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Facts
The assessee, a charitable trust registered since 2001, applied for fresh registration under the new regime (Section 12AB). Due to an oversight, an incorrect section was initially mentioned in the application form. Subsequently, a fresh application was filed, which was rejected by the CIT(E).
Held
The Tribunal held that the assessee's application was rejected by the CIT(E) without affording due opportunity. Citing previous decisions with similar circumstances, the Tribunal restored the issue to the CIT(E) for fresh consideration.
Key Issues
Whether the rejection of the registration application due to a clerical error in mentioning the wrong section, without affording a proper opportunity, is justified. Whether the assessee should be allowed to rectify the mistake and get the application considered on merits.
Sections Cited
12AB, 12A, 10(23C)(iv), 12A(1)(ac)(i), 12A(1)(ac)(vi)(B)
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Before: MS. KAVITHA RAJAGOPAL & SMT. RENU JAUHRI
Assessee by : Ms. Dinkle Hariya Revenue by : Shri Himanshu Joshi Date of Hearing 30.01.2025 Date of Pronouncement 28.02.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- The assessee has filed this appeal against the order of the Learned Commissioner of Income-tax (Exemption), Mumbai [hereinafter referred to as “CIT(E)”] dated 02.08.2024 rejecting the application for registration u/s 12AB of the Income-tax Act, 1961 [hereinafter referred to as “Act”].
The assessee has raised the following grounds of appeal:
1. THE ORDER BAD, ILLEGAL AND WITHOUT JURISDICTION 1.1 In the facts and the circumstances of the case, and in law, the Order for registration passed by Commissioner of Income Tax (Exemptions), Mumbai [Ld. CIT"] is bad in law, illegal and without jurisdiction, as - A.Y.2024-25. Kaushaliyadevi Atmaram Singhania Charitable Trust (i) the same is framed in breach of the statutory provisions of the Income tax Act, 1961 ['the Act']; and (ii) the same is arbitrary and perverse. WITHOUT PREJUDICE TO THE ABOVE 2. NATURAL JUSTICE 2.1 In the facts and the circumstances of the case, and in law, the impugned order is bad in law and illegal, as the same is framed in gross breach of the principles of Natural Justice. 2.2 Without prejudice to the generality of the above ground, the impugned order is bad in law and illegal as no sufficient and fair opportunity of being heard was provided to the Appellant. 2.3 It is submitted that in the facts and the circumstances of the case, and in law. the order is bad in law and illegal on this ground as well. WITHOUT FURTHER PREJUDICE TO THE ABOVE (ON MERITS) 3. REJECTION OF THE APPLICATION FOR REGISTRATION 3.1 The CIT erred in rejecting the application for registration made by the Appellant u/s. 12AB r.w.s. 12A(1)(ac) (i) of the Act on the following grounds- (a) that the Appellant had not claimed exemption in previous years; and (b) that the Appellant had not fulfilled the stipulated conditions prescribed for filing application for approval in Form 10AB. 3.2 While doing so, the CIT erred in: (1) Basing his action on surmises, suspicion and conjecture; (ii) Taking into account irrelevant and extraneous considerations: (iii) Ignoring relevant material and considerations as submitted by the Appellant: (iv) Ignoring the fact that the initial application dated 27.08.2021 was correctly filed in Form 10AB and that it was mistakenly, only through oversight, that the section was selected as 10(23C)(iv) instead of section 12A (1) (ac) (i) of the Act; (v) Ignoring the fact that the surrender of the approval earlier granted and making fresh application was only at the instance of CPC, Bengaluru. (v) Ignoring the fact that there was no option available to make the application in Form 10AB seeking registration u/s. 12A(1)(ac)(i) of the Act as on 14.02.2024 and, therefore, the Appellant had filed the application in Form 10AB seeking registration u/s. 12A (1) (ac) (iv) of the Act on account of technical reasons on the part of CPC. Bengaluru. (vi) Ignoring the submissions made by the Appellant and arriving at the conclusion that the Appellant was required to file Form 10AB u/s. 12A(1)(ac) (vi)(B) of the Act. 3.3 It is submitted that in the facts and the circumstances of the case, and in law, no such rejection was called for.”
A.Y.2024-25. Kaushaliyadevi Atmaram Singhania Charitable Trust 3. Brief facts of the case are that the assessee is a charitable trust registered u/s 12A of the Act w.e.f. 01.04.2001. Pursuant to the changes in the registration regime for the charitable organizations brought through the Finance Act, 2020, all the existing trusts had to apply for a fresh registration under the new provisions of section 12AB by filing an application in the prescribed Form. The assessee made efforts to comply with the requirements, but for one reason or the other, it has not been able to get the requisite registration. The chronology of events in this regard is as under:
Sr. No. Date Events 1. 17.06.2002 Date of registration u/s 12A of the Act in the old regime 2. 27.08.2021 Application in Form 12A for provisional registration filed 3. 24.09.2021 Order for provisional registration received in Form 10 AC 4. 09.01.2024 Surrender of approval granted on 24.09.2021 as advised by CPC 5. 24.02.2024 Application in Form 10AC for registration u/s 12AB 6. 02.08.2024 Order of rejection of application for registration filed on 14.02.2024 4. It is seen that due to lack of understanding of the new provisions, the assessee erroneously filed for provisional registration that too wrongly mentioning section 10(23c)(iv) instead of section 12A(1)(ac)(i) of the Act whereas in view of the fact that it was already registered u/s 12A in the old regime, it had to file for regular registration directly. Subsequently, the assessee filed a fresh application for regular registration on 24.02.2024. Vide letter dated 12.06.2024, the assessee informed the Ld. CIT(E) that due to oversight it had wrongly mentioned an incorrect section earlier while filing the form and A.Y.2024-25. Kaushaliyadevi Atmaram Singhania Charitable Trust therefore a fresh form has been filed on 24.02.2024. Relevant portion of the assessee’s submissions is as under: “We submitted Form 10A on August 27, 2021, seeking registration and Approval was granted through Form No. 10AC on September 24, 2021, by PCIT/CIT. However, while applying through over sight, we have mentioned Clause (iv) of Clause (23C) of Section 10 instead of Sub-clause (i) of Clause (ac) of Sub-section (1) of Section 12A. Subsequently on realizing the clerical error we have contacted the Bangalore office of department and were informed that we need to surrender the certificate and make a fresh application. We have filed fresh application in form 10AB for obtaining registration under Sub Clause (iv) of Clause (ac) of Sub Section (1) of Section 12A on 14.02.2024. For your ready reference we enclose herewith Form 10AC Approval Order in Annexure- B and Copy of New application filed in Form 10AB in "Annexure - c". Thus, the fresh application filed due to error in original registration. In view of the circular no. 07/2024 dated 25.04.2024, We request you to kindly consider the matter sympathetically and grant the registration as requested. We shall be glad to provide any other information you may desire. We highly regret the inconvenience caused to your good-self.”
However, the assessee’s request as well as application for registration was rejected by Ld. CIT(E) vide order dated 02.08.2024 with the following observations: “3. On verification of the facts and circumstances of the case, it is found that the trust had registration u/s 12A on 17.06.2002, since, the assessee has Old registration before 01.04.2021 u/s 12A. Further, the assessee has filed ITR 7 and claimed exemption in previous years. 4 As per above mentioned provision of Income Tax Act, the assessee has to file Form 10AB u/s 12A(1)(ac)(vi)(B), if the assessee has not claimed exemption in previous year. Since the assessee has claimed exemption in previous years, therefore this application u/s 12A is not allowable. Further, the assessee is not fulfilling the stipulated conditions prescribed for filing application for approval in Form 10AB. In view of the above this application Form is hereby rejected.”
6. Aggrieved with the order of Ld. CIT(A), the assessee is in appeal before the Tribunal. Before us, Ld. AR has cited a plethora of decisions wherein the co- ordinate benches have allowed condonation of delay and/or rectification of inadvertent mistakes by the assessees and directed the revenue to consider the A.Y.2024-25. Kaushaliyadevi Atmaram Singhania Charitable Trust application for registration on merits. Some of the decisions cited by the assessee are as under:
1.
Sharayu Foundation v. CIT (E) - [ITA No. 5115/M/2024, Order dated 21.01.2025 (Mumbai Tribunal)] 2. Chetna Organic Farmers v. CIT (E) - [ITA No. 984/ Hyd/2024, Order dated 20.01.2025 (Hyderabad Tribunal)] 3. ARREDS Trust v. CIT (E) [ITA No. 1665 / Chny / 2024, Order dated 08.01.2025 (Chennai Tribunal)] 4. Celebrate Life v. CIT (E) - [ITA No. 5692/M/2024, Order dated 31.12.2024 (Mumbai Tribunal)] 5. Datta Krupa Education Trust v. CIT (E) - [ITA No. 5152 /M/2024, Order dated 05.12.2024 (Mumbai Tribunal)] 6. Bombay Buddhist Association v. CIT (E) - [ITA No. 1527 /M/2024, Order dated 08.10.2024 (Mumbai Tribunal)] 7. Param Niketan Foundation v. CIT (E) - [ITA No. 1518/M / 2024, Order dated 04.07.2024 (Mumbai Tribunal)] 8. Shree Hari Samaj v. CIT (E) - [ITA No. 1517 /M/2024, Order dated 26.06.2024 (Mumbai Tribunal)] 9. Arya Samaj Safdarjung Enclave v. CIT (E) - [ITA No. 2810 / Del / 2022, Order dated 13.06.2023 (Delhi Tribunal)] Ld. DR, on the other hand, strongly relied on the order of Ld. CIT(E).
7. We have considered the rival submissions and perused material available on record. Admittedly, the assessee is a registered trust carrying on charitable activities since 2001. Upon introduction of new procedure for re-registration of trusts, the assessee made due efforts to comply with the provisions as is evident from the chronological chart in Para 3 hereinbefore. However, due to one reason or the other, the assessee could not fill the application form correctly and, therefore, the application was eventually rejected by Ld. CIT(E) without giving due opportunity to the assessee. In this regard, we have also gone through the decisions cited by the Ld. AR and in particular the order of the co-ordinate A.Y.2024-25. Kaushaliyadevi Atmaram Singhania Charitable Trust bench in the case of Arya Samaj Safdarjung Enclave v. CIT (E) dealing with a similar situation. Relevant portion of the order is reproduced below: “3. Brief facts of the case are that, the assessee e-filed an application for registration u/s 12A(1) (ac) of the Income Tax Act, ('Act' for short), but while selecting the Form 10A, the assessee wrongly selected Form 10AB. The CIT(E) while considering the application filed by the assessee u/s 12A(1)(a) of the Act. rejected the same for wrongly uploading the Form vide order dated 30/09/2022. Aggrieved by the order dated 30/09/2022, the assessee is before us by way of appeal on the grounds mentioned above.
The Ld. Counsel for the assessee filed written submission in detail and submitted that the assessee inadvertently clicked and selected Form No. 10AB instead of Form No. 10A which resulted in rejection of the Application. The Assessee is legally entitled for re-registration as per the provision of Section 12A(1)(ac) of the Act. Thus, Ld. Assessee's Representative submitted that the matter may be remanded to the file of CIT(E) Delhi to consider the case of the assessee de-novo.
5. The Id. Departmental Representative submitted that though the uploading of Form 10AB instead of 10A is an error of the Assessee, the same cannot be rectified by the CIT(E), therefore, justified the action of the CIT(E) in rejecting the application filed u/s 12A(1)(ac) of the Act.
We have heard the parties and perused the material available on record. It is not in dispute that the assessee had submitted an online application on 24/03/2022 for registration u/s 12A(1)(ac) of the Act, but due to inadvertent mistake of the Assessee selected Form 10B instead except of Form 10A which ultimately resulted in rejection of the Application by the CIT(E). Further it is also found that the assessee had filed signed Form 10A along with the submission dated 22/09/2022 wherein submitted that it was a bonafide mistake on the part of the assessee in selecting of Form 10AB instead of Form 10A and requested to accept the Form 10A.
By considering the above facts and circumstances we deem it fit to condone the delay and permit the assessee to file a fresh Form 10A within a period of 30 days from the date of receipt of these order and if such Form 10A is field, the CIT(E) shall consider the same on merit and decide application filed u/s 12A(1)(ac) in accordance with law without raising the issue of limitation.”
In view of the facts and circumstances of the case and decisions of the co- ordinate benches, we deem it appropriate to restore the issue back to the Ld. CIT(E) with the direction to consider the application filed by the assessee on 24.02.2024 and allow him to rectify any genuine mistake made in filling the A.Y.2024-25. Kaushaliyadevi Atmaram Singhania Charitable Trust application, by taking a physical form, if required. Ld. CIT(E) is, further, directed to decide the issue of registration on merits after giving due opportunity to the assessee for furnishing the requisite details as may be called for.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 28.02.2025.