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Facts
The assessee, a society with charitable objects, was granted provisional registration under section 12A. When it applied for regularization, the application was rejected by the CIT(E) on the grounds that it was filed under the wrong sub-clause of section 12A(1)(ac), specifically (iv) instead of (iii). The assessee contended that the CPC portal only allowed filing under sub-clause (iv) at the time.
Held
The Tribunal found that the application was rejected solely because it was filed under the incorrect sub-clause. In the interest of natural justice and acknowledging the portal's limitation, the Tribunal remitted the matter back to the CIT(E). The CIT(E) is directed to allow the assessee to resubmit the Form 10AB under the correct sub-clause and then decide the regularization application on its merits after providing a reasonable opportunity of being heard.
Key Issues
Whether the rejection of an application for regular registration under section 12A was justified when the application was filed under a wrong sub-clause due to portal limitations; whether the assessee should be granted another opportunity to file the application under the correct sub-clause.
Sections Cited
Section 12A, Section 12AB, Section 12A(1)(ac), Section 12A(1)(ac)(iii), Section 12A(1)(ac)(iv), Section 11(7)
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI RAJ KUMAR CHAUHAN, JM
Shia Isna Ashri Momin Jamat CIT (Exemption), /ITO Ward- 2(3), Room No. 601, 6th Floor, (N.G.) Flat No. 202, Lotous Park Building Cumballa Hill, MTNL Building, No.1, Aqsa Masjid Road, Vs. Pedder Road, Dr. G.D. Deshmukh Jogeshwari (W), Road, Maharasthra-400026. Maharashtra-400102 PAN : AAUTS0374B Appellant) : Respondent) Appellant/Assessee by : Shri Arvind Bansraj Singh, CA : Shri Dr. Kishor Dhule, CIT-DR Revenue/Respondent by Date of Hearing : 13.06.2024 Date of Pronouncement : 18.06.2024 O R D E R
Per Padmavathy S, AM:
This appeal is against the order of the Commissioner of Income Tax (Exemptions), Mumbai [for short 'CIT(E)] dated 13.01.2024 for the AY 2024-25 denying the registration under section 12A of the Income Tax Act, 1961 (the Act).
The assessee is a society established on 21.01.2015. The main objects for which the assessee was established are to carry out social and religious, education, medical relief, relief for the poor as well as advancement of objects of general public utility. The assessee caries out its charitable activities of teaching religious discourses to the students in the vicinity and provides carrier counseling to students. The assessee also conduct Urdu and Arabic language classes for students coming from Muslim Community and religious discourses / lectures are carried out during religious months like Moharram and Ramzan. The assessee was granted provisional registration under sub-cause (iii) of clause (ac) of sub-section (1) of section 12A on 29.03.2022 for period from AY 2022-23 to AY 2024-25. The assessee applied for regularization of the earlier provisional approval submitting all the relevant details. However, the application was rejected by stating that Registration under section 12AB is to be granted in terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the Society or institution, the genuineness of activities, and the compliance of any other law for the time being in force as are material for the purposes of achieving its objects. In the absence of necessary compliance by the Applicant, I am unable to arrive at a satisfaction on these parameters. As such, in view of the statutory limitation to decide on the application on or before 31.03.2023, I am left with no other option but to reject the application seeking registration under section 12AB of the Act.
The assessee reapplied for regular registration in Form 10AB on 30.09.2023 along with all necessary documents. Once again the application was rejected with the following observations:
"On perusal of the From 10AB filed by the assessee it was observed that the assessee has applied under section 12A(1)(ac) (iv) i.e. where registration of the Society or institution has become inoperative due to the first proviso to sub-section (7) of section 11 and not for regularisation of provisional registration. Hence this Application is hereby rejected.
However, this rejection will not adversely impact the provisional registration under section 12AB issued by the CPC. For statistical purposes, this application is non maintainable and stands rejected ".
The ld. AR submitted that while filing the fresh Form 10AB for regular registration the assessee should have submitted the application under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. However, at the time of filing of the said application in the last month in which it was due the portal of CPC was open only for sub-clause (iv) and was not accepting sub-clause (iii). The ld. AR further submitted that since the due date for regularization the provisional registration was expiring the assessee had no choice but to submit the application under sub-clause (iv). The ld. AR also submitted that the assessee was not given any opportunity to correct the application and the CIT(E) directly rejected the application on the ground that it is made under wrong sub-clause.
We have heard the ld. DR. From the perusal of the order rejecting the application filed by the assessee to regularize the registration under section 12A, we notice that the application is rejected for a reason that it is filed under the wrong sub-clause of section 12A(1)(ac) i.e. the provisional registration was granted under sub-clause (iii) whereas in the Form 10AB the assessee has applied under sub-clause (iv). We also notice that the CIT(E) while rejecting the application has held that the rejection will not adversely impact the provisional registration under section 12AB and that the assessee is at liberty to reapply in Form 10AB along with all necessary documents / enclosures. Considering the submission that the portal did not allow the assessee to submit the application under the correct clause, in the interest of natural justice, we are inclined to give one more opportunity to the assessee to reapply for regularizing the registration under section 12A under the correct sub-clause and accordingly, remit the issue back to CIT(E). The CIT(E) is directed to consider the Form 10AB as may be resubmitted by the assessee under the correct clause and decide regularizing the registration in accordance with law after giving a reasonable opportunity of being heard to the assessee. The assessee is directed to resubmit Form 10AB under correct sub-clause of section 12A(1)(ac) and cooperate with the proceedings. It is ordered accordingly.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 18-06-2024.