2024 (3) TMI 1370 - AT - Income Tax

Rejection of application for approval u/s 80G(5) - application being made under a different Clause (ii) of First Proviso of Section 80G(5) by mistake instead of u/s 80G(5)(iii) - HELD THAT - As we find merit in the case of the assessee. Procedure is the handmade of justice. Therefore, rejection of grant under Section 80G merely on procedural lapse by making application under Section 80G(5)(ii) inadvertently instead of u/s 80G(5)(iii) on the part of the assessee is not acceptable. Further that having regard to the identical facts and circumstances of the matter in the case relied upon by the A.R. we set-aside the issue to the file of the Ld. CIT(E) with a direction upon him to treat the said application under Section 80G(5)(iii) of the Act and to pass orders strictly in accordance with law. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Rejection of application for approval under Section 80G(5) of the Income Tax Act, 1961.
2. Applicability of different clauses of proviso under Section 80G(5).
3. Consideration of procedural or technical errors in application for registration.
4. Eligibility for final registration despite procedural errors.
5. Interpretation of the proviso to Section 80G(5) regarding the timeline for filing final registration.
6. Restoration of the matter to the Commissioner of Income Tax (Exemption) for fresh decision.

Analysis:
The appeal was against the order of the Commissioner of Income Tax (Exemption) rejecting the application for approval under Section 80G(5) of the Income Tax Act, 1961. The appellant contended that the rejection was based on a procedural mistake of filing the application under the wrong clause of the proviso. The appellant argued that the error should have been condoned considering the eligibility for final registration. The appellant relied on a judgment from the Calcutta Bench to support the argument, which was not contested by the Respondent. The Tribunal considered the submissions and relevant materials on record.

The Tribunal referred to the judgment by the Kolkata Benches, which clarified that an assessee granted provisional approval under Section 80G(5)(iv) is eligible to apply for final registration, regardless of when the activities commenced. The Tribunal highlighted that an application for final registration can only be made after provisional approval and within the specified timeline. The Tribunal emphasized that the rejection based on a procedural error was not justified, especially considering the eligibility of the assessee for final registration. The Tribunal, therefore, set aside the issue and directed the Commissioner to consider the application under the correct clause of the proviso and pass orders in accordance with the law.

In conclusion, the Tribunal found merit in the appellant's case and emphasized the importance of procedural fairness. The Tribunal's decision was influenced by the judgment from the Calcutta Bench, which clarified the timeline and eligibility criteria for final registration under Section 80G(5). The matter was remitted to the Commissioner for a fresh decision, instructing to treat the application under the correct clause and ensure compliance with legal requirements. The appeal was allowed for statistical purposes, indicating a favorable outcome for the appellant.