SWARAJ FOUNDATION,VISAKHAPATNAM V. INCOME TAX OFFICER (EXEMPTION WARD), VISAKHAPATNAM

ITA 69/VIZ/2025

AI Insights

The case involves Swaraj Foundation, a public charitable trust, which appealed against the decisions of the Commissioner of Income-Tax (Exemption), Hyderabad, rejecting its applications for permanent registration under Sections 12AB and 80G of the Income-tax Act, 1961. The rejections were primarily based on procedural errors in the filing of forms, which the Tribunal found to be technical and curable. The Tribunal noted that the trust had been granted provisional registrations despite these errors, and thus, the substantive compliance was met. The Tribunal directed the CIT(Exemptions) to reconsider the applications on their merits, disregarding the procedural mistakes.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705943 (ITAT-VISAKHAPATNAM)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: misc
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Opportunity of being heard; Principle of natural justice; Charitable institution
• Section: 12AA; 2; 80G

Judgement Text

"आयकर अपीलीय अधिकरण, विशाखापटणम पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL Visakhapatnam Bench श्री रिीश सूद, माननीय न्याययक सदस्य एिं श्री एस. बालक ृष्णन, माननीय लेखा सदस्य SHRI RAVISH SOOD, HON’BLE JUDICIAL MEMBER AND SHRI BALAKRISHNAN. S, HON’BLE ACCOUNTANT MEMBER, I.T.A. Nos.68 and 69/Viz/2025 Swaraj Foundation, Visakhapatnam. PAN : AAFTS2386C Vs. The Income Tax Officer, (Exemption Ward), Visakhapatnam. (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) करदाता का प्रतततितित्व/ Assessee Represented by : Shri GVN Hari, Advocate. राजस्व का प्रतततितित्व/ Department Represented by : Dr. Satyasai Rath, CIT(DR) सुिवाई समाप्त होिे की ततति/ Date of Conclusion of Hearing : 26.06.2025 घोषणा की तारीख/ Date of Pronouncement : 30.06.2025 O R D E R प्रतत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The captioned appeals filed by the assessee trust are directed against two separate orders passed by the Commissioner of Income-Tax (Exemption), [for short “CIT (Exemptions)”], Hyderabad, dated 13.02.2024 and 26.11.2024, wherein the latter had declined the assessee's application for permanent registration/approval u/s. 12AB 2 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society and u/s 80G(5) of the Income-tax Act, 1961 (in short ‘the Act’), respectively. Since these appeals pertain to the same assessee trust, therefore, these are being taken up and disposed off by way of a consolidated order. 2. We shall first take up the appeal filed by the assessee trust in ITA No.69/Viz/2025, wherein it has assailed the impugned order on the following grounds of appeal: “1. The order of the learned Commissioner of Income Tax (Exemptions), Hyderabad is contrary to the facts and also the law applicable to the facts of the case. 2) The learned CIT (Exemptions) is not justified in rejecting the application filed by the appellant in Form No.10AB for renewal of registration u/s 12AB of the Act. 3. Any other ground that may be urged at the time of hearing.” 3. Succinctly stated, the assessee is a public charitable trust constituted vide trust deed dated 15.08.2004. The assessee trust has been established to undertake charitable activities including providing scholarships, support for education and sports, assistance to the poor and underprivileged, and support for homes for the aged. The assessee trust was granted registration under Section 12AA of the Act by the CIT- 2, Visakhapatnam vide his order dated 09.11.2005. 4. That pursuant to the changes introduced by the Finance Act, 2020, the assessee trust was required to revalidate its registration by 3 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society filing “Form 10A” under clause (i) of Section 12A(1)(ac). However, due to an inadvertent error, while filing “Form 10A” on 11.03.2023, the assessee trust wrongly selected section code “02 - sub-clause (vi)” instead of “01 - sub-clause (i)”. However, despite the incorrect selection, the CPC, Bangalore issued Form 10AC dated 24.03.2023, granting provisional registration to the assessee trust for a period of 3 years, i.e., from 24.03.2023 to AY 2025-26 under the incorrect section code i.e under Section 12A(1)(ac)(vi) of the Act. 5. Subsequently, the assessee trust filed “Form 10AB” on 24.03.2024 for permanent registration under Section 12AB of the Act. 6. The CIT(Exemptions), during the course of proceedings initiated under Section 12A(1)(ac)(iv), issued notice dated 10.06.2024 and 01.07.2024 and called upon the assessee trust to file its memorandum of association/trust deed and other documents. On examination, the CIT(Exemptions) observed the incorrect selection of section code in the earlier “Form No. 10A” that was online, and called upon it to explain the same. In reply, the assessee trust submitted that the wrong selection was inadvertent and unintentional, and requested that the mistake be condoned and permanent registration under Section 12AB be granted on merits. 4 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society 7. However, the CIT(Exemptions) held a firm conviction that there was no provision to rectify the error in the earlier “Form No. 10A” and hence, vide his order dated 26.11.2024 rejected the application filed by the assessee trust in “Form No. 10AB” for permanent registration by holding the same as non-maintainable and infructuous. 8. The assessee trust being aggrieved with the order of the CIT(Exemption) has carried the matter in appeal before us. 9. We have heard the Ld. Authorized Representatives of both parties, perused the orders of the CIT(Exemption) and the material available on record. 10. Shri. GVN Hari, Ld. Authorized Representative (for short, “AR”) for the assessee trust at the threshold of hearing of the appeal, submitted that the CIT(Exemption) most arbitrarily based on a clerical mistake that has its genesis in an inadvertent error on the part of the assessee trust while filing the online application in “Form No. 10A” for provisional registration on 11.03.2023, had rejected its application for permanent registration u/s 12AB of the Act. Elaborating further on his contention, the Ld. AR submitted that it was not only the assessee trust that had while filing “Form No. 10A” on 11.03.2023 wrongly selected the section code “02 - sub-clause (vi)” instead of “01 - sub-clause (i)”, but also the 5 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society CPC, Bangalore had issued “Form No. 10AC” dated 24.03.2023, granting provisional registration to the assessee trust for a period of 3 years, i.e., from 24.03.2023 to AY 2025-26 under the incorrect section code. The Ld. AR submitted that the assessee trust was validly registered under Section 12AA since 2005 and had complied with the statutory requirement of revalidation. The Ld. AR further submitted that the mistake in selecting the incorrect section code was purely procedural, and the substantive compliance of filing Form 10A was met. The Ld. AR submitted that the CIT(Exemption) instead of being guided by the inadvertent procedural mistakes and technical errors that had crept in at the stage of filing of the application in “Form No. 10A” for provisional registration on 11.03.2023, and rejecting the application filed by the assessee trust for permanent registration, should have examined its said application in “Form No. 10AB” for permanent registration on merit. The Ld. AR had drawn our attention to the “Form No. 10AC”, dated 24.03.2023 issued by CPC, wherein provisional registration was clearly granted under the Act, albeit under an incorrect sub-clause, which was selected by mistake. Carrying his contention further, the Ld. AR submitted that the principles of natural justice and substantial compliance warranted that the assessee trust should not be penalized for a technical mistake, especially when the department itself, 6 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society i.e the CPC, Bangalore had accepted the application for provisional registration and issued a valid registration. 11. Per contra, the Ld. CIT-DR relied on the order passed by the CIT(Exemption). 12. We have thoughtfully considered the contentions advanced by the Ld. Authorised representatives of both parties. 13. Admittedly, the assessee trust held a valid registration under Section 12AA since 09.11.2005, which necessitated revalidation under Section 12AB by selecting section code 12A(1)(ac)(i). Although the assessee trust in its “Form No. 10A” filed on 11.03.2023 for provisional registration had inadvertently selected the section code “02 - sub-clause (vi)” instead of “01 - sub-clause (i)” of Section 12A(1)(ac), but there can be no denying of the fact that the CPC itself had by acting upon the said application issued “Form No. 10AC” on 24.03.2023 granted provisional registration for a period of 3 years. 14. Considering the aforesaid facts, we are of the firm conviction that as the application for permanent registration filed by the assessee trust in “Form No. 10AB” was made in continuation of the aforementioned provisional registration; therefore, the CIT(Exemptions) should have 7 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society examined it on merits, instead of rejecting it solely on technical grounds. 15. At this stage, it would be relevant to point out that the Hon’ble Courts have consistently held that the procedural mistakes or technical errors that are curable and do not affect the core eligibility should not be allowed to defeat the rights of an assessee, particularly in the case of charitable institutions. 16. In our considered view, the CIT(Exemptions) ought not to have rejected the application filed by the assessee trust in “Form No. 10AB” for permanent registration u/s 12AB as non-maintainable without affording it an opportunity to rectify the said procedural error. We are of firm conviction that the rendering of substantive justice should not be allowed to be curtailed by technical lapses. 17. We thus, in terms of our aforesaid deliberations are of the considered view that the matter in all fairness requires to be set aside to the file of the CIT(Exemptions) with the direction to examine the assessee’s application for registration under Section 12AB afresh on merits, after granting a reasonable opportunity of being heard to the assessee trust. The CIT(Exemptions) is further directed to take a liberal 8 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society and pragmatic approach and pass a speaking and reasoned order, considering the procedural error as curable. 18. In the result, the appeal filed by the assessee trust in ITA No.68/Viz/2025 is allowed for statistical purposes in terms of our aforesaid observations. ITA No.68/Viz/2025 19. We shall now deal with the appeal filed by the assessee trust, wherein it has assailed the rejection of its application for permanent registration under Section 80G(5) of the Act by the CIT(Exemption). The assessee trust has assailed the impugned order on the following grounds of appeal before us: “1. The order of the learned Commissioner of Income Tax (Exemptions), Hyderabad is contrary to the facts and also the law applicable to the facts of the case. 2) The learned CIT (Exemptions) is not justified in rejecting the application filed by the appellant in Form No.10AB for approval u/s 80G of the Act. 3. Any other ground that may be urged at the time of hearing.” 20. The Ld. AR submitted that the assessee trust was granted the approval under Section 80G of the Act by the CIT-1, Visakhapatnam vide his order dated 11.10.2011. 21. Elaborating further on his contention, the Ld. AR submitted that it was only the assessee trust that had while filing “Form No. 10A” on 9 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society 24.08.2021 wrongly selected the section code “12 - sub-clause (A) of clause (iv) of ‘first proviso’ to sub-section (5) of Section 80G” instead of “12 - sub-clause (A) of clause (i) of ‘first proviso’ to sub-section (5) of Section 80G”, but also the department had issued “Form No. 10AC” dated 24.09.2021, granting provisional registration to the assessee trust from 24.09.2021 to AY 2024-25 under the incorrect section code i.e Clause (iv) of the “first proviso” to Section 80G(5) of the Act. The Ld. AR submitted that the assessee trust was validly registered under Section 80G since 2011 and had complied with the statutory requirement of revalidation. The Ld. AR further submitted that the mistake in selecting the incorrect section code was purely procedural and the substantive compliance of filing Form 10A was met. The Ld. AR submitted that the CIT(Exemption) instead of being guided by the inadvertent procedural mistakes and technical errors that had crept in at the stage of filing the application in “Form No. 10A” for provisional registration on 28.08.2021, and rejecting the application filed by the assessee trust for permanent registration in “Form No. 10AB” on 14.06.2024 should have rather examined the same on merit. The Ld. AR had drawn our attention to the “Form No. 10AC”, dated 24.09.2021 issued by the department, wherein provisional approval u/s 80G(5) was clearly granted under the Act, albeit under an incorrect sub-clause, 10 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society which was selected by mistake. Carrying his contention further, the Ld. AR submitted that the principles of natural justice and substantial compliance warranted that the assessee trust should not be penalized for a technical mistake, especially when the department itself had accepted the application filed by the assessee trust for provisional approval. 22. Per contra, the Ld. CIT-DR relied on the order passed by the CIT(Exemption). 23. As the impugned order of the CIT(Exemption) assailed before us referred to an application filed by the assessee trust in “Form No. 10AB” for registration u/s 12AB of the Act and not for approval u/s 80G of the Act, the Ld. AR was queried about the same. In reply, the Ld. AR submitted that its application for approval u/s 80G has been rejected based on the said order it had received from the CIT(Exemption), Hyderabad. Elaborating further, the Ld. AR submitted that the factual mistakes in the impugned order had crept in on the part of the office of the CIT(Exemption). The Ld. A.R to dispel all doubts on the issue in hand had taken us through, viz. (i). copy of the application filed in “Form No. 10A” on 20.08.2021 for provisional approval u/s 80G of the Act; (ii). copy of “Form No. 10AC” issued on 24.09.2021; (iii). copy of “Form No. 11 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society 10AB” application filed by the assessee trust for permanent approval u/s 80G of the Act; and (iv). copies of notices dated 21.06.2024, 07.07.2024 and 29.11.2024 issued by the CIT(Exemption) alongwith the copies of the replies filed by the assessee trust dated 13.07.2024 and 04.12.2024. 24. The Ld. CIT-DR on being confronted by the explanation of the assessee trust regarding the aforesaid discrepancies in the impugned order passed by the CIT(Exemption) dated 13.12.2024 did not controvert the same. 25. We have thoughtfully considered the issue in hand in the backdrop of the impugned order passed by the CIT(Exemption) and the material available on record. As the facts and issues involved in the captioned appeal remain the same as were there before us in ITA No.69/Viz/2025, therefore, the order therein passed while disposing of the said appeal shall apply mutatis-mutandis for disposing of the present appeal. 26. We thus, in terms of our aforesaid deliberations are of the considered view that the matter in all fairness requires to be set aside to the file of the CIT(Exemptions) with a direction to examine the application filed in “Form No. 10AB” by the assessee trust for grant of 12 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society approval under Section 80G of the Act afresh on merits. Needless to say, the CIT(Exemption) shall in the course of the set aside proceedings afford a reasonable opportunity of being heard to the assessee trust. The CIT(Exemptions) is further directed to take a liberal and pragmatic approach and pass a speaking and reasoned order, considering the procedural error as curable. 27. In the result, the appeal filed by the assessee trust in ITA No.68/Viz/2025 is allowed for statistical purposes in terms of our aforesaid observations. 28. Resultantly, both the appeals filed by the assessee trust are allowed for statistical purposes in terms of our aforesaid observations. Order pronounced in the Open Court on 30th June, 2025. Sd/- (एस. बालक ृष्णन) (S. BALAKRISHNAN) लेखा सदस्य/ACCOUNTANT MEMBER Sd/- (रिीश सूद) (RAVISH SOOD) न्यायिक सदस्य/JUDICIAL MEMBER Sd/- Hyderabad, dated 30.06.2025. TYNM/sps 13 ITA Nos.68 and 69/Viz/2025 Medeng Unicus Society आदेशकी प्रतततिति अग्रेतषत/ Copy of the order forwarded to:- 1. तिर्ााररती/The Assessee : Swaraj Foundation, D.No.49-28-13, Mohan Sadan, Madhuranagar, Visakhapatnam. 2. राजस्व/ The Revenue : The Income Tax Officer, (Exemption Ward), Visakhapatnam. 3. The Principal Commissioner of Income Tax (Exemptions), Visakhapatnam 4. तवभागीयप्रतततितर्, आयकर अिीिीय अतर्करण, / DR, ITAT, Visakhapatnam. 5. गार्ाफ़ाईि / Guard file आदेशािुसार / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam "