The Income Tax Appellate Tribunal, Pune, has clarified that an inadvertent misselection of the clause under which an application for approval under Section 80G is filed does not invalidate the application if the substantive eligibility is intact. This ruling reinforces procedural flexibility in tax compliance for charitable entities, ensuring that technical errors do not defeat legitimate claims for tax exemption.
Background & Facts
The Dispute
The appellant, INIL Greentech Foundation, applied for approval under Section 80G(5) of the Income Tax Act, 1961, to enable donors to claim tax deductions on contributions. The application was submitted in Form 10AB on 30.09.2025. The Commissioner of Income Tax (Exemption), Pune, rejected the application on 25.03.2026, holding that the appellant had incorrectly selected Clause (ii) of the first proviso to sub-section (5) of Section 80G, whereas the correct provision applicable to the appellant was Clause (iii).
Key Facts
- The appellant is registered under Section 12A of the Income Tax Act, establishing its eligibility as a charitable trust.
- The appellant had previously held provisional approval under Section 80G(5)(vi), which expired and required renewal under the new regime introduced by the Finance Act, 2020.
- Form 10AB was filed on time, on 30.09.2025.
- The appellant did not submit a copy of any prior regular approval, as required under Clause (ii), because it had never held such approval.
- The appellant had, in fact, been eligible for approval under Clause (iii), which applies to entities that have never held prior approval but seek initial registration under the new framework.
- The error was purely in the selection of the clause in the dropdown menu of Form 10AB, not in the substance of the application or supporting documents.
Procedural History
- 30.09.2025: Application for approval in Form 10AB filed by the appellant.
- 25.03.2026: Ld. CIT (Exemption), Pune, rejected the application on grounds of incorrect clause selection.
- 14.07.2026: Hearing before ITAT Pune, Bombay Bench "A".
- 15.07.2026: Judgment pronounced by the Tribunal.
The Parties' Positions
For the Appellant
The appellant’s counsel, Shri Akshay Khandale and Shri Nrupbahaddur Bam, conceded that the application was filed under Clause (ii) by inadvertence. They argued that the appellant was eligible under Clause (iii), which governs first-time applicants without prior approval. They emphasized that all supporting documents, including registration under Section 12A, financial statements, and governing documents, were submitted and met the statutory requirements. The error was purely clerical and did not affect the substance of the application.
For the Respondent
The Revenue, represented by Shri Mithun Shete, defended the rejection, arguing that Form 10AB is a statutory form requiring strict compliance. The selection of the correct clause is mandatory, and failure to do so renders the application non-conforming. The Revenue contended that allowing correction would undermine the integrity of the approval process.
Relief Sought
The appellant sought setting aside of the order dated 25.03.2026 and a direction to the Ld. CIT (Exemption) to treat the application as filed under Clause (iii) of the first proviso to sub-section (5) of Section 80G and decide it on merits.
The Legal Issue
The central question was whether an inadvertent error in selecting the wrong clause in Form 10AB under Section 80G, where the applicant is otherwise eligible and has filed the application within time, constitutes a fatal defect or a curable procedural irregularity.
Arguments Presented
For the Appellant
The appellant relied on the precedent set by the Kolkata Bench of the Tribunal in Nitdaa Foundation v. CIT (167 taxmann.com 111), where a similar error - filing under Clause (iv) instead of Clause (i) - was held to be a curable defect. The counsel argued that the purpose of Section 80G is to encourage charitable giving, and technical errors should not defeat substantive eligibility. The application was timely, complete in substance, and the correct clause was identifiable from the facts presented. The error was not fraudulent or intentional.
For the Respondent
The Revenue contended that Form 10AB is a statutory form with mandatory fields, and the clause selection is a critical determinant of eligibility criteria. The Revenue cited the principle of strict compliance with statutory forms and argued that permitting correction would open the door to abuse and inconsistent application of the law.
The Court's Analysis
The Tribunal acknowledged the Revenue’s concern for procedural integrity but emphasized that the object of Section 80G is to facilitate charitable activities, not to penalize technical oversights. The Tribunal observed that the appellant had filed the application within the stipulated time, submitted all required documents, and was clearly eligible under Clause (iii). The error in selecting Clause (ii) was not a misrepresentation but a clerical mistake in form-filling.
The Tribunal placed significant reliance on its own coordinate bench’s decision in Nitdaa Foundation v. CIT, where it held that "the error on the part of the assessee for mentioning the wrong clause is deemed to be a curable defect and the application... is deemed to be filed under the correct clause." The Tribunal noted that the facts in the present case were materially identical: timely filing, correct substantive eligibility, and no intent to mislead.
"Since, Form No. 10AC was filed in time, the error on the part of the assessee for mentioning the wrong clause is deemed to be a curable defect and the application on Form No. 10AC is deemed to be filed under the correct clause."
The Tribunal further held that the Revenue’s role is to examine eligibility on merits, not to reject applications on purely technical grounds when the substance is intact. The Tribunal directed the Ld. CIT (Exemption) to treat the application as filed under Clause (iii) and decide it on its merits after providing a reasonable opportunity of hearing. The appellant was also directed to comply with all notices and submit documents without seeking adjournments.
The Verdict
The appeal was allowed for statistical purposes. The order dated 25.03.2026 rejecting the application was set aside. The matter was restored to the Ld. CIT (Exemption), Pune, with directions to treat the application as filed under Clause (iii) of the first proviso to sub-section (5) of Section 80G. The Ld. CIT was directed to decide the application on merits within two months from the date of receipt of this order. The appellant was directed to submit all requisite documents without seeking adjournments, failing which the Ld. CIT may pass appropriate orders.
What This Means For Similar Cases
Technical Errors in Form 10AB Are Curable
- Practitioners representing charitable trusts must now argue that inadvertent selection of the wrong clause in Form 10AB does not invalidate the application if the entity is otherwise eligible and the application is timely.
- The burden shifts to the Revenue to prove fraud or intentional misrepresentation; mere clerical error is insufficient for rejection.
- All supporting documents submitted with the application remain relevant and must be evaluated on substance, not form.
Timeliness Is Critical for Relief
- The judgment reinforces that timely filing is the key threshold for invoking the doctrine of curable defects.
- Applications filed after the deadline cannot benefit from this ruling, even if the error is inadvertent.
- Practitioners should always retain proof of timely submission (e.g., e-filing receipts, postal acknowledgments).
Procedural Fairness Over Rigid Compliance
- The Tribunal prioritized substantive justice over hyper-technical compliance, aligning with the broader trend in tax jurisprudence.
- This decision supports the principle that statutory forms are instruments of administration, not traps for the unwary.
- Similar cases involving Form 10A, Form 10BB, or other tax forms with dropdown selections may now be argued on analogous grounds.
