2024 (6) TMI 1050 - AT - Income Tax

Rejection of application for final registration u/s 12A - application filed by the assessee on Form 10AB merely for selecting the wrong Section code - HELD THAT - We find that the assessee had intimated ld. CIT (Exemption) about the inadvertent mistake committed at its end and also about the revised Form 10AB filed for the final registration. As seemed that CIT (E) failed to take note of the same and failed to provide opportunity to the assessee. We therefore under the given facts and circumstances of the case in the interest of justice and being fair to both the parties restore this issue of final registration to the file of ld. CIT (E) with a direction that the date of application for final registration should be considered as 26.05.2023. The final registration should be granted as per the revised application filed by the assessee incorporating the correct Section code. Needless to mention that proper opportunity of being heard should be provided to the assessee. Rejection Application filed u/s 80G(5)(iii) solely on the ground that it is belated and is not maintainable - HELD THAT - We notice that the assessee which is a charitable organization working for the relief of animals and protecting them from cruelty has filed an application for approval of the Trust u/s 80G(5)(iii) of the Act on Form 10AB under Rule 17A of the Rules dated 27.05.2023. As per ld. CIT (E) the last date to file such application relevant to the assessee is 30.09.2022. We however notice that Section 80G(5)(iii) of the Act refers to the Institution or Trust which are carrying out charitable activities and maintains regular accounts of receipts and expenditure. Certainly Section 80G(5)(iii) of the Act has a direct connection with Section 12A of the Act which refers to the registration of charitable organizations. From perusal of the above circular which is binding upon the Revenue authorities we notice that the extended time provided for filing the fresh application on Form 10AB is 30.09.2023. Where the assessee had filed an application on Form 10AB on 27.05.2023 which is prior to the last date for filing such application i.e. 30.09.2023 which means that application of the assessee is not time barred. We therefore find that CIT (E) grossly erred in rejecting the application as non-maintainable and also erred in cancelling provisional certificate issued to the assessee. We therefore direct ld. CIT (E) to restore the provisional certificate issued to the assessee and also to admit the application on Form 10AB u/s 80G(5)(iii) of the Act and decide it on merits in accordance with law. Accordingly all the grounds of appeal raised by the assessee are allowed for statistical purposes.

Summary

Issues:
1. Rejection of application for final registration under Section 12A of the Income Tax Act due to selecting the wrong Section code.
2. Dismissal of application under Section 80G(5)(iii) of the Act as belated and non-maintainable.

Issue 1: Rejection of Application for Final Registration under Section 12A:
The appeal concerned the rejection of the assessee's application for final registration under Section 12A of the Income Tax Act due to selecting the wrong Section code. The assessee initially applied under Section 12A(1)(ac)(iv) but later realized the correct code should have been 12A(1)(ac)(iii). The Tribunal found that the correct Section code applicable to the assessee was indeed 12A(1)(ac)(iii) and that the mistake was inadvertent. Despite the assessee filing a revised Form 10AB with the correct Section code and providing relevant documents, the application was rejected without considering the revised application. The Tribunal, in the interest of justice, directed the matter to be restored to the Commissioner for reconsideration based on the revised application with the correct Section code, ensuring the assessee is given a proper opportunity to be heard.

Issue 2: Dismissal of Application under Section 80G(5)(iii) as Belated:
The second appeal addressed the dismissal of the assessee's application under Section 80G(5)(iii) of the Act as belated and non-maintainable. The assessee argued that as per a CBDT Circular, the application was filed within the prescribed timeline. The Tribunal noted that Section 80G(5)(iii) relates to charitable organizations maintaining regular accounts, closely linked to Section 12A. Referring to the CBDT circular, it was established that the application deadline was extended to 30.09.2023. As the assessee submitted the application on 27.05.2023, within the extended timeframe, the rejection was deemed erroneous. The Tribunal directed the restoration of the provisional certificate and consideration of the application on its merits. All grounds of appeal were allowed for statistical purposes in this regard.

In conclusion, both appeals filed by the assessee were allowed for statistical purposes, with directions issued to rectify the errors in the application processes under Section 12A and Section 80G(5)(iii) of the Income Tax Act.