2024 (3) TMI 1370 - AT - Income Tax

Tribunal Overturns Rejection of Tax Exemption Approval Due to Procedural Errors, Orders Reassessment for Fairness.

Shree Bipin Biharidas Charitable Foundation Versus Commissioner of Income Tax (Exemption), Ahmedabad.

Shree Bipin Biharidas Charitable Foundation Versus Commissioner of Income Tax (Exemption), Ahmedabad. - TMI 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.