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Income Tax Appellate Tribunal, `B BENCH, CHENNAI
Before: SHRI GEORGE GEORGE KAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal at the instance of the assessee trust is directed against CIT(E)’s order dated 02.08.2024, rejecting the application seeking registration u/s.12AB of the Income Tax Act, 1961 (hereinafter the ‘Act’).
2. The grounds raised are as follows:- The rejection order passed by the CIT (EXEMPTIONS), Chennai dated 02/08/2024 in DIN-ITBA/EXM/F/EXM45/2024-25/1067246424 (1) is contrary to law, facts, and in the circumstances of the case.
The CIT (EXEMPTIONS), Chennai erred in passing the rejection order and ought to have appreciated that the rejection order was passed without considering the facts of the case.
The main objective of the Trust is only charitable, medical relief, educational assistance and others and does not include religious purpose. In the application it is mentioned as religious which is mistake apparent on record. We wish to state that even in the trust deed, it does not contain the term religious purpose in the objectives clause. Hence the same may be treated as mistake apparent on record.
Also, provisional 12A certificate in Form 10AC was issued in May 2021 valid from Assessment Year 2021-2022 to 2023-2024. Since it mandates to be applied before 6 months of expiry of the certificate and in pursuance of Circular 8 of 2022 providing extension to apply for registration before 30.06.2024, at the time of re-registration in February 2024, we had wrongly applied u/s 12(1)(ac) (vi) (B) instead of applying u/s 12(1)(ac) (ii).
The CIT(EXEMPTIONS) has passed the order without referring to explanation give for the mistake apparent on records.
The Appellant craves leave to file additional grounds/ arguments at the time of hearing.
Prayer: Requesting the Honorable ITAT to consider the company objectives for charitable purpose and order suitably to issue Exemption u/s 12A and 80G.
The assessee trust’s application for registration u/s.12AB of the Act was rejected by the CIT(E) by observing as under:-
4.1: As per the provisions of the Income Tax Act, 1961, a trust or institution can apply for registration either as Charitable or Religious or Charitable cum Religious but cannot apply for Charitable Trust with Religious objects.
The CIT (E) can grant registration only based on the application filed by the applicant in Form 10AB. The System also process the application based on the application filed by the applicant. Processing of application and granting of registration are carried in ITBA and there is no functionality available in the system to change the objects mentioned in Form 10AB other than applied in the application filed in Form 10AB and grant registration.
4.2: As explained in the Show Cause Notice issued to the applicant, it has filed its application u/s.12A(1) (ac) (vi)(B).This section applicable for those trust/institutions who have commenced their activities and no income or part thereof has been excluded from the total income u/s.10(23C)(iv), (v),(vi), (via) or u/s.11 or 12 for any previous year ending on or before the date of such application, at any time after the commencement of such activities. It is seen from the financials submitted, the applicant has filed ITR-7 for the AY 2021- 22 and 2022-23 and claimed application of income for the same year. Since, the applicant had claimed application of income in respect of the above mentioned assessment years, it is not eligible to file application u/s 12A(1)(ac) (vi)(B) of the I.T. Act, 1961. The same is tabulated as under:
S.No. Assessment year Gross Receipt Application Claimed 1 2021-22 10,00,000 8,20,000 2 2022-23 5,35,000 3,64,850 In view of the above fact, the application filed by the applicant in section code 12A(1)(ac) (vi) (B) in Form 1OAB is not maintainable as such deserves for rejection.
4.3 As explained in para 4.1 and 4.2 of this order, as per the provisions of section 12AB (1)(b) clause (ii) (B) of the 1.TAct, 1961, if the application is made under item (B) of sub-clause (vi) of the said section 12A(1) (ac) and the Principal Commissioner or Commissioner has not satisfied, he can reject the application of the trust/institution. Hence, the application filed by the applicant on 27.02.2024 in Form No. 10AB u/s 12(1) (ac) (vi) B seeking registration u/s.12AB of the 1.T. Act. 1961 is rejected.
4.4: As explained above, the applicant failed to comply with the notices sent, in spite of reasonable opportunities afforded. In light of the above facts and the applicant not furnished any details in response to the notices issued, the above referred application in Form No. 10AB filed by the applicant on 27.02.2024 could not be processed as per the provisions of section 12AB of the Act.
4.5: In view of the above fact, the application filed by the applicant in section code 12A(1)(ac) (vi) (B) in Form 10AB is not maintainable and as such deserves for rejection.
As explained in para 1 of this order, as per the provisions of section 12AB(1)(b) clause (ii) (B) of the I.T.Act, 1961, if the application is made under item (B) of sub-clause (\vi) of the said section 12A(1)(ac) and the Principal Commissioner or Commissioner has not satisfied, he/she can reject the application of the trust/institution. Hence, the application filed by the applicant on 27.02.2024 in Form No. 10AB u/s 12(1)(ac)(vi) B seeking registration u/s.12AB of the I.T. Act, 1961 is rejected.
Aggrieved by the rejection of application seeking registration u/s.12AB of the Act, the assessee has filed the present appeal before the Tribunal. The ld.AR submitted that the show-cause notice was issued in e-mode through ITBA e-filing portal. It was stated that the assessee did not take notice of the same and so, the requisite evidence could not be furnished. It was submitted that in the interest of justice and equity, the issue may be restored to the files of the CIT(E). Further, the ld.AR submitted that the objects of the assessee trust is only charitable, medical relief, education etc., and does not have religious objects. He further submitted that in the application it has been mentioned as religious which is mistake apparent on record. It was stated in the trust deed, the objects does not have any clause relating to religious purpose. Hence, the application may be treated as mistake apparent on record.
The ld.DR supported the order of CIT(E).
We have heard rival submissions and perused the material on record. The assessee trust has been incorporated on 06.11.2020. The provisional certificate was applied on 14.02.2021 u/s.12A(1)(ac)(vi) of the Act. The provisional certificate was obtained on 27.05.2021. As the provisional certificate in Form 10AC issued in May, 2021, registration was valid only from assessment year 2021-22 to 2023-24. Therefore, it was mandatory on the part of the assessee trust to apply before the expiry of six months of the certificate in pursuance to Circular No.8 of 2022 i.e., before 30.06.2024. At the time of re-registration in February, 2024, it is seen that the assessee trust had wrongly applied u/s.12(1)(ac)(vi)(B) of the Act instead of applying u/s.12(1)(ac)(ii) of the Act. We note that the show-cause notice issued from the office of the CIT(E) to furnish the necessary evidence on or before 17.07.2024 (refer para 3.2 & 4.4 of the CIT(E) order), the assessee did not respond to the same by uploading the details in e-filing portal. In the interest of justice and equity, we are of the view that the matter needs fresh consideration by the CIT(E). Accordingly, we restore the issue raised in this appeal to the files of the CIT(E). The CIT(E) is directed to provide reasonable opportunity to the assessee to furnish the requisite evidence / details as called for in the show- cause notice. The assessee is directed to co-operate with the Revenue and shall not seek unnecessary adjournment. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open court on 21st January, 2025 at Chennai.