Loading judgment…
Facts
The assessee, an Educational Trust registered u/s.12AA since 2017, inadvertently applied for registration under Section 12A(1)(ac)(iv) of the Act instead of the correct Section 12A(1)(ac)(i) under the new regime. This led to the Ld.CIT(E) rejecting its application for Section 12AB registration, despite the application being filed within the extended deadline.
Held
The Tribunal determined that the assessee's mistake was inadvertent and not intentional. It set aside the Ld.CIT(E)'s order and directed the Ld.CIT(E) to treat the application as if filed under Section 12A(1)(ac)(i) and grant provisional registration u/s.12AB for five years from AY 2022-23, after verifying relevant documents.
Key Issues
Whether an old trust's application for Section 12AB registration can be rejected due to an inadvertent error in selecting the wrong sub-clause under Section 12A(1)(ac).
Sections Cited
12AB, 12A(1)(ac), 12A(1)(ac)(i), 12A(1)(ac)(iv), 12AA, 11
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee Trust against the action of the Learned Commissioner of Income Tax (Exemption), (hereinafter referred to as ‘Ld.CIT(E)‘), Chennai, dated 26.07.2024 rejecting the application filed by the assessee seeking registration u/s.12AB of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘), which was filed by the assessee online on 13.01.2024 in Form No.10AB u/s.12A(1)(ac)(iv) of the Act.
(AY -) Prem Educational Trust :: 2 ::
At the outset, the Ld.AR of the assessee brought to our notice that appeal has been filed belatedly after ‘94’ days and the assessee has filed an affidavit explaining the cause of delay. Having gone through the contents of the application and the affidavit filed by the assessee, we find that there is reasonable cause for delay which we excuse and proceed to adjudicate the appeal on its merits.
The brief facts brought to our notice by the Ld.AR of the assessee are that the assessee is an Educational Trust, which was granted registration u/s.12AA of the Act on 31.01.2017 and therefore, assessee- Trust was an old Trust enjoying registration u/s.12AA of the Act from AY 2017 onwards having been found to be engaged in charitable activities.
1. According to the Ld.AR, as per new regime which came into force from 01.04.2021, the assessee inadvertently filed for registration u/s.12AB of the Act under sub-clause (iv) of section 12A(1)(ac) of the Act instead sub-clause (i) of section 12A(1)(ac) of the Act, because of which, the Ld.CIT(E) has dismissed the application, even though, the assessee had filed the application within the extended time given up to 30.06.2024 by the CBDT. Therefore, he prays that due to inadvertent mistake because of complexities in filing of registration u/s.12AB of the Act as well as glitches in the system, the assessee shouldn’t be deprived of, the exemption u/s.11 of the Act due to the aforesaid reasons which were not intentional or deliberate. Therefore, prayed that assessee’s application (AY -) Prem Educational Trust filed on 13.01.2024 to be considered as he fall under clause (i) of section 12A(1)(ac) of the Act.
Per contra, the Ld.DR supporting the action of the Ld.CIT(E) submitted that the assessee had filed application u/s.12A(1)(ac)(iv) of the Act and since, the assessee didn’t satisfy the conditions as required by law for processing the application under clause (iv) of u/s.12A(1)(ac), he Ld.CIT(E) has rightly held that the application was not maintainable and he rejected it. Therefore, he doesn’t want us to interfere in the impugned order of the Ld.CIT(E).
After hearing both the parties, we note that assessee is an Educational Trust which was engaged in charitable activities which paved way for it being granted registration u/s.12A of the Act on 31.01.2017 and therefore is noted to be an old Trust enjoying the registration u/s.12A of the Act from AY 2017-18 onwards which registration assessee would have enjoyed for perpetuity, but for the amendment brought in the Act regime w.e.f. 01.04.2021 which brought in new regime & new procedure was required to be followed by old Trust enjoying registration u/s.12A/80G of the Act as well as Trusts which was applying for registration u/s.12 of the Act. In the present case, we note that assessee being an old Trust, pursuant to the new regime, the assessee ought to have filed its application for registration under clause (i) of section (AY -) Prem Educational Trust :: 4 ::
12A(1)(ac)of the Act which would have facilitated automatic registration for five (5) years from AY 2022-23 onwards (taking note that assessee filed for registration on 13.01.2024 which is well within the extended time given by CBDT viz. up to 30.06.2024). But assessee is noted to have inadvertently applied for registration under clause (iv) of section 12A(1)(ac)(iv) of the Act (which was not applicable to assessee) rather it ought to have files as noted above under sub-clause (i) of sec.12A(1)(ac) of the Act (which was meant for old Trust like assessee). In such a factual back ground, the Ld.CIT(E) while processing this application of assessee, ought to appreciated this crucial fact that assessee Trust was an old Trust and if it correctly applied u/s.12A(1)(ac)(i) of the Act, it could have automatically got registration for five (5) years, and should have granted such registration from AY 2022-23 onwards, since assessee has filed the application in question on 13.01.2024 well within the extended time i.e. before 30.06.2024. But the Ld.CIT(E) taking note that assessee had filed application under clause (iv) instead of Clause (i) after expressed his helplessness (since system is in control for processing of application) in a computerized manner has rejected the application filed by the assessee on 13.01.2024, which impugned action can’t be countenanced. The system/software has been programmed by human beings, and the authorities vested with power to grant registration, can’t be seen to be helpless and blame the system for not processing the (AY -) Prem Educational Trust application filed by the assessee under the right clause. In the light of the discussion, we set aside the impugned order of the Ld.CIT(E) and restore the assessee’s application back to his file and direct the Ld.CIT(E) to treat the application as if filed u/s.12A(1)(ac)(i) of the Act, instead of clause (iv) and consider grant of provisional registration u/s.12AB of the Act for five (5) years from AY 2022-23 onwards, and if advised, assessee to file hard copy of relevant application for grant of registration u/s.12AB of the Act. And the Ld.CIT(E) may call for relevant documents to ascertain the aforesaid facts and consider granting registration for five (5) years from AY 2022-23 onwards, ignoring the inadvertent mistake in filing under wrong sub-clause (iv) of section 12A(1)(ac) of the Act, which can’t be said be intentional/deliberate and done with mala-fide intention. And thereafter process the application in accordance to law.
In the result, appeal filed by the assessee is allowed for statistical purposes.