PONDICHERRY UTKAL SAMAJ,PUDUCHERRY vs. COMMISSIONER OF INCOME TAX(EXEMPTION), CHENNAI, CHENNAI

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ITA 2503/CHNY/2024Status: DisposedITAT Chennai18 December 20244 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the rejection of the assessee's application by the CIT(E) on hyper-technical grounds was not justified. The Tribunal noted that the assessee's authorized representative submitted that the mistake in filing under clause (iv) instead of clause (iii) was an inadvertent error. The Tribunal found that the CIT(E) should have provided an opportunity to the assessee to rectify the mistake. The Tribunal respectfully followed a coordinate bench's order in Chinnasamy Nagalingam Institute of Medical Science Research Foundation Vs CIT(E) ITA No.906/Chny/2024, which directed the CIT(E) to grant an opportunity for rectification. Therefore, the Tribunal set aside the impugned order and directed the CIT(E) to grant the assessee an opportunity to rectify the mistake and thereafter, proceed to dispose of the application on merits after affording a reasonable opportunity of hearing.

What were the facts?

The assessee, Pondicherry Utkal Samaj, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Chennai, challenging an order dated 01.08.2024 passed by the Commissioner of Income Tax (Exemption), Chennai (CIT(E)). The assessee had applied for approval under Section 80G of the Income Tax Act, 1961, by filing Form 10AB under clause (iv)(B) of the first proviso to Section 80G(5). The CIT(E) rejected the application, holding that the assessee was not eligible under this clause as it had commenced activities and claimed application of income in its ITRs for financial years 2021-22 and 2022-23, which are prior to the application date. The assessee contended that this was a technical error and it should have filed under clause (iii) of the first proviso to Section 80G(5).

What were the issues?

1. Whether the rejection of the assessee's application for approval under Section 80G of the Income Tax Act, 1961, by the Commissioner of Income Tax (Exemption) on hyper-technical grounds is justified? Assessee's Contention: The assessee argued that it mistakenly filed Form 10AB under clause (iv) of the first proviso to Section 80G(5) instead of clause (iii), which was a technical error. The assessee contended that it is otherwise eligible for approval under Section 80G and the CIT(E) ought not to have rejected the application on such a ground, especially considering the recent changes in the registration regime. Revenue's Contention: The Revenue relied upon the order of the CIT(E), which rejected the application based on the assessee's ineligibility under the specific clause cited.

Which sections of the Income-tax Act were involved?

Section 80G(5),Section 10(23C)(iv),Section 10(23C)(v),Section 10(23C)(vi),Section 10(23C)(via),Section 11,Section 12

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL & HON’BLE SHRI MANU KUMAR GIRI

Hearing: 16.12.2024Pronounced: 18.12.2024

आयकर अपीलीय अिधकरण ‘बी’’ �ायपीठ चे�ई म�। IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, CHENNAI माननीय �ी मनोज कुमार अ�वाल ,लेखा सद� एवं माननीय �ी मनु कुमार िग�र, �ाियक सद� के सम�। BEFORE HON’BLE SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER AND HON’BLE SHRI MANU KUMAR GIRI, JUDICIAL MEMBER आयकरअपील सं./ Pondicherry Utkal Samaj, Vs. The Commissioner of Income Tax No.2, Thiruvika Street, Exemptions, Ashok Nagar, Chennai. Puducherry [PAN: AAJAP 7787P] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri V. Meenakshi Sundar, C.A., ��यथ� क� ओर से /Respondent by : Ms. D. Komali Krishna, IRS, CIT. सुनवाई क� तार�ख/Date of Hearing : 16.12.2024 घोषणा क� तार�ख /Date of Pronouncement : 18.12.2024 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member)

This appeal filed by the assessee is arising out of the order of the Ld. Commissioner of Income Tax (Exemption) Chennai (in short ‘’the Ld. CIT (E)’’) dated 1.08.2024 2. The assessee has filed an application on 29.02.2024 in form No.10AB under clause (iv) B of first proviso to Section 80G(5) of the Income Tax Act, 1961 (in short ‘’the Act’’) seeking approval u/s.80G of the Act. As per the ld. CIT(E) Section 80G(5) (iv) (B) of the Act applicable for those trust who have commenced their activities and no income or part thereof has been excluded from the total income u/s.10(23C)(iv) (v)(vi), (via) or u/s.11 or 12 for any previous year ending on or before the date of such application at any time after the commencement of such activities. The assessee trust had filed ITR 7 for the financial years 2021-33 and 2022-23 and claimed application of income in respect of above financial years hence assessee is not eligible to file application u/s.80G (5)(iv)(B) of the Act and the application filed by the assessee was rejected by the ld. CIT(E). Aggrieved, assessee preferred an appeal before the Tribunal.

3. The ld. counsel argued the same points what is narrated in the grounds of appeal

. He further submitted the assessee instead of filing form in 10AB under clause (iii) has filed in clause (iv). This is only an technical error and the ld. CIT(A) ought not have rejected the application, otherwise assessee is eligible for grant of approval under Section 80G of the Act. Per contra, the ld.DR relied upon the order of the ld.CIT(E).

4. We heard the rival contentions and perused the material available on record. We find that in similar circumstances the co-ordinate bench of the Tribunal in the case of Chinnasamy Nagalingam Institute of Medical Science Research Foundation Vs CIT(E) dated 03.07.2024 has directed Ld. CIT(E) to grant an opportunity to the assessee to rectify the mistake. The said direction is as under:- 1. Aggrieved by rejection of an application filed in Form No.10AB seeking registration under Clause (ii) of first proviso to Sec. 80G(5) vide impugned order dated 09.02.2024, the assessee is in further appeal before us. At the time of hearing, none appeared for assessee. Upon perusal of impugned order, it could be seen that the application has been rejected in view of the fact that the assessee was having provisional registration and it had filed application under clause (ii) of first proviso to Sec. 80G(5) whereas it ought to have applied under clause (iii) of first proviso to 80G(5) which is applicable for provisionally registered entity. Aggrieved, the assessee is in further appeal before us.

2. We are of the considered opinion that the application ought not to be rejected on mere technical grounds. The wrong selection of clause may be due to an inadvertent error and the same may be in view of the fact that new regime of registration of trust was brought in place very recently. The applicant ought to have been granted an opportunity to rectify the error. Therefore, we direct Ld. CIT(E) to grant an opportunity to the assessee to rectify the mistake and thereafter, proceed for disposal of application on merits after affording reasonable opportunity of hearing to the assessee.

3.

The appeal stand allowed for statistical purposes. Order pronounced on 3rd July, 2024

5.

In this case, the ld. Authorized Representative submitted that the assessee instead of filing Form 10AB under clause (iii) has filed in clause (iv). The ld. Authorized Representative further contended that the ld.CIT(E) erred in not entertaining the application on hyper technical ground.

6.

We find that the ld.CIT(E) ought to have given proper opportunity to rectify the mistake. Even otherwise, the ld.CIT(E) is supposed to see whether objects as submitted by the assessee in the application for registration are as per law or not. Hence, summary dismissal of the application for approval on hyper technical ground is not justified. We also find that the Tribunal order in the case of Chinnasamy Nagalingam Institute of Medical Science Research Foundation Vs CIT(E) dated 03.07.2024 was candidly referred by the assessee but that the same was not considered by the ld.CIT(E). Therefore, respectfully following the co-ordinate bench order referred supra, we set aside the impugned order passed by the ld.CIT(E) and direct Ld. CIT(E) to grant an opportunity to the assessee to rectify the mistake and thereafter, proceed for disposal of application on merits after affording reasonable opportunity of hearing to the assessee.

7.

In result, appeal of the assessee is allowed for the statistical purpose.

Order pronounced in the open court on 18th day of December, 2024

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