Mentioning Of Wrong Clause In Application For Registration U/s 80G Out Of Inadvertence, Is No Basis To Deny Deduction: Kolkata ITAT

The Bench comprising of Sonjoy Sarma (Judicial Member) and Girish Agrawal (Accountant Member) observed that, “all the facts were before CIT (exemption) when the assessee for the first time applied for the final approval u/s 80G of the act. Merely, because the assessee out of inadvertence had mentioned another clause, the same was not an illegality but rather the same was a rectifiable mistake.” (para 4)

“in fact, instead of getting the application withdrawn, CIT(Exemption) was supposed to give opportunity to the assessee to rectify the mistake i.e. the mentioning of the appropriate clause. Ld. CIT (Exemption) even could have suo-moto passed an order treating the said application under the relevant 'clause-iii' of section 80G(5) of the act”, added the bench.

As per the brief facts of the case, the assessee society has been registered as charitable institution u/s 12A and also granted approval/registration u/s 80G. However, thereafter an amendment was brought into the relevant provisions of section 12A & 80G vide taxation and other laws (relaxation and amendment of certain provisions) act, 2020 with effect from 01.04.2021 whereby, an institution, which has already been approved before the aforesaid amendment, was required to re-apply for grant of approval u/s 80G within three months from the 1st day of April, 2021. The assessee accordingly re-applied for registration u/s 12A as charitable institution and for grant of approval u/s 80G. The assessee was granted approval/registration u/s 12A and u/s 80G(5)(iv).

The assessee thereafter applied for final approval u/s 80g where the assessee inadvertently submitted its application for final approval in Form 10AB and mentioned the 'clause-ii' of the first proviso to sub-section 5 of section 80g instead of 'clause-iii' and was accordingly advised by CIT(E) to withdraw the said application and make a fresh application mentioning the correct clause. The assessee withdrew his application and submitted a fresh one with correct clause but same has been rejected by the cit(e) while observing that the time period for making application mentioning 'clause 80G(5)(iii)' had already expired, therefore, the assessee could not be granted final registration u/s 80G(5)(iii).

The bench noted that the application of the assessee for final approval u/s 80G has been rejected because of technical reasons for which the assessee cannot be faulted with.

The bench found that the assessee before the amendment was already approved as a charitable institution u/s 12A as well as 80G.

The bench further found that the assessee was to apply for the final registration u/s 80G which was also duly complied by the assessee within the time limit prescribed for the same. However, due to the mistake in mentioning the proper clause, the assessee was told to withdraw the application and file a fresh application. The assessee filed the fresh application without any delay.

The bench observed that CIT(E) completely ignored the events which occurred from the date of filing of the application for final approval and leading to the filing of the fresh application because of the technical mistakes.

Therefore, the ITAT granted an opportunity to the assessee to rectify the mistake.

Counsel for Appellant/ Taxpayer: Miraj D. Shah

Counsel for Respondent/ Department: S. Datta

Case title: Sarda Mission Sevasram verses CIT

Case number: ITA no.994/kol/2023

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