2025 (9) TMI 23 - AT - Income Tax

Application dated 13.01.2024 to be treated as under s.12A(1)(ac)(i); provisional s.12AB registration directed for five years from AY 2022-23

Prem Educational Trust Versus The ITO (Exemption), Ward-1, Chennai

Prem Educational Trust Versus The ITO (Exemption), Ward-1, Chennai - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether the delay of 94 days in filing the appeal ought to be excused as reasonable cause. 2. Whether an old Trust, previously registered under section 12A, which filed an online application for registration under section 12AB using sub-clause (iv) of section 12A(1)(ac) instead of sub-clause (i), may be treated as having effectively filed under sub-clause (i) when the mistake was inadvertent and the application was submitted within the extended time notified by the Board. 3. Whether the Commissioner (Exemption) could reject the application on the ground that the application was filed under the incorrect sub-clause and that the computerized system did not permit processing under the correct provision, or whether the authority must remedy the filing error, call for documents and process the application in accordance with law. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Excusal of Delay in Filing Appeal Legal framework: Limitation provisions for filing appeals require timely institution; courts may excuse delay for sufficient cause. Precedent Treatment: No prior decisions were cited or applied by the Tribunal in the judgment. Interpretation and reasoning: The affidavit explaining the 94-day delay was examined and found to demonstrate reasonable cause. The Court observed the affidavit's contents and the surrounding circumstances and exercised discretion to excuse the delay. Ratio vs. Obiter: Ratio - the Court's excusal of delay on the facts and affidavit presented constitutes the operative decision on limitation for these proceedings. Conclusion: Delay of 94 days in filing the appeal was excused and the appeal admitted for adjudication on merits. Issue 2 - Effect of Inadvertent Filing under Section 12A(1)(ac)(iv) instead of (i) for an Old Trust Legal framework: The Act, as amended w.e.f. 01.04.2021, prescribes a new registration regime under section 12AB and classifies applications by sub-clauses of section 12A(1)(ac); sub-clause (i) governs old trusts seeking registration under the new regime enabling automatic/provisional registration for five years from AY 2022-23 where applicable; sub-clause (iv) applies to other specified categories. Precedent Treatment: No precedents were referred to or distinguished; the Tribunal adjudicated on statutory interpretation and administrative fairness based on the record. Interpretation and reasoning: The Tribunal found as a fact that the assessee was an old Educational Trust previously registered under section 12A since 31.01.2017. Under the statutory scheme effective from 01.04.2021, an old Trust in this position ought to have applied under sub-clause (i) to obtain provisional registration for five years from AY 2022-23. The assessee filed within the extended window (application dated 13.01.2024, within CBDT's extension to 30.06.2024) but inadvertently selected sub-clause (iv) in the online Form No.10AB. The Tribunal treated the misfiling as inadvertent, not intentional or mala fide, and emphasized substantive entitlement over procedural form where the mistake did not prejudice any statutory requirement or public interest. Ratio vs. Obiter: Ratio - where an eligible old Trust files an application within the prescribed/extended period but selects the incorrect sub-clause in the online form due to inadvertence, the authority must treat the application as if filed under the correct sub-clause (here, 12A(1)(ac)(i)) and proceed to consider provisional registration for five years from AY 2022-23, subject to verification of documents and compliance with statutory conditions. Obiter - observations on filing complexities and system glitches as general policy considerations. Conclusion: The application filed under sub-clause (iv) is to be treated de facto as filed under sub-clause (i) for an old Trust that satisfies the substantive criteria and filed within the extended time; the authority is directed to consider granting provisional registration under section 12AB for five years from AY 2022-23, after calling for and verifying relevant documents. Issue 3 - Authority's Reliance on Computerized System Limitations and Obligation to Remedy Filing Errors Legal framework: Administrative authorities must process applications in accordance with law; procedural or technological impediments cannot be used to deny substantive rights where statutory criteria are met. Precedent Treatment: No authority was cited; the Tribunal articulated administrative law principles in context. Interpretation and reasoning: The Tribunal rejected the Commissioner's expressed helplessness that the computerized system would not permit processing an application filed under the incorrect sub-clause. It noted that systems/software are human-programmed and cannot absolve the statutory authority of its duty to grant registration where conditions are met. The Tribunal directed the Commissioner to restore the application to file, treat it as filed under the correct sub-clause, call for hard copies or relevant documents if necessary, and process the application in accordance with law. Ratio vs. Obiter: Ratio - an administrative officer cannot refuse to exercise statutory powers on the ground of computerized system constraints; where a prima facie entitlement exists and the filing error is inadvertent, the officer must correct or accommodate the error and process the application, including calling for documents and granting provisional registration where appropriate. Obiter - comments on the programmability of systems and general filing complexities. Conclusion: The Commissioner's rejection on grounds of incorrect sub-clause selection and system incapacity could not be sustained. The application is to be restored and processed as if filed under section 12A(1)(ac)(i), with the Commissioner empowered to call for documents and grant provisional registration under section 12AB for five years from AY 2022-23 if statutory conditions are satisfied. Overall Disposition The appeal is allowed; the impugned order rejecting the application is set aside and the application is to be treated as filed under section 12A(1)(ac)(i) and reconsidered for provisional registration under section 12AB for five years from AY 2022-23, subject to verification and compliance with law. The delay in filing the appeal is excused.