Registration benefit under Section 12AA/12AB upheld; assessing authority directed to reconsider past-year exemptions and grant relief.

Registration under Section 12AA/12AB and the first proviso (with Circular No.01/2015) can render Sections 11 and 12 applicable to earlier assessment years where assessment proceedings were pending at the date of registration; this permits relief despite belated filing when objects and activities remain unchanged. The court found that denial of exemption for procedural delay produced an unfair substantive tax liability and, in view of the amending provisions and explanatory circular aimed at removing hardship to charitable organisations, set aside the rejection of condonation and directed revision of the assessment intimation to consider entitlement to exemptions.

---

---

Issues: Whether the petitioner (a trust) is entitled to the benefit of registration under Section 12AA/12AB for the Assessment Year 2016-2017 (financial year 2015-2016) so as to claim exemptions under Sections 11 and 12 despite belated filing of Form No.10B and whether the impugned order rejecting the application for condonation of delay in filing Form No.10B should be set aside.

Analysis: The statutory regime provides that registration under Section 12AA/12AB ordinarily operates from the assessment year following the financial year in which application for registration is made (Section 12A(2)), but the first proviso to Section 12A(2) and Circular No.01/2015 permit availability of Sections 11 and 12 for earlier assessment years in which assessment proceedings are pending as on the date of registration, provided objects and activities remain the same. The petitioner applied for registration after the end of the relevant financial year, received registration with retrospective effect from 01.04.2016, and the impugned order rejected condonation of delay and denied exemption, relying on authorities that emphasize registration as condition precedent. On the facts, the petitioner's declared receipts were limited and the denial of exemption due to procedural delay produced a substantive tax liability. The Court found that, in the circumstances and having regard to the amending provisions and explanatory circular aimed at removing hardship to charitable organisations, the substantial entitlement to exemption could not be denied as a result of technical/ procedural lapses and that the impugned rejection produced an unfair result requiring revision of the assessment intimation.

Conclusion: The impugned order rejecting the application for condonation of delay is set aside and the assessing authority is directed to pass a fresh order by revising the intimation dated 25.02.2019 as modified by order dated 23.11.2019 so that entitlement to exemption under Sections 11 and 12, in accordance with registration and applicable proviso and circular, is considered.

---