2025 (10) TMI 1212 - AT - Income Tax

Registration under s.12AB refused as second application time-barred; CBDT circular inapplicable; assessee may appeal denial

ITAT upheld the CIT(E)'s refusal to grant registration under s.12AB, finding the assessee's second application time-barred and not saved by the CBDT ... Denial of registration of the assessee trust in terms of the provisions of Section 12A(1)(ac)(iii) - period of limitation beyond the statutory time limit - Impugned application is the second application as original application filed already stood rejected by the CIT(E) - HELD THAT:- Assessee was unable to controvert the findings of the CIT (E) as above that the impugned application filed by the assessee seeking final registration u/s 12AB of the Act was filed beyond the date specified in law for filing the same and also that it was not saved by the CBDT Circular extending the time limit for filing such applications. Considering the above facts we see no reason to interfere in the order of the Ld. CIT(E) rejecting assesses application seeking registration u/s 12AB of the Act. The remedy with the assessee, as per law, against the denial of registration u/s 12AB of the Act, lay with filing of appeal against the original order denying grant of approval to the assessee, which was passed by the Ld. CIT(E). The assessee is at liberty to pursue the said course of action. ISSUES PRESENTED AND CONSIDERED 1. Whether the final registration application under section 12AB (as applied through section 12A(1)(ac)(iii)) was validly rejected for non-maintainability on the ground that it was filed beyond the statutory time limit and was not saved by the CBDT extension circular. 2. Whether the rejection of the application without according an opportunity to produce documentary evidence or without consideration of past activities and provisional registration violated principles of natural justice or rendered the order unsustainable. 3. Whether the remedy of the applicant lay in filing an appeal against the original order denying registration and whether the Tribunal should interfere with the CIT(E)'s maintainability finding or advise on condonation of delay in a future appeal. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Maintainability: time-bar and effect of CBDT circular Legal framework: The statutory scheme requires filing of registration applications under section 12AB (as relevant through section 12A(1)(ac)(iii)) within the time prescribed by law. The CBDT issued a circular (No. 07/2024 dated 25.04.2024) that extended the time for filing certain applications and specified in para 4.1 the categories of applications covered by the extension. Precedent treatment: No judicial precedents were cited in the impugned order or before the Tribunal that altered the statutory time limits or the applicability of the circular; the Tribunal proceeded on the basis of the statutory scheme and the text of the CBDT circular. Interpretation and reasoning: The Tribunal examined the record and noted that the impugned application was the second application for final approval; an earlier application dated 17.09.2023 had already been rejected by the CIT(E) and provisional registration had been cancelled by order dated 23.02.2024. The subsequent application, though filed within the extended window provided by the CBDT circular, did not fall within para 4.1 of the circular because the earlier rejection and cancellation precluded coverage under the categories listed. On this factual and textual basis the CIT(E) concluded the present application was beyond the statutory deadline and therefore non-maintainable. The Tribunal found no error in that conclusion and observed that the assessee's counsel did not controvert the factual finding that the application was time-barred and not saved by the circular. Ratio vs. Obiter: Ratio - an application for final registration filed after an earlier rejection and cancellation is not maintainable merely because a general extension has been issued; applicability of an extension circular must be determined against its specific coverage (para 4.1). Obiter - none on alternative methods of calculating time limits beyond the circular's text. Conclusions: The Tribunal upheld the CIT(E)'s rejection of the application as non-maintainable for being filed beyond the prescribed time and not covered by the CBDT circular. Issue 2 - Alleged denial of opportunity / failure to consider documentary evidence and past activities Legal framework: Principles of natural justice require reasonable opportunity to place material before a decision-maker where admissible and relevant. The assessment of genuineness of charitable activities under section 12AB is fact-sensitive and ordinarily involves consideration of documents such as activity reports, bank statements, financial statements and provisional registration status. Precedent treatment: The record did not identify binding precedent applied to require reopening of maintainability questions where the application is time-barred. The Tribunal applied standards of opportunity to be given but contextualized them within the maintainability determination. Interpretation and reasoning: The Tribunal noted that the sole argument advanced before it was that the application had been rejected without adequate opportunity to file documentary evidence. However, the Tribunal accepted the CIT(E)'s factual finding that the application was the second application following prior rejection and cancellation and therefore was non-maintainable. Because the maintainability objection was dispositive and uncontroverted, the Tribunal did not find error in refusing to consider the merits (i.e., documentary evidence and activities) of a time-barred application. The Tribunal also observed that the remedy against the earlier denial lay in an appeal against the original denial, implying that procedural avenues to test merits remained available but through the correct proceedings. Ratio vs. Obiter: Ratio - when an application is held non-maintainable as being beyond the statutory time and not covered by an extension, a tribunal need not adjudicate the merits including documentary verification or purported defects in opportunity, unless the maintainability finding itself is successfully challenged. Obiter - the Tribunal remarked that the assessee could furnish documentary evidence if given an opportunity in the proper proceeding, but this was not a basis to set aside the maintainability finding. Conclusions: The Tribunal rejected the contention of denial of natural justice as insufficient to overturn the maintainability rejection; it declined to remit for merits consideration because the application was correctly held non-maintainable. Issue 3 - Appropriate remedy and observations on condonation of delay in appeal Legal framework: Statutory rights to seek registration can be challenged by appeal against the order that denied registration; time limits for appeals are governed by the relevant procedural provisions and condonation of delay is available in appropriate cases before the appellate forum on established principles. Precedent treatment: The Tribunal did not rely on or distinguish any precedent concerning condonation thresholds; it confined itself to stating legal remedies and the discretion available to appellate bodies. Interpretation and reasoning: The Tribunal observed that the proper remedy lay in appealing against the original order dated 23.02.2024 which denied final approval and cancelled provisional registration. It acknowledged the practical difficulty that such an appeal may be time-barred but recorded that the assessee's bona fide attempt to rectify the rejection by filing a fresh application (which was later held non-maintainable) could be a relevant circumstance for an appellate bench to consider when deciding an application for condonation of delay. This observation was directional and advisory, not an order of condonation. Ratio vs. Obiter: Ratio - the proper procedural remedy for challenging denial of registration is an appeal against the original denying order; maintainability of a subsequent application does not replace or negate the right to appeal the original order. Obiter - the Tribunal's remark that the facts may be considered for condonation in a future appeal is advisory and not a ruling on condonation. Conclusions: The Tribunal dismissed the present appeal and directed that the assessee remain free to pursue an appeal against the original order; the Tribunal indicated that it would be open to consider a condonation plea in that appeal based on the assessee's bona fide conduct, but made no binding determination on such condonation.