2024 (3) TMI 1475 - AT - Income Tax

Genuine clerical mistake in form and section code condoned; registration under section 12A permitted despite CBDT deadline lapse

ITAT, Hyderabad allowed the appeal and set aside the CIT(E)'s rejection, holding that the assessee's selection of the wrong section code and filing in ... Denial of registration u/s 12A - mistake in selecting a wrong code, namely, “02-Sub-clause (vi) of clause (ac) of sub-section (1) of Section 12A” instead of section code 12A(1)(ac)(i) of the Act - delay in applying the Form 10A HELD THAT:- If the assessee applying on 27/05/2021 by selecting the wrong section code as 02-Sub clause (vi) of clause (ac) of sub-section (1) of section 12A was a mistake, still it is a mistake on 15/05/2023 also by applying for registration in Form 10AB. If really the assessee wanted to apply under 02-Sub clause (i) of clause (ac) of sub-section (1) of section 12A on any occasion, the proper form was not Form 10AB, but it should be Form 10A only. Form 10AB is applicable for the section code of 02-Sub clause (ii) or (iii) or (iv) or (v) of clause (ac) of sub-section (1) of section 12A whereas for section code 02- Sub clause (i) or (vi) of clause (ac) of sub-section (1) of section 12A of the Act, the application shall be in Form 10A only. The fact remains that the assessee did not avail the opportunity of extension of time for filing application in Form 10A, if really its intention is to apply for 02-Sub clause (i) of clause (ac) of sub-section (1) of section 12A of the Act, by bringing the mistake to the notice of the authorities, since the assessee holds the registration under section 12A. When the CBDT took cognizance of the matter and by way of circulars extended the due date for filing Form 10A, it cannot be said that the CIT(E) can exercise jurisdiction to condone the delay in applying the Form 10A on the ground of mistake, because the time extended for such purpose by the CBDT expired by 30/09/2023. We do not find anything illegality or irregularity in the rejection of application by CIT(E). Practical aspect of hardship that has befallen on the assessee, the fact remains that finally vide Circular No.6/2023 dated 24/05/2023, CBDT extended the date up to 30/09/2023, whereas the assessee filed Form 10AB by 15/05/2023. Though the assessee did not plead before the Revenue authorities by that day about the mistake of selection of wrong section code while applying in Form 10AB and seek rectification, the request of the assessee for regular registration is pending by that date. Though in a wrong Form, the request of the assessee was pending before the due date. In this peculiarity of the circumstances, we deem it just and proper to condone the mistake committed by the assessee while applying registration in Form 10AB instead of Form 10A and also by making a selection of wrong section code, namely, 02-Sub clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act instead of 02-Sub clause (i) of clause (ac) of sub-section (1) of section 12A of the Act. Grounds are allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether an assessee holding prior registration under section 12A, who selected an incorrect section code in online application (Form 10AC/10AB) under clause (ac) of section 12A(1), can be permitted regular registration under section 12AB by treating the incorrect selection as a bonafide mistake. 2. Whether the Commissioner of Income Tax (Exemption)/competent authority can condone delay or rectify the error of selection of wrong section code after expiry of dates extended by the Central Board of Direct Taxes (CBDT) for filing Form 10A/10AC, or whether jurisdiction to accept late/rectified applications is ousted by the CBDT time-limits. 3. Whether Form 10AB is the proper form for conversion/regularisation where the correct statutory provision requires filing Form 10A (i.e., distinction between applicability of Form 10A and Form 10AB for different sub-clauses of section 12A(1)(ac)). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Permissibility of condoning an incorrect section-code selection as a bonafide mistake for registration under section 12AB Legal framework: Applicants registered under section 12A are required, pursuant to clause (ac) of subsection (1) of section 12A and Rule 17A of the Income-tax Rules, to file the appropriate online form (Form 10A) selecting the correct sub-clause code (e.g., sub-clause (i)) to seek regularisation/registration; separate statutory form provisions exist for other sub-clauses (Form 10AC/Form 10AB as prescribed). Precedent Treatment: The record does not refer to any judicial precedent being applied or overruled; the Tribunal decided the issue on statutory text, administrative circulars and facts. Interpretation and reasoning: The Tribunal analysed the statutory scheme distinguishing which sub-clauses require Form 10A and which permit Form 10AB/Form 10AC. It acknowledged the assessee's explanation that a wrong code was selected in the drop-down at an earlier stage and again when filing Form 10AB, but emphasised that if the intention was to apply under sub-clause (i) the correct procedural route was Form 10A. Nevertheless, the Tribunal took a pragmatic approach to the peculiar facts: at the time of the second filing, the assessee's request for regular registration (though in an incorrect form) was pending before the due date extended by CBDT; this pendency and the outstanding CBDT extension influenced the Tribunal to treat the mistake as curable in equity. Ratio vs. Obiter: Ratio - an inadvertent selection of an incorrect section code in an online form may be condoned where, on the facts, (a) genuine mistake is demonstrated, (b) the request for regular registration was pending before the extended due date such that the application was effectively before authorities during the CBDT extension period, and (c) condonation does not conflict with statutory limitations imposed by CBDT extensions. Obiter - general propositions about what constitutes bona fides or heuristic thresholds for delay when no precedent is cited. Conclusions: The Tribunal found the mistake to be condonable on the peculiar facts and directed the CIT(E) to permit the assessee to file Form 10A and proceed to hear and decide the request for regular registration. The Tribunal thereby allowed relief notwithstanding procedural mis-filing, treating it as a curable bonafide error in equity. Issue 2 - Jurisdiction of CIT(E) to condone delay after expiry of CBDT-extended filing dates Legal framework: CBDT issued timelines and subsequent extensions for filing Form 10A/related forms for existing registered entities; those circulars set cut-off dates for acceptance of applications or rectifications. The authority of CIT(E) is circumscribed by statutory time-limits and CBDT directions. Precedent Treatment: No prior judicial authority was cited to expand or restrict the CIT(E)'s statutory power to condone time-bar after CBDT cut-off dates; the Tribunal relied on the CBDT circulars as determinative of the window for filing/rectification. Interpretation and reasoning: The Tribunal acknowledged that the CIT(E) generally lacks jurisdiction to condone delay beyond CBDT-prescribed extended dates. It recorded the Revenue's submission that the due date had been extended and that the CIT(E) could not exercise power to condone beyond the extended deadline. The Tribunal nevertheless reconciled this principle with the factual peculiarity that the assessee's erroneous application was pending before the due date (i.e., the wrong form was on record before CBDT's final extended cut-off). Given that the application (albeit in wrong form) was pending during the extension period, the Tribunal treated the equities as favouring condonation and processing by permitting re-filing in Form 10A. Ratio vs. Obiter: Ratio - while statutory or CBDT time-limits ordinarily preclude condonation by the CIT(E) after expiry, where an application (though incorrectly framed) was pending before the authority within the CBDT-extended window, the Tribunal may, in exercise of its supervisory jurisdiction, allow correction/condonation to prevent hardship. Obiter - broader statements about limits of CIT(E) power without specific statutory citation. Conclusions: The Tribunal confirmed the general proposition that CIT(E) cannot condone delay beyond CBDT extensions, but concluded on the facts that condonation was justified because the incorrectly filed application was pending within the extension period, and thus permitted correction and processing as if the correct form had been filed. Issue 3 - Proper form to be used (Form 10A vs Form 10AB/10AC) for different sub-clauses of section 12A(1)(ac) Legal framework: The Rules prescribe distinct forms for applications corresponding to different sub-clauses under section 12A(1)(ac). Form 10A applies for certain sub-clauses (including sub-clause (i) and (vi)); Form 10AB applies for other sub-clauses (ii)-(v); Form 10AC is for provisional registration where applicable. Precedent Treatment: No case law was cited; the Tribunal interpreted statutory scheme and Rule 17A to delineate form applicability. Interpretation and reasoning: The Tribunal observed that if the assessee, already possessing registration under section 12A, intended to apply under sub-clause (i) it should have used Form 10A. The repeated selection of an incorrect section code and the filing in Form 10AB were procedural errors incompatible with the statutory form-prescription. This distinction was central to the Tribunal's analysis of whether the mistake could be treated as curable. Ratio vs. Obiter: Ratio - the prescribed form for an application must correspond to the specific sub-clause under which registration is sought; using an incorrect form does not fulfil the statutory requirement unless rectified in time or condoned under exceptional facts. Obiter - commentary on dropdown errors and user interface issues as systemic causes of mis-selection. Conclusions: The Tribunal held that Form 10A was the proper form for the assessee's intended application under sub-clause (i) and directed that the assessee be permitted to apply in Form 10A so that the CIT(E) can hear and decide the request for regular registration; the incorrect use of Form 10AB was condoned in the circumstances to enable substantive adjudication. Ancillary observations 1. The Tribunal emphasised factual considerations (the pendency of the request within the CBDT extended period and the absence of clear gain to the assessee from the mis-selection) in exercising discretion to condone the mistake. 2. No judicial precedents were applied or overruled; the decision rests on statutory interpretation of section 12A(1)(ac), Rule 17A, CBDT circular timelines and equitable considerations in the particular factual matrix.