Selecting Wrong Income Tax Section Code/Clause would Not Disentitle Appellant to Rightful Claim: ITAT directs de novo Hearing [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) held that the Selection of the wrong clause by the appellant cannot be treated as fatal to the proceedings initiated after the filing of the application for approval under Section 80G of the Income Tax Act, 1961 does not disentitle the applicant to its rightful claim.

The appellant is a registered trust that had filed an application in Form 10AB for the renewal of approval under Section 80G(5)(ii) of the Income Tax Act, 1961. To verify the genuineness of the applicant’s activities, the Commissioner of Income Tax (Exemptions) ( CIT(E) ) issued a notice through the Income Tax Business Application (ITBA) portal calling for certain information and clarification. The assessee duly submitted its response.

Another notice was issued, which pointed out certain discrepancies in the details furnished. The assessee filed submissions as a response.

However, the CIT(E) rejected the application as non-maintainable. The basis for the rejection was that the appellant had selected an incorrect section code while applying, which, according to the authority, made the application invalid for consideration under Section 80G(5) of the Act.

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Aggrieved by this decision, the appellant filed an appeal before the ITAT.

The bench, comprising Dr. Manish Borad (Accountant Member) and Vinay Bhamore (Judicial Member), noted that the denial of the 80G application was based on a hyper-technical ground that the wrongful selection of the section code in Form 10AB.

Referring to a similar ruling by the Surat Bench in Shree Swaminarayan Gadi Trust Vadtal (SVG) v. CIT (Exemptions) (2024), the Tribunal noted that procedural mistakes like incorrect section code selection should not override substantive rights when the necessary information and compliance have been otherwise met.

Accordingly, the ITAT set aside the impugned order and remanded the matter back to the CIT (Exemptions) for fresh consideration. The CIT (E) was directed to allow the appellant to file the correct application and decide the matter de novo on the merits.

The appeal was allowed for statistical purposes.

The Revenue was represented by Rakesh Ranjan while none appeared on behalf of the assessee.

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