ITAT Grants Relief to NGO: Technical Filing Error Won't Block 80G Tax Benefits [Read Order]

The Income Tax Appellate Tribunal (ITAT), Nagpur Bench, ruled that a technical error in filing an application for tax exemption under Section 80G of the Income Tax Act, 1961, should not deny the NGO its rightful benefits. The tribunal emphasized that such inadvertent mistakes should not override the substantive merits of the case.

The dispute arose when Gayatri Gram Vikas Sanstha, a trust based in Akola, Maharashtra, filed an application for provisional registration under Section 80G(5)(iv)(A) of the Act. However, the Commissioner of Income Tax (Exemption) rejected the application, citing that the trust had incorrectly applied under this clause since its activities had already commenced in 1994-95. The CIT(E) argued that the trust should have applied under Section 80G(5)(iv)(B) instead and canceled the provisional approval granted earlier.

The trust appealed to the ITAT, contending that the rejection was purely on technical grounds and did not consider the genuine charitable nature of its activities. The tribunal, comprising V. Durga Rao (Judicial Member) and K.M. Roy (Accountant Member), agreed with the trust’s argument. It noted that while the wrong clause was cited in the application, this was a simple oversight and not a deliberate attempt to mislead.

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The ITAT observed that denying registration for such a technical error would be unjust, especially when the trust’s eligibility under the law was otherwise valid.

The tribunal directed the trust to file a fresh application under the correct clause, Section 80G(5)(iv)(B), and instructed the CIT(E) to process it without being influenced by the earlier rejection. The ITAT’s order made it clear that procedural lapses should not hinder access to tax benefits if the entity meets the substantive requirements of the law.

The ruling underscores the importance of focusing on the substance of an application rather than hyper-technicalities.

The decision brings clarity to NGOs and trusts navigating the complexities of tax exemption registrations, ensuring that genuine cases are not dismissed over procedural oversights.

In Conclusion, the appeal was allowed for statistical purposes.

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