Company wins appeal against rejected section 12AB registration due to improper CIT evaluation of financial records

ITAT Jaipur allowed the appeal for statistical purposes in a case involving rejection of registration under section 12AB. The assessee company, incorporated in March 2021, applied for permanent registration in September 2022 with financial statements showing donations received of Rs 26,97,148 and expenditure of Rs 27,02,718. CIT(E) rejected the application claiming non-compliance with notice and failure to prove genuineness of activities. ITAT found CIT(E)'s reasoning incorrect as financial accounts were properly filed and AO had accepted the expenditure in assessment under section 143(3). Matter remanded to CIT(E) for fresh consideration with proper opportunity of hearing.

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Issues Involved:
1. Condonation of delay in filing the appeal.
2. Rejection of application for registration u/s 12AB of the Income Tax Act.

Condonation of Delay:
The assessee filed an appeal with a delay of 296 days, citing reasons such as receiving incorrect advice from previous counsel and misunderstanding the necessity of filing an appeal due to the company's net loss. The Tribunal, after considering the affidavit and the reasons provided, condoned the delay. The Tribunal referenced the Supreme Court decision in Collector, Land Acquisition vs. Mst. Katiji and Others, 167 ITR 471 (SC), emphasizing a liberal approach in condoning delays when sufficient cause is shown.

Rejection of Application for Registration u/s 12AB:
The application for registration u/s 12AB was rejected by the CIT(E) due to the assessee's failure to submit required documents and prove the genuineness of its activities. Despite multiple notices, the assessee did not provide complete responses, including bank statements, final accounts, and evidence of charitable activities. The Tribunal noted that the assessee had submitted some financial statements and donation details, which were not fully considered by the CIT(E). The Tribunal found that the assessee was genuinely carrying out charitable activities and deserved another opportunity to present its case.

Decision:
The Tribunal set aside the CIT(E)'s order and remanded the matter back to the CIT(E) for reconsideration. The CIT(E) was directed to provide the assessee with a proper opportunity to submit the required documents and to make a decision based on the merits of the case. The Tribunal emphasized that this decision should not be seen as an indication of the merits of the dispute, which should be independently adjudicated by the CIT(E).

Conclusion:
The appeal was allowed for statistical purposes, and the matter was remanded to the CIT(E) for a fresh decision after providing the assessee with an opportunity to be heard. The Tribunal's order was pronounced in the open court on 27/05/2024.

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