-26 Shri Ram Ek Dharmada Trust 6. This issue we find is squarely covered by the decision of the ITAT, Mumbai Bench in the case of Rotary Charity Trust vs. CIT(E) in ITA No.6133/Mum/2024 dated 09.01.2025 wherein it considered identical issue in favour of the assessee and restored the matter back to the ld. CIT(E) for consideration afresh treating the application to have been made in terms of the correct provisions of law.The Mumbai Bench of ITAT in the case of Celebrate Life vs. CIT(E) passed in ITA No. 5692/Mum/2024 wherein on identical facts and circumstances of the matter where due to inadvertent error the wrong clause was inserted instead of clause (iii) of first proviso to sub-section 80G of the Act, granted liberty to the assessee to file a fresh application before the ld. CIT(E) under the correct Form with the further directions upon the CIT(E) to accept the same and to grant permission to load the said form online and decide the issue, in accordance with law, after affording an opportunity of being heard to the appellant. 7. In view of the above discussion, we remit the issue back to the file of ld. CIT(E), with a direction to grant an opportunity of being heard to the assessee and to consider the evidences on record or any other evidence which it may choose to file at the time of hearing of the matter in regard to grant of approval under section 80G(5)(ii) of the Act. Printed from counselvise.com P a g e | 8 ITA No. 4543/Mum/2025 A.Y. 2025-26 Shri Ram Ek Dharmada Trust Considering such facts and circumstances of the instant case, in order to provide a fair opportunity of being heard and to represent its case in a judicious manner, the matter needs to be revisited by the ld. CIT(E) after affording reasonable and adequate opportunity of being heard to the assessee. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 14.10.2025. Sd/- Sd/- SANDEEP GOSAIN PRABHASH SHANKAR (न्याययकसदस्य /JUDICIAL MEMBER) (लेखाकारसदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिनाुंक /Date 14.10.2025 Lubhna Shaikh / Steno आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. Printed from counselvise.com P a g e | 9 ITA No. 4543/Mum/2025 A.Y. 2025-26 Shri Ram Ek Dharmada Trust सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अयिकरण/ ITAT, Bench, Mumbai. Printed from counselvise.com "