2024 (6) TMI 1050 - AT - Income Tax

Charitable organization wins appeal after registration rejected for wrong section code despite filing revised form

ITAT Kolkata allowed the appeal filed by a charitable organization working for animal relief. The CIT (E) had rejected the final registration application ... Rejection of application for registration for incorrect section code without opportunity to rectify - treatment of revised Form 10AB and date of filing - right to opportunity of hearing before rejection of application - restoration for fresh consideration by assessing authority - time-bar and extension of filing period under CBDT Circular for Form 10AB applications - maintainability of application for approval under section 80G(5)(iii) in relation to registration under section 12ARejection of application for registration for incorrect section code without opportunity to rectify - treatment of revised Form 10AB and date of filing - right to opportunity of hearing before rejection of application - Assessee's final registration application on Form 10AB filed on 23.05.2023 was improperly rejected for having mentioned an incorrect section code without considering the revised Form 10AB dated 18.10.2023 or giving opportunity to the assessee. - HELD THAT: - The assessee, a charitable trust provisionally registered under the Act, filed Form 10AB on 23.05.2023 but inadvertently selected an incorrect section code. A corrected Form 10AB selecting the appropriate code was uploaded on 18.10.2023 with explanatory remarks and supporting documents. The assessing authority rejected the original application dated 23.05.2023 as non-maintainable without taking note of the corrected submission or affording an opportunity of hearing. In the interest of justice and fairness the Tribunal held that the matter should be restored to the file of the CIT (Exemption) for fresh consideration; the date of application is to be treated as 26.05.2023 and final registration is to be considered on the basis of the revised Form 10AB. The assessee must be given a proper opportunity to be heard and to place supporting documents; if the assessee fails to comply after adequate opportunity, the authority may pass a speaking order in accordance with law. [Paras 5, 6]Matter restored to the CIT (Exemption) to consider the revised Form 10AB (treated as dated 26.05.2023) and grant final registration after providing the assessee a proper opportunity of hearing; grounds allowed for statistical purposes.Time-bar and extension of filing period under CBDT Circular for Form 10AB applications - maintainability of application for approval under section 80G(5)(iii) in relation to registration under section 12A - restoration for fresh consideration by assessing authority - Assessee's application under section 80G(5)(iii) filed on 27.05.2023 is not time-barred in view of the CBDT Circular extending the operative filing period to 30.09.2023, and the CIT (Exemption) erred in dismissing the application as belated and in cancelling the provisional certificate. - HELD THAT: - The assessee filed Form 10AB for approval under section 80G(5)(iii) on 27.05.2023. The CBDT Circular No.6 of 2023 extended the last date for filing certain pending or belated applications to 30.09.2023 and expressly permitted fresh filings within the extended time where earlier applications had been rejected solely as late. Given the direct connection between section 80G(5)(iii) and registration under section 12A, and that the assessee's filing pre-dates the extended deadline, the Tribunal found the application not time-barred. Consequently, the CIT (Exemption)'s rejection and cancellation of the provisional certificate were held to be erroneous. The Tribunal directed restoration of the provisional certificate and directed the authority to admit the Form 10AB application under section 80G(5)(iii) and decide it on merits in accordance with law. [Paras 10, 12]Provisional certificate to be restored; Form 10AB filed on 27.05.2023 to be admitted and decided on merits in accordance with the CBDT Circular and law; grounds allowed for statistical purposes.Final Conclusion: Both appeals allowed for statistical purposes; (1) the application for final registration is restored for reconsideration on the revised Form 10AB (treated as filed on 26.05.2023) with an opportunity of hearing, and (2) the application under section 80G(5)(iii) filed on 27.05.2023 is held not time-barred, the provisional certificate is to be restored and the application admitted and decided on merits. 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.