2024 (6) TMI 531 - AT - Income Tax

Rejection of the application for registration u/s 80G(5) - assessee has not received physical copy of order or soft copy on registered e-mail in rejecting the application of assessee-trust for registration - show cause notice for initiating proceeding u/s 12A(1)(ac)(iii) of the Act was only reflected on e-portal of the department and was not served upon the assessee HELD THAT - We find that at the time of filing application for registration in Form 10AB as per Rule 17A, the assessee furnished required details. In addition to, the assessee also filed copy of trust deed, the registration certificate with Charity Commissioner, old registration certificate under Section 12A, audit report and details of activities on 27/03/2023, as per acknowledgment placed on record. Thus, prima facie, the assessee has furnished certain details to substantiate the object and activities. However, the facts remained the same that the ld. CIT(E) rejected the application by taking view that despite issuing show cause notice dated 03/08/2023, the assessee neither filed any submission nor sought any adjournment. We find that the alleged notice dated 03/08/2023 was not served upon the assessee due to technical glitch as seen in the screen shot of ITBA Portal wherein e-mail address of assessee is not reflected. We find that the application of assessee was rejected without giving fair and reasonable opportunity. We further find that the CBDT in a recent Circular No. 7/2024 has extended time period for filing application in Form 10AB for seeking approval under Section 80G(5) of the Act up to 30/06/2024, therefore, the assessee is also allowed benefit of such relaxation. Hence, the grounds of appeal raised by assessee is restored back to the file of ld. CIT(E) to consider the case of assessee on merit and examine the object and activities of the assessee and pass order in accordance with law. Needless to direct that before passing the order, the ld. CIT(E) shall grant a fair and reasonable opportunity of hearing to the assessee. The assessee is also directed to be more vigilant in making compliance in time and not raised a technical issue of non-service of physical notice as the assessee may be very well aware that in a new regime, the application is filed electronically, the show cause notice as well as the compliance is mandatorily be made only through ITBA Portal. Gounds of appeal are allowed for statistical purpose.

Summary

Issues involved:
The appeal challenges the rejection of the application for registration under Section 80G(5) of the Income Tax Act, 1961 by the Commissioner of Income Tax (Exemptions), Ahmedabad. The issues raised include interpretation of time limit for application validity, application of circular No. 6/2023 dated 24/05/2023, lack of opportunity for being heard, and the delay in filing the appeal before the Tribunal.

Interpretation of Time Limit for Application Validity:
The assessee's appeal contested the Commissioner's interpretation of Section 80G(5) of the Act regarding the time limit for the validity of the application. The assessee argued that the time limit was not correctly applied by the Commissioner.

Application of Circular No. 6/2023:
The appeal also challenged the Commissioner's interpretation and application of circular No. 6/2023 dated 24/05/2023 of CBDT in determining the time limit of application validity under Section 80G(5) of the Act.

Lack of Opportunity for Being Heard:
The appeal contended that the Commissioner erred in not providing an opportunity for being heard before rejecting the application under Section 80G(5) of the Act, along with the rejection of provisional registration under Section 80G(5)(iv) of the Act.

Delay in Filing Appeal:
The delay in filing the appeal before the Tribunal was addressed by the assessee, explaining that the delay was due to not receiving the rejection order physically or via registered e-mail promptly. The assessee filed an affidavit to explain the delay, stating that they were unaware of the rejection until January 2024.

Merits of the Case:
The assessee argued on merit that the rejection of the application was based on a notice that was not served due to a technical glitch in the ITBA portal. The assessee also cited a High Court ruling regarding the need for proper service of notices.

Decision:
The Tribunal considered the submissions of both parties and found merit in the assessee's arguments. The delay in filing the appeal was condoned, and the case was restored to the Commissioner for a fair examination of the object and activities of the assessee. The Tribunal directed the assessee to be more vigilant in compliance and not to raise technical issues regarding notice service.

Result:
The appeal of the assessee was allowed for statistical purposes, with the order announced on 17th May, 2024.