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Facts
The assessee trust applied for registration under Section 12A of the Income Tax Act. The application was rejected by the CIT(E) due to an incorrect selection of a sub-section. The assessee's appeal to the tribunal was filed after a significant delay of 638 days.
Held
The Tribunal condoned the delay in filing the appeal in the interest of substantial justice. The Tribunal found that the rejection of the application solely on account of a wrong code, without considering the merits, was not appropriate.
Key Issues
Whether the appeal filed after a significant delay should be admitted and whether the rejection of a registration application due to a technical error (wrong sub-section selection) is justified.
Sections Cited
12A, 12A(1)(ac)(iv), 12A(1)(ac)(iii), 154, 11
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Income Tax Appellate Tribunal, PUNE “B” BENCH : PUNE
Before: DR. MANISH BORAD & SHRI VINAY BHAMORE
The Grassland Trust, 1301, CIT (Exemption), Pune. Vrundavan Ashtram, Sadashiv Peth, Pune-411030 vs. PAN : AADTT 7535 L (Appellant) (Respondent) For Assessee : Ms. Kimaya Kudva, CA For Revenue : Shri Rakesh Ranjan -CIT DR Date of Hearing : 05.06.2025 Date of Pronouncement : 06.06.2025 ORDER PER DR. MANISH BORAD, AM:
This appeal filed by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Exemptions), Pune [“CIT(E)”] dated 29/05/2023; whereby application for registration u/s. 12A(1)(ac)(iv) of the Act has been rejected.
Registry has informed that present appeal is barred by limitation by 638 days. Application for condonation of delay along with affidavit is placed on record. The main reasons which giving raise to the delay in filing the present appeal are mentioned in para (iii) to (ix) of the affidavit and the same reads as under:-
2 ITA.No.1070/PUN/2025 “iii. Thereafter, the appellant trust filed Form 10AB on 25/11/2022 for obtaining permanent registration u/s 12A(1) (ac) (iv) of ITA, 1961, and the learned CIT(E) initiated the proceeding u/s 12A. The learned CIT(E) has issued a hearing notice and the same was complied by the appellant. However, the learned CIT(E) passed an order dated 29/05/2023 rejecting the application due to incorrect selection of clause/section. iv. Further, the appellant filed a second application for regular registration u/s 12A(1)(ac)(iii) on 05/09/2023 against the second provisional registration dated 07/10/2022 for the period from AY 2023-24 to AY 2025-2026. The learned CIT (Exemption), Pune after considering the submission and approved appellant's application vide approval order dated 24/03/2024. v. On consultation with the tax consultant and considering the above, the appellant believes that there is no point in filing an appeal against the order dated 29/05/2023 as the trust hold valid 12A registration as per order dated 24/03/2024. vi. On 14/02/2025 the learned AO has passed an order u/s 154 of the ITA, 1961, disallowing the exemption claimed u/s 11 for AY 2022-23. The disallowance has been made on the ground that the appellant's application for regular registration u/s 12A was rejected by the CIT(E) vide order dated 29/05/2023. Consequently, the fresh registration granted to the appellant is applicable only for AY 2023-24 to 2027-28. Since the appellant did not hold a valid registration under section 12A for AY 2022-23, the exemption u/s 11 has been denied. vii. Upon receipt of the aforesaid order, the appellant was under a bona fide misconception regarding the appropriate course of action and was uncertain whether to prefer an appeal against the order passed u/s 154 or the order passed u/s 12A(1)(ac) (iv). Consequently, the delay in filing the present appeal occurred due to the appellant inadvertently pursuing an incorrect remedy. viii. Thereafter, the appellant prefers to appoint a new tax consultant in Pune in order to seek redressal against the said orders. On consultation with the new tax consultant, the tax consultant advised to immediately filed an appeal against the order dated 29/05/2023. Further in order to file an appeal before your honors the new tax consultant requested for certain documents and information w.r.t. activity of the appellant, etc. ix. Due to change in tax consultant for filing appeal, a bonafide delay crept in due to exchange of files/records between the tax consultants and complying and sending the requisite documents for filing an appeal before your goodself. As such, delay has been crept in filing present appeal which was purely unintentional. Thereafter, the services of the new tax
3 ITA.No.1070/PUN/2025 consultant have been sought to file the present appeal before the Honorable ITAT.”
On going through the above reasons giving rise to the delay in filing the present appeal and also considering the ratio laid down by the Hon'ble Apex Court in Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 2 SCC 107 holding that “when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay”, we in the larger interest of justice, condone the delay of 638 days and admit the appeal for adjudication.
The assessee has raised the following grounds of appeal:-
“1. The learned CIT (Exemption), Pune; erred in law and on facts in rejecting appellant's application for registration u/s 12A of ITA, 1961.
2. Appellant contends that appellant ought to have applied for regular registration u/s 12A(1)(ac)(iii) whereas, inadvertently has applied for regular registration u/s 12A(1)(ac)(vi) of ITA, 1961. As such, the incorrect selection of the sub-section has resulted in rejection of 12A Registration.
3. Appellant craves leave to add/alter/clarify/ explain/ modify/delete any or all of the grounds of appeal, and to seek any just and fair relief.”
5. At the outset, learned counsel for the assessee submitted that application for registration u/s. 12A of the Act filed on 25/11/2022 on Form No. 10AB was rejected on account of 4 ITA.No.1070/PUN/2025 incorrect code mentioned in the application. Prayer made that the issue may be restored to the file of Ld.CIT(E) for fresh adjudication with liberty to the assessee to make necessary amendment in the application and then to decide the application for regular registration u/s. 12A of the Act by way of the details filed in the paper book.
Ld.DR did not oppose the request of the learned counsel for the assessee.
We have heard rival contentions and perused the record placed before us. The assessee is aggrieved with the rejection of application for registration u/s. 12A of the Act. We observe that the assessee granted provisional registration u/s. 12A vide order dated 27/05/2021 for the period from A.Ys. 2021-22 to 2023-24. Thereafter, the assessee filed application for permanent registration u/s. 12A(1)(ac)(iv) of the Act on 25/11/2022 which was followed by notice by the Ld.CIT(E) dated 03/03/2023 specifying the mistake made in the application on account of selecting incorrect code. The assessee gave a detailed reply on 10/03/2023, however, Ld.CIT(E) dismissed the application as non-maintainable and rejected for statistical purposes. Under these given facts and circumstances, we find that merely for mentioning wrong code, application should not have been rejected and therefore in the interest of natural justice and fair to both the parties, we deem
5 ITA.No.1070/PUN/2025 it appropriate to give one more opportunity to the assessee to go before the Ld.CIT(E) and place revised application with necessary correction mentioning the correct code along with the relevant details as called for in notice issued by the Ld.CIT(E). On due consideration of these details, the Ld.CIT(E) shall decide the application for permanent registration u/s. 12A of the Act, for which a reasonable opportunity shall be granted to the assessee. The grounds of appeal raised by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 06.06.2025.