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Facts
The assessee filed an application for registration under Section 12AB of the Income Tax Act, 1961. The CIT(E) rejected the application because the assessee failed to provide a copy of the provisional registration under Section 12AB, instead submitting one under Section 10(23C)(vi). Consequently, the application for approval under Section 80G(5) was also rejected.
Held
The Tribunal noted that the relevant provision of Section 12A(1)(ac)(iii) has been amended to allow registration based on provisional approval under Section 10(23C)(vi). The Tribunal set aside the matter to the CIT(E) to grant the assessee another opportunity to rectify the defect and consider the application in light of the amended provisions.
Key Issues
Whether the rejection of registration under Section 12A and approval under Section 80G was justified based on the technical defect of submitting an incorrect provisional registration certificate, especially in light of subsequent amendments.
Sections Cited
12A, 12AB, 10(23C)(vi), 80G(5)
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: Ms. SUCHITRA KAMBLE & SHRI NARENDRA PRASAD SINHA
O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: These two appeals are filed by the assessee against the order of the Commissioner of Income Tax (Exemption), Ahmedabad, (in short ‘the CIT(E)’) both dated 15.03.2023 in the matter of rejection of registration under Section 12A of the Income Tax Act, 1961 (in short ‘the Act’) and rejection of approval u/s.80G(5) of the Act.
There was delay of 529 days in filing of these appeals. The assessee has filed an affidavit explaining that Shri Kiran Babulal Trivedi, Director of the trust was the sole responsible person for & 1859/Ahd/2024 [Infinite Happiness Spiritual Foundation vs. CIT(E)] - 2 – managing the affairs of the trust. Due to indisposition of his brother Mr. Vikram Babulal Trivedi he was unable to look after the affairs of the trust and the matter was assigned to the Accountant Shri Mehulkumar Maheshkumar Shah to make compliance in respect of the application filed by the Trust before the Ld. CIT(E). The said Accountant had made a mistake in filing the applications and due to his mistake the applications were rejected. Thereafter, the matter was assigned to the Accountant to co-ordinate with the Chartered Accountant for filing appeal against the order of the Ld. CIT(E). The said Chartered Accountant left for his native place and neither contacted the Chartered Accountant nor filed the appeal before the Tribunal. On mere enquiry with his personal friends, the Accountant was of the opinion that no appeal was required to be filed in the matter. As the Accountant had left for his native place in Uttar Pradesh, he could not be easily contacted, which led to delay in filing of the appeal. An affidavit of Shri Mehulkumar Maheshkumar Shah, the Accountant of the trust, has also been filed and he has owned up the delay in filing this appeal. A copy of medical certificate for the treatment of Mr. Vikram Babulal Trivedi has also been filed. It is found that the trust was established for charitable purpose and is engaged in various social welfare activities. It is also found that the applications of the assessee were not rejected on merit, but only on technical ground of filing wrong application. Further, the provision of the Act has now been amended which makes the application of the assessee eligible for registration, as sought for. Considering these facts as well as the explanation of the assessee, the delay in filing of the appeal is condoned.
& 1859/Ahd/2024 [Infinite Happiness Spiritual Foundation vs. CIT(E)] - 3 – ITA No. 1858/Ahd/2024
The brief facts of the case are that the assessee had filed an application in Form NO.10AB for registration of the trust u/s.12AB of the Act on 30.09.2022. The Ld. CIT(E) had made enquiry about the activities of the trust vide notice dated 23.01.2023, which was only partly complied. It was further noticed by Ld. CIT(E) that the present application was filed u/s 12A(1)(ac)(iii) of the Act, which required for enclosing a copy of the provisional registration u/s.12AB of the Act and which was not found enclosed with the application. The assessee, therefore, vide another notice dated 04.02.2023 was required to rectify this defect, which was not complied. As a result, the Ld. CIT(E) had rejected the application for registration u/s.12A of the Act by noting that in the absence of the copy of provisional registration granted u/s12A(1)(ac)(vi) of the Act, the application was non- maintainable. Further, the application for approval u/s.80G(5) of the Act was also rejected in the absence of a valid registration u/s.12A of the Act.
Ms. Urjita Shah, Ld. AR appearing for the assessee submitted that no compliance could be made before the Ld. CIT(E) due to fault of the Accountant which has been explained in the affidavit filed by the assessee. It was explained that the provisional registration granted u/s 10(23C)(vi) of the Act in Form No. 10AC was wrongly filed by the Accountant with the application. She, therefore, requested that another opportunity may be provided to the assessee to file the correct provisional & 1859/Ahd/2024 [Infinite Happiness Spiritual Foundation vs. CIT(E)] - 4 – certificate by setting aside the matter to the file of the Ld. CIT(E).
Per contra, Shri V Nandakumar, Ld. CIT.DR supported the order of the Ld.CIT(E).
We have carefully considered the rival submissions. The assessee had filed the application in Form 10AB on 30.09.2022 for registration u/s.12A(1)(ac)(iii) of the Act. The said Section at the relevant point of time was as under:
12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:— ………. (ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution,— ……… (iii) where the trust or institution has been provisionally registered under section 12AB, at least six months prior to expiry of period of the provisional registration or within six months of commencement of its activities, whichever is earlier;
The Ld. CIT(E) had rightly noticed that the registration u/s 12A(1)(ac)(iii) could have been granted only if the assessee had a provisional registration certificate u/s 12AB of the Act. The assessee had enclosed provisional registration granted u/s 10(23C)(vi) of the Act in Form No. 10AC along with the application. Accordingly, the Ld. CIT(E) had issued a show cause notice to the assessee to rectify this defect, which was not complied. Therefore, he had rejected the application for registration u/s.12A of the Act.
& 1859/Ahd/2024 [Infinite Happiness Spiritual Foundation vs. CIT(E)] - 5 – 8. It is found that the provision of section12A(1)(ac)(iii) of the Act has since been amended w.e.f. 01.10.2024 as per which the registration u/s.12A of the Act can be allowed on the basis of provisional approval u/s 10(23C)(vi) of the Act. The amended sub-clause (iii) of section 12A(1)(ac) is found to be under:
(iii) where the trust or institution has been provisionally registered under section 12AB 93[or provisionally approved under sub-clause (iv) or sub- clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10], at least six months prior to expiry of period of the provisional registration 93[or provisional approval, as the case may be,] or within six months of commencement of its activities, whichever is earlier; 9. In view of the above facts, we deem it proper to set aside the matter to the file of the Ld. CIT(E) with a direction to allow another opportunity of being heard to the assessee to rectify the defect in the application as noticed by him. The Ld. CIT(E) is also free to consider the application of the assessee on the basis of provisional approval u/s 10(23C)(vi) of the Act filed by the assessee along with the application, in accordance with the amended provisions of the section.
In the result, the appeal of the assessee is allowed for statistical purposes.
The Ld. CIT(E) had rejected the application for registration u/s. 80G(5)(iii) of the Act for the reason that registration u/s.12A of the Act was a pre-requisite condition for grant of registration. Since, the matter regarding registration u/s.12A of the Act has been set aside to the file of the Ld. CIT(E), we deem it necessary & 1859/Ahd/2024 [Infinite Happiness Spiritual Foundation vs. CIT(E)] - 6 – to set aside the present matter as well to the file of the Ld. CIT(E), who will re-adjudicate the issue of approval u/s.80G of the Act after deciding the matter of registration u/s.12A of the Act.
In the result, the appeal of the assessee is allowed for statistical purposes.
In the combined result, both the appeals filed by the assessee are allowed for statistical purpose.
This Order pronounced on 30/01/2025
Sd/- Sd/- (SUCHITRA KAMBLE) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 30/01/2025 S. K. SINHA True Copy आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant ��यथ� / The Respondent. 2. संबं�धत आयकर आयु�त / Concerned CIT 3. 4. आयकर आयु�त(अपील) / The CIT(A)- �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. गाड� फाईल / Guard file. 6. आदेशानुसार/ BY ORDER,