Taxmann passes order ignoring Finance Act 2024, ITAT Restores 80G Application for Fresh Review

On May 17, 2024, the assessee, a charitable foundation, applied Form 10AB to register under Section 80G(5)(iv)(B) of the Income Tax Act. On October 17, 2024, the CIT (Exemptions) denied the application, stating that it did not meet the requirements outlined in Section 80G(5)(iv)(B) because the assessee had previously claimed the exemptions.

The assessee explained that the restriction had been removed by the Finance Act, 2024, from October 1, 2024; however, the CIT(E) did not consider this amendment. The assessee further argued that the same Form 10AB applies for Section 80G(5)(iii), even if it is filed under the incorrect clause, and that this technical error shouldn’t negate the claim. As a result, the assessee filed this appeal before the ITAT, contesting the rejection.

Main Contention: Whether it was appropriate to reject the registration application under Section 80G based only on a technical clause selection, especially after the Finance Act of 2024 had amended the relevant provision.

ITAT Held: The ITAT agreed with the assessee’s contention that the application for 80G registration was rejected on a technical ground without considering the recent amendment by the Finance Act, 2024. It agreed with the assessee that the error in selecting the wrong clause was minor and the application should have been evaluated on the merits.

The Tribunal, therefore, sent the matter back to the CIT (Exemptions) to treat the application as filed under the correct clause i.e., Section 80G(5)(iii) and decide it afresh after giving the assessee a fair chance to be heard. The appeal was allowed on statistical grounds.

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