2024 (6) TMI 527 - AT - Income Tax

Rejection of application for registration u/s 12A/12AB - clerical error committed in selecting appropriate head in drop down list provided in e-filing portal while furnishing Form 10AB electronically - HELD THAT - There is no dispute that the assessee applied for registration under Section 12A/12AB of the Act under Form 10AB on 28.09.2023 - CIT(E) while considering the application of assessee noted that the application filed by assessee is not maintainable and accordingly, a show cause notice dated 02/11/2023 was issued for seeking clarification. The assessee responded to the show cause notice of CIT(E) vide their reply dated 15.12.2023. The contents of show cause notice and the reply thereof is not recorded by CIT(E) in his order. We find that the assessee vide their reply dated 15/12/2023 prayed to consider the application in appropriate sub-clause of section 12A(1). CIT(E) held that he has no power to change/ amend or rectify Form-10AB. We find that it was an inadvertent mistake and the assessee has already explained the facts and prayed for correction before the ld. CIT(E). In our view the mistake in filing entry was not fetal and could be considered in appropriate sub-clause or clause of section 12A(1). Otherwise, the assessee has provided all the details and information in Form-10AB, while applying for registration under section 12A/12AB. Being first appellate authority, the plea of assessee for correction in Form-10AB is accepted and the order of CIT(E) is set-aside. The registry official of CIT(E) maintaining record of ITBA portal about the registration of trust under section 12A/12AB is directed either to correct such mistake or allow the assessee to rectify or amend the relevant clause/ sub-clause of section 12A(1). Considering the fact that the application of assessee was not considered on merit, therefore, we deem it appropriate to direct the CIT(E) to treat the application of assessee u/s 12A(1)(ac)(iii) in place of Section 12A(1)(ac)(iv) of the Act and to consider the case on merit and pass the order in accordance with law. Grounds of appeal raised by the assessee are allowed for statistical purposes only. Delay in filing application for approval u/s 80G(5) - We find that the CBDT in its recent Circular No. 7/2024 dated 25/04/2024 has extended the time limit for filing Form 10AB for approval u/s 80G(5) till 30/06/2024. It is further clarified in the aforesaid Circular that where any trust, institution or fund has already made an application in Form 10AB under the said provisions on or before issuance of this circular, where the Principal Commissioner or Commissioner has not passed an order before issuance of this circular, the pending application in Form 10AB may be treated as valid application or where the Principal Commissioner or Commissioner has passed an order rejecting such application on or before issuance of this circular, solely on account of fact that application was furnished after due date or that application has been furnished under wrong code, it may furnish a fresh application in form 10AB within extended period i.e. up to 30/06/2024. Considering the benefit allowed by the CBDT in its Circular No. 7/2024, therefore, the assesse is also eligible for benefit of similar extended period.

Summary

Issues Involved:
The judgment involves challenges to the rejection of registration under Section 12A/12AB of the Income Tax Act and rejection of approval under Section 80G(5) of the Act.

Issue 1: Registration under Section 12A/12AB
The appellant challenged the rejection of registration under Section 12A(1) of the Act, citing a clerical error in the application process. The appellant argued that the error was inadvertent and should not lead to denial of registration, as all conditions under Section 12A were met. The appellant sought a correction to the application under the appropriate sub-clause.

The Tribunal considered the submissions and found that the mistake in the application was not fatal and could be rectified. The Tribunal accepted the appellant's plea for correction and directed the authorities to treat the application under the correct sub-clause of Section 12A(1). The Tribunal emphasized the need for the authorities to consider the case on merit and granted the appellant an opportunity to provide necessary details and comply with requirements.

Issue 2: Approval under Section 80G(5)
The appellant also challenged the rejection of approval under Section 80G(5) of the Act, due to an error in selecting the appropriate clause in the application. The appellant requested a similar correction to the application under the correct clause.

The Tribunal, noting its decision in a similar case regarding registration under Section 12A, set aside the rejection of the approval under Section 80G(5). The Tribunal directed the authorities to reconsider the application on merit, granting the appellant a fair opportunity to present their case. The Tribunal highlighted the importance of timely submission and adherence to requirements, while also acknowledging the benefit of an extended filing period granted by the CBDT.

Conclusion:
The Tribunal allowed both appeals for statistical purposes, directing the authorities to reevaluate the applications for registration under Section 12A/12AB and approval under Section 80G(5) with a focus on merit. The Tribunal emphasized the need for proper consideration of the cases, granting the appellants opportunities to rectify errors and provide necessary details. The Tribunal also highlighted the importance of timely compliance with filing requirements and extended periods granted by the CBDT.