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Facts
The assessee filed an application for registration under section 12A(1)(ac)(vi)(B) of the Income Tax Act. The CIT(E) rejected the application citing that it was filed beyond the prescribed time limit and also noted an incorrect section code was used. The assessee claimed that this was an inadvertent error due to lack of professional assistance.
Held
The Tribunal noted that the assessee had previously been granted provisional registration under section 12A(1)(ac)(vi) of the Act. The Tribunal found that the issue was whether the assessee could apply for final registration under a different sub-clause if provisional registration was under another. The Tribunal decided to set aside the matter to the CIT(E).
Key Issues
Whether the application for registration under Section 12A was correctly rejected due to an incorrect section code and timing, and if the assessee should be given an opportunity to rectify the mistake.
Sections Cited
12A(1)(ac)(vi)(B), 12A, 11, 12A(1)(ac)(vi)
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Income Tax Appellate Tribunal, AHMEDABAD “D” BENCH
Before: Ms. Suchitra Kamble & Shri Narendra Prasad Sinha
आदेश/ORDER PER : NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER
This appeal is filed by the assessee against the denial of approval u/s. 12A(1)(ac)(vi)(B) of the Income Tax, 1961 [in short “the Act”] vide order dated 17/03/2025, passed by the Commissioner of Income Tax (Exemption), Ahmedabad [in short the CIT(E)].
A.Y. NA PLP Janseva Foundation vs. CIT (Exemption) 2. The following grounds have been taken in this appeal: -
1. The Ld. CIT(Exemptions) has erred in rejecting the application filed by Appellant Trust on the ground that application filed in Form 10AB has not filed within time limit prescribed and therefore it is non maintainable. On facts and circumstances of the case the action of Ld. CIT (Exemptions) of rejecting application filed u/s. 12A(1)(ac)(vi-B) of the Act which is incorrect. The same be held now.
Without prejudice to the above, the appellant trust has selected the incorrect section code-item (B) of sub-clause (vi) of clause (ac) of sub-section (1) of section 12A instead of the correct code, which is sub-clause (iii) of clause (ac) of sub-section (1) of section 12A.
3. It is respectfully submitted before your Honour that the appellant was unable so avail proper guidance and professional assistance at the time of filing Form 10AB under the relevant provisions of the Income-tax Act, 1961. This lack of access to adequate professional support led to inadvertent errors in the application 4. The Order passed by the Ld. CIT is bad in law and contrary to the provisions of law and facts. It is submitted that the same be held so now.
5. Your appellant craves leave to add, alter, and/or to amend all or any of the grounds before the final hearing of the appeal.”
Shri Sunil Talati, the ld. counsel for the assessee submitted that the ld. CIT(E) had rejected the application filed by the assessee for the reason that the assessee Trust was not found eligible for registration under section 12A(1)(ac)(vi)-ITEM(B) of the Act. The Ld. AR explained that the trust was registered on 17th May, 2021 and a provisional approval u/s 12A of the Act was granted by the Ld. CIT(E) on 24th September, 2021 for the period AY 2022-23 to AY 2024-25. Accordingly, the return of income was filed claiming exemption u/s 11 of the Act. On expiry of the provisional certificate, the Trust had made fresh application for registration on 20th September, 2024. The Ld. AR submitted that while filing the application in Form 10AB, there was an inadvertent error as A.Y. NA PLP Janseva Foundation vs. CIT (Exemption) incorrect section code - item (B) of sub clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act was selected in place of the correct code, which was sub clause (iii) of clause (ac) of sub- section (1) of section 12A of the Act. The Ld. AR submitted that the assessee is engaged in charitable activities and it may be allowed an opportunity to rectify the inadvertent mistake in the application and for this purpose the matter may be set aside to the file of Ld. CIT(E) with a direction to re-adjudicate the issue.
Per contra, Shri Sher Singh, the ld. CIT-D.R. submitted that the Ld. CIT(E) had rightly rejected the application as filed by the assessee.
We have considered the submission of the assessee and perused the materials placed before us. The Ld. CIT(E) had rightly rejected the application filed by the assessee Trust u/s 12A(1)(ac)(vi) of the Act as non-maintainable for the reason that the conditions for such approval was not found satisfied. In fact, the Ld. CIT(E) had made certain queries in the course of the proceeding before him, which was complied by the assessee. However, the fact that there was a mistake in the application of the assessee was not brought to the notice of the Ld. CIT(E). The assessee has now submitted that there was a mistake in the application in quoting the section code under which the approval was sought. According to the assessee, the section code “Item (B) of sub-section (vi) of clause (ac) of sub-section (1) of section 12A” was wrongly quoted in the application in place of correct section code “sub-section (iii) of clause (ac) of sub-section (1) of section 12A” of A.Y. NA PLP Janseva Foundation vs. CIT (Exemption) the Act. A copy of order dated 24.09.2021 of the provisional registration allowed to the assessee has been brought on record. It is found there from that the assessee was allowed provisional registration under sub-section (vi) of clause (ac) of sub-section (1) of section 12A for the AY 2022-23 to AY 2024-25. When the provisional registration was allowed under sub-section (vi) of clause (ac) of sub-section (1) of section 12A of the Act, the assessee had rightly applied for regular registration under this provision only. It, prima facie, transpires that the mistake on the part of the assessee, if any, had occurred in the application for provisional registration and not in the application for regular registration.
The contention of the assessee is that there was a mistake in wrong selection of section code in the application. We don’t find any such mistake in the regular registration application. Rather, the mistake was made at the time of filing the application for provisional registration. The moot issue to be considered here is, if the provisional registration was allowed under one sub- clause, whether the assessee could have made application for final registration under different sub-clause. For this purpose, we deem it proper to set aside the matter to the file of Ld. CIT(E) with a direction to first examine this issue and thereafter allow an opportunity to the assessee to rectify the mistake in the application, if any. The assessee may also be allowed a proper opportunity of being heard in the matter. The assessee will also be free to make a fresh application under the correct provisions of the Act, if it so desires.
A.Y. NA PLP Janseva Foundation vs. CIT (Exemption)
In the result, the appeal filed by the assessee is allowed for statistical purpose.