2023 (12) TMI 1298 - AT - Income Tax

Registration u/s 80G - Application rejected as mistake in mentioning the proper Clause - Assessment of trust - HELD THAT - All the facts were before ld. CIT (Exemption) when the assessee for the first time applied for the final approval u/s 80G of the Act. Merely, because the assessee out of inadvertence had mentioned another Clause, the same was not an illegality but rather the same was a rectifiable mistake. The facts were on the record that the assessee before the amendment was already approved as a charitable institution u/s 12A as well as 80G of the Act. The assessee duly applied for provisional registration in view of the amended provisions. The same was also granted to the assessee. The next course for the assessee was to apply for the final registration u/s 80G of the Act which was also duly complied by the assessee within the time limit prescribed for the same. However, due to the mistake in mentioning the proper Clause, the assessee was told to withdraw the application and file a fresh application. The assessee filed the fresh application without any delay. However, ld. CIT (Exemption) completely ignored the events which occurred from the date of filing of the application for final approval and leading to the filing of the fresh application because of the technical mistakes. In fact, instead of getting the application withdrawn, ld. CIT (Exemption) was supposed to give opportunity to the assessee to rectify the mistake i.e. the mentioning of the appropriate Clause. Ld. CIT (Exemption) even could have suo-moto passed an order treating the said application under the relevant Clause-iii of Section 80G(5) of the Act. Thus delay in filing the fresh application is, hereby, condoned. It is directed that the application of the assessee for final registration may be treated as filed within the time limit prescribed and the time consumed by the assessee in filing the revised application will not be taken into consideration. The matter is accordingly restored to the file of ld. CIT (Exemption) with a direction that ld. CIT (Exemption) will pass an order on merits irrespective of the delay occurred in filing the fresh application for final approval u/s 80G(5) Application for final registration was to be filed within six months from the commencement of its activities and therefore, the application of the assessee for final registration was time barred - We note that the issue has already been discussed and adjudicated by the Coordinate Bench of the Tribunal in the case of West Bengal Welfare Society vs. CIT(Exemption), Kolkata 2023 (9) TMI 1422 - ITAT KOLKATA wherein, it has been held that the assessee, who has been granted provisional registration, is eligible to apply for final registration irrespective of the fact that the assessee had already commenced its activity even prior to the date of grant of provisional approval. Thus matter is restored the file of the CIT(E) for decision afresh - Appeal filed by the assessee is treated as allowed for statistical purposes.

Summary

Issues:
The appeal against the rejection of the application for registration under section 80G of the Income Tax Act, 1961.

Grounds of Appeal:
1. The rejection of the application under section 80G(5)(iii) was erroneous.
2. The rejection was arbitrary, unjustified, and unwarranted.
3. The rejection based on the application date not meeting the deadline was incorrect.
4. Request for reconsideration of the application based on the subsequent submission.
5. Provision to modify grounds of appeal before the hearing date.

Facts:
The appellant, a charitable institution, had prior approvals under sections 12A and 80G of the Act. Due to an amendment, a reapplication for approval under section 80G was necessary. The appellant received provisional approval and subsequently applied for final approval, but a technical error led to the withdrawal and refiling of the application. The rejection was based on the application deadline and a mistaken clause reference.

Judgment:
The rejection of the final approval application was deemed unjust due to technical reasons beyond the appellant's fault. The appellant had complied with all requirements promptly, and the error was rectifiable. The delay in refiling the application was condoned, and the application was to be treated as filed within the prescribed time limit. The matter was remanded for a fresh decision, disregarding the delay.

Legal Interpretation:
The Tribunal clarified that the appellant, having received provisional approval, was eligible for final registration, regardless of prior activity commencement. The provision required provisional approval before applying for final registration. The Tribunal emphasized that the appellant's actions were in line with statutory requirements, and there was no delay in the application process.

Conclusion:
The appeal was allowed for statistical purposes, and the case was remanded for a fresh decision on the application for final registration under section 80G of the Income Tax Act, 1961.