Loading judgment…
Facts
M/s. Nightingale Social Welfare Society, already registered under Section 12AA since 2010, received a fresh registration in Form 10AC on 28.05.2021, which inexplicably mentioned "provisional registration". Based on this, the CIT(E) cancelled the registration, believing the assessee lacked prior 12AA registration. The assessee had initially filed a renewal application in Form 10AB under a bonafide belief but later withdrew it, relying on CBDT Circular No. 11/2022.
Held
The Tribunal condoned a 33-day delay in filing appeals, accepting the assessee's reasonable explanation of awaiting rectification. It clarified that, as per CBDT Circular No. 11/2022, "provisional registration" in Form 10AC for existing trusts registered under Section 12A/12AA prior to 01.04.2021 should be treated as full registration. Consequently, the CIT(E)'s order cancelling the registration was set aside, and the matter was remanded for fresh adjudication considering the circular and all submitted documents.
Key Issues
Whether the CIT(E) was justified in cancelling the assessee's registration under Section 12AB/Form 10AC, specifically regarding the interpretation of 'provisional registration' for trusts already registered under Section 12A/12AA, in light of CBDT Circular No. 11/2022; and the condonation of delay in filing appeals.
Sections Cited
12AA, 12AB, 154, 12A, 10, 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘B’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : These appeals are filed by M/s. Nightingale Social Welfare Society (“the assessee”), feeling aggrieved by the orders passed by the Learned Commissioner of Income Tax (Exemptions), Hyderabad (“Ld. CIT(E)”), both dated 07.12.2024 for the A.Y. 2025-26. 2. At the outset, it is observed that there is delay of 33 days in filing of both these appeals. The assessee has filed petitions for condonation of such delay supported by affidavits explaining the reasons for the delay in filing the present appeals. The learned Authorised Representative (“Ld. AR”) submitted that the due date for filing the appeals before the Tribunal expired on 28.02.2025. However, prior to the expiry of the limitation period, the assessee had filed a rectification application under section 154 of the Income Tax Act, 1961 (“the Act”) before the Ld. CIT (E) on 08.01.2025, seeking correction of errors in the impugned orders. The assessee was under a bonafide belief that the rectification would be allowed and the issue resolved at that stage. Hence, the appeals before the Tribunal were not filed within the prescribed period.
2.1 The Ld. AR further submitted that there was no intentional delay. The delay occurred while the assessee was waiting for disposal of the rectification applications, and only later, on being advised by counsel, the assessee chose to pursue the appellate remedy. Therefore, the delay of 33 days was neither deliberate nor mala fide, and the same deserves to be condoned in the interest of justice.
Per contra, the Learned Departmental Representative (“Ld. DR”) did not seriously object to the condonation petition filed by the assessee.
We have heard the rival submissions and perused the record. It is not in dispute that the assessee had filed a rectification application under section 154 of the Act on 08.01.2025 (Page nos.40 to 43 of the paper book), prior to the expiry of the appeal limitation period on 28.02.2025. We have gone through the affidavits filed along with the condonation petitions and find that the explanation given by the assessee is reasonable and bonafide. In our considered view, the pendency of the rectification petition constituted a sufficient cause for the delay in filing the appeals. The delay of 33 days is short and has been properly explained. We are satisfied that there was no lack of diligence or mala fide intention on the part of the assessee. Since the Ld. DR has not raised any serious objection either, we see no reason to decline condonation. Accordingly, applying the principles of substantial justice, and considering the circumstances of the case, we condone the delay of 33 days in filing the appeals. The appeals are admitted for adjudication on merits.
The assessee has raised the following grounds of appeal :
6. The brief facts of the case are that, the assessee is a society duly registered under section 12AA of the Act, originally granted registration by order dated 16.03.2011 with effect from 01.04.2010. Later, pursuant to the transitional provisions of the amended registration regime under the Finance Act, 2020, the assessee was issued a fresh registration in Form No. 10AC dated 28.05.2021, valid from Assessment Year 2022–23 to 2026–27. Subsequently the Ld. CIT (E) cancelled the registration granted under Form 10AC dated 28.05.2021 on the ground that the assessee did not possess registration under section 12AA prior to 01.04.2021.
Aggrieved with the order of Ld. CIT(E) the assessee is in appeal before the Tribunal. The Ld.AR submitted that, the assessee is a society duly registered under section 12AA of the Act, originally granted registration by order dated 16.03.2011 with effect from 01.04.2010. Later, pursuant to the transitional provisions of the amended registration regime under the Finance Act, 2020, the assessee was issued a fresh registration in Form No. 10AC dated 28.05.2021, valid from Assessment Year 2022–23 to 2026–27. However, this Form No. 10AC mentioned the nature of registration as “provisional”, even though the assessee was already holding valid registration under section 12AA prior to 01.04.2021. Under a bonafide belief, the assessee filed renewal application in Form No. 10AB on 28.06.2024. Later, during follow-up with the tax department regarding the status of this application, the assessee was informed that as per CBDT Circular No. 11/2022 dated 03.06.2022, in cases where the assessee already held a registration under section 12A/12AA as on 31.03.2021, the word “provisional registration” mentioned in Form 10AC was to be read as “registration”. Accordingly, the assessee filed a letter dated 05.09.2024, withdrawing the renewal application in Form 10AB, and also enclosed copies of the original 12AA registration dated 16.03.2011, and Form 10AC dated 28.05.2021. The assessee had clarified the facts before the Ld. CIT(E) that, the assessee was having valid registration prior to 01.04.2021.
7.1 Despite this clarification, the Ld. CIT (E) passed the impugned order on 07.12.2024, cancelling the registration granted under Form 10AC dated 28.05.2021 on the ground that the Form 10AB application had become infructuous, and also observing that the assessee did not possess registration under section 12A/12AA prior to 01.04.2021. The Ld. AR submitted that, the Ld. CIT(E) has cancelled the registration of the assessee without considering the fact that the assessee was having registration prior to 01.04.2021. Accordingly, the Ld. AR prayed before the bench to set aside the issue to the file of Ld. CIT(E) for reconsideration of the issue.
Per contra, the Ld. DR, though relied on the impugned order of the Ld. CIT (E), could not dispute the factual position that the assessee was already registered under section 12AA before 01.04.2021, and that the CBDT Circular No. 11/2022 applies to such cases.
We have heard the Ld. AR for the assessee and the Ld. DR for the Revenue and perused the record. The Ld. AR submitted that the assessee was holding a valid and subsisting registration under section 12AA of the Act from 01.04.2010, granted vide order dated 16.03.2011, much before the cut-off date of 01.04.2021(page no.1 of the paper book). The Ld. AR placed reliance on CBDT Circular No. 11/2022 dated 03.06.2022, which clarifies that where an existing trust or institution was already registered under section 12A/12AA prior to 01.04.2021, and had applied for migration as required, the registration granted in Form 10AC would be treated as valid and final, and the reference to “provisional registration” in such cases is to be treated as “registration”. We have gone through the copy of CBDT Circular No. 11/2022 placed at page no.19 to 27 of the paper book, wherein at para no.4 & 5 of the Circular, it has been mentioned as under :
9.1 On perusal of above, we found that, in cases where the registration under clause (ac) of sub-section (1) of section 12A has been granted to a trust or institution already registered under section 12A or 12AA and such trust or institution has been issued Form No. 10AC mentioning the term “provisional registration”, such term shall be treated as “registration” for the purpose of the Act. We also note that the assessee, in view of the said circular, had rightly withdrawn the renewal application filed in Form 10AB and brought all relevant documents, including the original 12AA registration and the clarification circular, to the notice of the Ld. CIT (E). However, the Ld. CIT (E) did not consider the facts that the assessee was in possession of registration prior to 01.04.2021 while passing the impugned cancellation order.
9.2 In view of the above facts and in the interest of natural justice, we are of the considered opinion that the matter requires fresh adjudication by the Ld. CIT (E) in light of CBDT Circular No. 11/2022, after duly considering the documents already filed by the assessee and granting an opportunity of being heard. Accordingly, the impugned order passed by the Ld. CIT (E) is set aside, and the matter is restored to his file with a direction to reconsider the assessee’s case afresh in accordance with law and in light of CBDT Circular No. 11/2022 dated 03.06.2022.
Therefore, our findings in shall mutatis mutandis apply to this appeal also. Accordingly, the impugned order passed by the Ld. CIT (E) is set aside, and the matter is restored to his file with a direction to reconsider the assessee’s case afresh in accordance with law and in light of CBDT Circular No. 11/2022 dated 03.06.2022.
In the result, both the appeals of assessee are allowed for statistical purposes. Order pronounced in the open Court on 30th June, 2025.