2024 (9) TMI 477 - AT - Income Tax

Rejection of approval u/s. 80G(5) - wrong selection of the section code in the application - application filed in Form No.10AB rejected holding it to be infructuous and also barred by limitation, observing that the commencement of activities was much earlier - HELD THAT - Assessee, being a Trust registered even prior to 31.03.2021 and thereafter applied for registration, as mentioned above on provisional basis. In our considered opinion, though the assessee had committed a mistake in selecting the wrong section code while making an application at the first instance, however, for such a mistake, the permanent registration cannot be denied by the respondent. It cannot be disputed that CBDT extended the due date for filing of Form Nos.10A/10AB under the Act and as on the date, it stood extended till 30/06/2024 by Circular No.07/2024. It occurs to our mind that it would have been better, if the respondent cross-verifies the details submitted by the assessee at the earliest point of time of issuance of provisional certificate and should have issued a notice at that time by pointing out the wrong selection of section code by the assessee, so that the assessee could have rectified the mistake. We, therefore, taking a pragmatic view of the matter, deem it just and proper to remand the issue to the file of the learned CIT(E) to permit the assessee to rectify the mistake in submitting the application form and to consider the application of assessee for grant of permanent registration. Appeal of assessee allowed for statistical purposes.

Summary

Issues:
1. Rejection of application for registration under section 80G(5) of the Act.
2. Dispute over the selection of the wrong section code in the application.
3. Consideration of the timeline for filing the application and extension of the due date.
4. Failure to cross-verify details submitted by the assessee for provisional registration.
5. Decision on allowing the assessee to rectify the mistake and apply for permanent registration.

Analysis:
The case involves the rejection of the assessee's application for registration under section 80G(5) of the Act by the learned Commissioner of Income Tax (Exemption) ("Ld. CIT(E)"). The assessee, a Charitable Trust, had initially obtained approval under section 80G(5) of the Act in form 10AC, valid till the Assessment Year 2024-25. Subsequently, the assessee filed Form No.10AB, which was rejected by the Ld. CIT(E) as infructuous and barred by limitation due to the selection of the wrong section code (80G(5)(iv) instead of 80G(5)(i)).

The assessee contended that the selection error was unintentional, citing a Tribunal decision that rejected an application based on the wrong form selection. However, the Ld. CIT(E) maintained the rejection, stating that the decision cited was specific to that case. The Tribunal noted that the assessee's provisional registration was granted despite the error, and the due date for application submission was extended by the CBDT.

The Tribunal found that while the assessee erred in the initial application, permanent registration should not be denied solely for this mistake. It highlighted the CBDT's extension of the due date for form submissions and emphasized the need for cross-verifying details at the provisional registration stage to rectify errors promptly.

Referring to a similar case, the Tribunal decided to remand the issue to the Ld. CIT(E) to allow the assessee to rectify the mistake and consider the application for permanent registration. The assessee was directed to cooperate and provide necessary details for the expedited resolution of the case. The appeal was treated as allowed for statistical purposes, indicating a favorable outcome for the assessee.

In conclusion, the judgment addresses the importance of procedural diligence in verifying application details, the impact of selection errors on registration applications, and the need to facilitate rectification of genuine mistakes to ensure fair consideration for registration under relevant provisions of the Act.