Technical Error in Application Cannot Be Ground To Reject Registration: ITAT Directs Reconsideration Of Trust Registration Applications [Read Order]

The Income Tax Appellate Tribunal has directed the reconsideration of the registration applications of the trust,it held that the mere technical error of choosing the wrong section code cannot be a ground for rejecting registration.

The applications for final registration and approval under the Income Tax Act were made by the assessee trust through Form 10AB but the Commissioner of Income Tax rejected the applications and cancelled the provisional registration that had been granted by the Central Processing Cell.

The rejection of the applications by the Commissioner of Income Tax was based mainly on the ground that the assessee had entered the wrong section code while making the application for provisional registration, which made the application invalid.Aggrieved by this decision, the assessee filed appeals before the Tribunal challenging the rejection of its applications.

The assessee contended that the error in selecting the incorrect section code was merely a bonafide and inadvertent error in filling up the online application. It was contended that such a technical error should not lead to denial of registration as the trust was an established entity and was already conducting its activities for years.

On the other hand, the Revenue followed the order of the CIT(E) and supported the rejection of applications based on a technical ground.

On examining the facts, the Tribunal comprising Paresh M. Joshi,[Judicial Member] and B. M. Biyani [Accountant Member], observed that the rejection of applications was based solely on a technical ground of incorrect code being selected in the application form, whereas the merits of the activities of the trust were not even considered.

The Tribunal held that substance has to prevail over form, and a genuine mistake in the selection of the wrong clause cannot warrant the outright rejection of the registration. It has also been observed that the assessee has to be given an opportunity to rectify the mistakes.

Accordingly, the Tribunal has set aside the orders passed by the CIT (Exemptions) and has remanded the case for fresh consideration allowing the authority to permit the assessee to rectify the mistake in the application and then decide the case on merit by giving an opportunity of hearing.