ITAT Condones Delay, Revives 80G Application Rejected on Technical Grounds

The assessee, a Youth Service Centre, applied for Section 80G approval using Form 10AB; however, the CIT(E) denied it because clause (ii) was chosen incorrectly rather than clause (iii). The authority regarded the application as non-maintainable and held that it lacked the authority to correct the form. The assessee blamed a technical issue with the portal for the error.

The ITAT allowed a 78-day delay in filing the appeal by accepting the trust’s explanation that the previous consultant neglected to notify it of the rejection, which was subsequently discovered by a new consultant. The appeal was allowed for hearing by the ITAT.

Issue Raised: Whether the CIT(E) was justified in rejecting the trust’s application under Section 80G based only on the incorrect clause selection made on the portal and due to technical difficulties, and whether the CIT(E) was correct to ignore the applicant’s true intent and eligibility.

Tribunal Held: The Tribunal condoned the delay of 78 days, finding the explanation genuine and without malafide. The Tribunal on the merits agreed that the application had been rejected solely on a technicality arising from clause selection.

Tribunal relied on past rulings like Bhagwan Mahaveer Jain Relief Trust v. CIT(E) and Subharma Charitable Trust v. CIT(E), which held that technical errors like wrong clause selection should not result in outright rejection when the trust is otherwise eligible. Upholding principles of natural justice, the Tribunal remanded the matter to the CIT(E) to consider the application de novo and allow correction of the selected clause if the trust meets other eligibility conditions.

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