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Facts
The assessee, Shree Panchadaiva Trust, applied for registration under section 12AB. Its initial application was rejected for non-submission of documents, and a subsequent application was rejected by the CIT(E) on technical grounds, including a wrongly cited section (12A(1)(ac)(ii) instead of for regularization) and misinterpretation of Circular No. 06 of 2023 regarding the due date for filing Form 10AB.
Held
The Tribunal held that the CIT(E) erred in rejecting the application on technical grounds without affording the assessee an opportunity to correct the inadvertent error. The issue is remanded back to the CIT(E) to decide on merits after providing adequate opportunity to the assessee.
Key Issues
Rejection of application for registration under section 12AB due to technical fault without providing an opportunity to rectify the error and improper consideration of relevant circulars by CIT(E).
Sections Cited
12AA, 12A, 12AB
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Income Tax Appellate Tribunal, MUMBAI BENCH ‘C, MUMBAI
Before: SHRI AMARJIT SINGH, HONBLE & SHRI RAHUL CHAUDHARY, HONBLE
O R D E R PER AMARJIT SINGH, AM:
The present appeal filed by the assessee is directed against the order dated 05.12.2023 for Assessment Year 2024-25. The assessee has raised the following grounds of appeal:
“1. The Appellant submits that the Learned CIT (E) has not applied his mind while perusal of the application in Form 10AB and has erred in not considering the material placed on record and the written submission made, wherein the appellant fulfills all conditions required for granting of Registration u/s 12AA.
The appellant submits that while denying registration u/s 12AA, the Learned CIT (E) has never held that the trust is not for religious/charitable purposes as required u/s 12A of the Income Tax Act 1961.
The Appellant submits that no reasonable opportunity has been granted to the appellant for being heard and the said order has been passed without issuing a show cause notice to the appellant before the Shree PanchadaivaTrust A.Y. 2023-24 rejection of the said application. Non issuance of show cause notice mentioning that the application is likely to be rejected for reasons mentioned therein, is a violation of section 12AB as well as principal of natural justice.
The Appellant submits that the provisional registration u/s 12AB was valid form AY 2022-23 to AY 2024-2025. The appellant had filed the application in Form 10AB on 28.09.2023 which was within 6 months before-the expiry of provisional registration. The Learned CIT (E) has erroneously mentioned that the application was not filed within 6 months of activities or 6 months before the expiry of provisional registration.
The Appellant submits that the Learned CIT (E) has erred in not considering the circular no 6 of 2023 dated 24.05.2023 wherein clause 5 of the said circular clearly stated that the due date had been extended till 30.09.2023 where the due date for filing of Form 10AB had expired prior to the date of the said circular.
The Appellant submits that while processing the appellant application u/s 12AB the Learned CIT(E) has not applied his mind and he ought to have asked the appellant the requisite details and information and relevant documents rather than hurriedly rejecting the application on the technical ground without considering the applicability of circular no 6 of 2023 dated 24.05.2023
The Appellant submits that The Learned CIT (E) while processing the application for registration ought to have given an opportunity to the appellant to reply the queries if any.
The Appellant submits that The Learned CIT (E) has not appreciated and considered the entire facts of the case in establishing the genuineness of the activities of the trust and has not carried out proper enquiry. The Learned CIT(E) has rejected the application for registration u/s 12AB without giving opportunity of being heard in the said matter which is a violation of provisions of section 12AB as well as principal of natural justice.
The Appellant submits that The Learned CIT (E) has not followed the procedures laid down in section 12AB for granting of Registration which is a violation of provisions of section 12AB as well as principal of natural justice.
Shree PanchadaivaTrust A.Y. 2023-24 10. The Appellant challenges the action of The Learned CIT (E) in rejection of application for seeking registration u/s 12AA of the Income Tax Act 1961 is violation of principal of natural justice and is contrary to the provisions of the law and facts of the case. Hence. the same be kindly directed to grant registration from the year when the application is made.
The Appellant craves leave to add, alter, omit, change, amend or modify any of the aforesaid grounds of appeal as the occasion may arise or demand.”
Fact in brief is that assessee applied for registration u/s 12AB of the Act on 28.09.2023 in Form No. 10AB. The ld. CIT(E) observed that assessee had already filed application in Form No. 10AB for regularization of provisional registration u/s 12A on 05.04.2022 and the said application of the assessee was rejected vide order dated 28.10.2022 because of not submitting required documents in the prescribed time. The ld. CIT(E) held that facility for filing fresh application in Form No. 10AB was open for the trust who had not filed application within 6 months of activities or 6 months before the expiry of provisional registration. Since the assessee was not covered under both the conditions, therefore, the fresh application filed by the assessee on 28.09.2023 was not filed in accordance with the Circular No. 06 of 2023 dated 24.05.2023 therefore same was rejected.
Before us, the ld. Counsel filed copies of document placed in the paper book which were submitted before the ld. CIT(E). The ld. Counsel submitted that as per Form No. 10AC, the provisional registration was provided to the assessee trust from A.Y. 2022-23 to 2024-25. The ld. Counsel also referred the Form No. 10AB already filed by the assessee on 05.04.2022 and 09.03.2022. She submitted that her earlier Form No. 10AB was rejected because of inadvertently referring of section code as 01-sub-clause (ii) of clause (ac) of sub- Shree PanchadaivaTrust A.Y. 2023-24 section (1) of section 12A in the application by the assessee. The ld. CIT(E) has rejected the application filed by the assessee on the ground that assessee has applied u/s 12(1)(ac)(ii) for renewal of registry and not regularization of provisional registration. Thereafter, the assessee again filed another application on 28.09.2023 which was dismissed by the ld. CIT(E) on the ground that filing of fresh application was not as per Circular No. 06 of 2023 dated 24.05.2023 as discussed above in this order. The ld. Counsel contended that Circular No. 06 of 2023 had clearly stated that due date has been extended till 30.09.2023 for filing Form 10AB, the ld. CIT(E) has not given proper opportunity to the assessee.
On the other hand, ld. DR supported the order of lower authorities.
Heard both the sides and perused the material on record. Without reiterating the fact as discussed supra in this order, it is evident that assessee has filed more than one application u/s 10AB seeking registration u/s 12AB of the Act due to rejection of earlier application by the ld. CIT(E) as discussed. The ld. CIT(E) has rejected the application filed because of technical fault of wrongly mentioning that assessee has applied u/s 12A(1)(ac)(ii) for renewal of registration and not for regularization of provisional registration. In this regard, we consider that ld. CIT(E) should have given opportunity to the assessee to correct the technical fault inadvertently mentioned in the application form as discussed above. In view of above facts and circumstances, we restore the issue to the file of the ld. CIT(E) for deciding the same on merit after affording adequate opportunities to the assessee. Accordingly, the appeal of the assessee is allowed for statistical purposes.
In the result, appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 23.09.2024 Sd/- Sd/- (RAHUL CHAUDHARY) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai: 23.09.2024 Biswajit, Sr. P.S.