SRI RAMAJAYAM EDUCATIONAL TRUST,KANCHIPURAM vs. CIT(A) EXEMPTION), CHENNAI

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ITA 2449/CHNY/2024Status: DisposedITAT Chennai10 December 2024Bench: HON’BLE SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER AND HON’BLE SHRI MANU KUMAR GIRI (Judicial Member)3 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the rejection was based on a technical ground and that the assessee should have been given an opportunity to rectify the mistake. The Tribunal directed the CIT(E) to treat the application as filed under the correct clause and consider it on merits.

What were the facts?

The assessee trust filed an application for approval under Section 10(23C) in Form 10AB. The application was rejected by the CIT(E) on the grounds that it was filed under the wrong clause, as the assessee had already obtained provisional approval and should have applied under a different clause.

What were the issues?

Whether the rejection of an application for approval under Section 10(23C) on a technical ground, without providing an opportunity to rectify the error, violates the principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 10(23C)

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: 09.12.2024Pronounced: 10.12.2024

आयकर अपीलीय अिधकरण ‘सी’ �ा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./ Sri Ramajayam Educational Trust, Vs. The Commissioner of Income Tax No.152, Thirumangalaiwar Street, (Exemption) Sriperumbudur, Chennai. Kanchipuram 602 105. [PAN: AAPTS 2772N] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri R.S.Balaji and P.R.Balachander, Advocates ��यथ� क� ओर से /Respondent by : Ms. C. Vatchala, IRS, CIT. सुनवाई क� तार�ख/Date of Hearing : 09.12.2024 घोषणा क� तार�ख /Date of Pronouncement : 10.12.2024 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member)

Aggrieved by rejection of application filed in Form No.10AB on 02.01.2024 for seeking approval under clause (ii) of first proviso to section 10(23C) of the Income Tax Act, 1961 (‘ACT’ in short) vide impugned order dated 27.06.2024, the assessee is in appeal before us. The registry has noted a delay of 28 days in the appeal, the condonation of which has been sought by Ld. AR on the strength of affidavit of Managing trustee of the assessee trust. We have perused the reasons and condoned the delay. The appeal is admitted for adjudication.

2. It has been stated that the application was rejected on the ground that the assessee ought to have applied under clause (iii) of first proviso to Section 10(23C) but it wrongly applied under clause (ii). However, while processing the application filed in Form No.10AB on 02.01.2024, the ld.CIT(E) noticed from the assessee’s Form 10AC that the applicant has been granted provisional approval (fresh approval) for the approval period from AY 2024-25 to AY 2026-27. Therefore, the ld. CIT(E) held that the applicant / assessee ought to have filed its application under clause (iii) of the first proviso to section 10(23C) but the applicant has erroneously filed its present application in Form 10AB seeking approval under clause (ii) of the first proviso to section 10(23C) which covers the cases of trusts which are already approved and seeking re-approval. Hence the ld.CIT(E) held the present application under clause (ii) of the first proviso to section 10(23C) seeking approval is prima-facie non-maintainable.

3.

As is evident, the assessee was been granted provisional approval from approval period from AY 2024-25 to AY 2026-27. The Ld. CIT(E) held that application filed under Clause (ii) would not be maintainable since the application was to be filed in Clause (iii) in assessee’ case. Aggrieved, the assessee is in further appeal before us.

4.

We find that the application has been rejected merely on technical ground. It is clear that the assessee had obtained provisional approval and it sought permanent registration. By inadvertent mistake, the assessee preferred application under wrong Clause (ii) instead of Clause (iii). The assessee ought to have been granted an opportunity to rectify the same but in this case none. We also note that the ld. CIT(E) vide impugned order dated 27.06.2024 (near fag end of 30.06.3024) advised the assessee to file fresh application in the light of the CBDT Circular No.07/2024 dated 25.04.2024 extending the due date for filing Form 10AB from 30.09.2023 to 30.06.2024. We find that from 02.01.2024 i.e; the date of filing application in Form No.10AB till date of impugned order dated 27.06.2024, assessee has not been granted an opportunity to correct the mistakes well within the time period of 30.06.2024 which clearly violates principle of natural justice. Hence, we direct Ld. CIT(E) to treat the present application under clause (ii) of the first proviso to section 10(23C) filed on 02.01.2024 as filed under clause (iii) of the first proviso to section 10(23C) and consider the same on merits. The assessee is directed to substantiate its application. The appeal stand allowed for statistical purposes.

5.

In result, appeal of the assessee stand allowed for statistical purposes.

Order pronounced in the open court on 10th day of December, 2024.

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