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Facts
The assessee, Elim Church Education Centre Religious & Charitable Trust, was granted provisional registration under Section 12AB of the Income Tax Act for AYs 2021-22 to 2023-24. When applying for renewal of this registration, the Trust inadvertently selected sub-clause (vi) instead of the correct sub-clause (iii) of Section 12A(1)(ac). Consequently, the CIT(E) rejected the renewal application, leading the assessee to file an appeal.
Held
The Tribunal condoned the 36-day delay in filing the appeal, acknowledging sufficient cause. Citing Supreme Court pronouncements that curable procedural irregularities should not defeat substantive rights and that rules of procedure serve justice, the Tribunal ruled that the assessee's inadvertent error in selecting the wrong sub-clause should not result in the rejection of their renewal application. The CIT(E) was directed to deem the application as filed under the correct sub-clause (iii), process it lawfully after hearing the assessee, and allow for the submission of necessary documents.
Key Issues
Whether an inadvertent procedural error made by the assessee in selecting a sub-clause during an online application for renewal of registration under Section 12AB of the Income Tax Act should lead to the rejection of the application by the CIT(E).
Sections Cited
12A(1)(ac)(vi), 12AB, 12A(1)(ac)(iii), 12AB(1)(b)(i), 12AB(1)(b)(ii)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘A’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI MANOJ KUMAR AGGARWAL
आदेश / O R D E R
PER ABY T. VARKEY, JM:
This is an appeal preferred by the assessee Trust against the order of the Learned Commissioner of Income Tax (Exemptions)/NFAC, (hereinafter referred to as “the Ld.CIT(E)”), Chennai, dated 16.07.2024 rejecting the application filed by the assessee online dated 26.01.2024 in Form No.10AB u/s.12A(1)(ac)(vi)(b) of the Income Tax Act, 1961 (hereinafter referred to as "the Act”) seeking registration u/s.12AB of the Act.
At the outset, the Ld. Counsel for the assessee submitted that there is a delay of ‘36’ days in filing of this appeal and submitted the reasons for delay. Since we note from the explanation given by the assessee that assessee was prevented by sufficient cause, we condone the delay of ‘36’ days and proceed to adjudicate the appeal on merits.
At the outset, the Ld.AR of the assessee draw our attention to the fact that the assessee Trust was formed in the year 2021 and applied for provisional registration u/s.12AB of the Act which was granted on 27.05.2021 from AYs 2021-22 to AY 2023-24 [for three years] as per section 12A(1)(ac)(vi) of the Act. Further, the Ld.AR pointed out that the assessee while applying for renewal of the registration u/s.12AB of the Act inadvertently clicked sub-clause (vi)
1. instead of sub-clause (iii) of section 12A(1)(ac), because of which, the Ld.CIT(E) has rejected the application filed online dated 26.01.2024. Therefore, she prays that inadvertent mistake should not come in the way of the assessee to get the registration u/s.12AB of the Act.
Per contra, the Ld.DR couldn’t controvert the aforesaid facts.
However, he doesn’t want us to interfere with the order of the Ld.CIT(E).
Having heard both the parties, we find that assessee Trust was formed in 2021 and granted provisional registration u/s.12AB of the Act on 27.05.2021 for three years from AYs 2021-22 to 2023-24; and as per the scheme of the Act, the assessee in order to renew its registration u/s 12AB, had to file application under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A, but assessee inadvertently filed/clicked online sub-clause (vi) of clause (ac) of sub-section (1) of section 12A. Therefore, the Ld.CIT(E) has rejected the application filed by the assessee dated 26.01.2024 by passing the impugned order rejecting the same. The impugned action of the Ld.CIT(E) can’t be countenanced. In this context, we take note of the Hon’ble Supreme Court decision in the case of United Bank of India v. Naresh Kumar AIR 1997 SC 3, wherein, it was observed by their Lordships “as far as possible, a substantive right should not be defeated on account of a procedural irregularity which is curable” and in the case of Associated Journals Ltd. v.
Mysore Paper Mills Ltd., reported in [2006] 69 SCL 311 (SC), it was observed by the Hon’ble Supreme Court -
“… Rules of procedure cannot be a tool to circumvent the justice. In fact, the Rules are laid to help for speedy justice … Technical defects in petition are curable…..”. 6. In Owners & Parties interested in MV Vali Perov. Fernandeo Lopez AIR 1989 SC 2206, it was observed “Rules of procedure are not by themselves an end, but means to achieve the ends of justice.
Rules of procedure are tools forged to achieve justice and are not hurdles to obstruct the pathway to justice. Construction of a rule of procedure which promotes justice and prevents its miscarriage by enabling the Court to do justice in myriad situations, all of which can’t be envisaged, acting within the limits of permissible construction, must be preferred to that which is rigid and negatives the cause of justice. Procedure is meant to sub-serve and not rule the cause of justice”.
In the light of the aforesaid decisions of the Hon’ble Supreme Court, we are of the view that the inadvertent mistake made by the assessee while clicking the online portal i.e. clicking sub-clause (vi) instead of sub-clause (iii) should not have resulted in rejection of the application filed by the assessee for renewal of registration u/s.12AB of the Act. Therefore, we direct the Ld.CIT(E) to treat the application filed by the assessee Trust as if it has been filed under clause (iii) instead of clause (vi) and process the application for renewal u/s.12AB in accordance to law and the assessee is directed to file all the required documents to prove the genuineness of its activities as prescribed u/s.12AB(1)(b)(i) and the Ld.CIT(E) to pass order under sub-clause (ii) of section 12AB(1)(b) of the Act, after hearing the assessee.
In the result, appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on the 19th day of March, 2025, in Chennai.