CHENNAI SOUTH FELLOWSHIP,CHENNAI vs. CIT- EXEMPTIONS, CHENNAI

The short grievance of the assessee is that the CIT(E), has rejected the application filed by assessee in form 10AB for registration under section 12A(1)(ac)(iii) of the Income Tax Act (hereinafter referred to as ‘Act’) which deals with the cases where trust / institution is registered u/s.12AB of the Act and an application is to be made when the period of said registration is due to expire at least six months prior to expiry of the said period. The application was rejected since the assessee failed to furnish copy of form No.10A and copy of registration in form No.10AC. Accordingly, the application was held to be non-maintainable.

From records, it emerges that the assessee filed Form 10A registration on 22.02.2020. This Form 10A was rejected by the CIT(E) vide order dated 21.09.2020 for the reason that the assessee trust did not respond to various notices sent by CIT(E). The assessee preferred rectification application u/s.154 of the Act on 02.08.2021. The application dated 24.07.2021 has been placed on record at page 70 to 78 of paper book.

In ld. Authorized Representative submitted that assessee Trust filed its returns of Income for the assessment years 2020-21 and 2021-22, which was processed under section 143(1) of the Act on 01.06.2022 treating the Trust as registered under section 12A of the Act. Further, intimation under section 143(1) of the Act for the assessment year 2022-23 has been issued on 17.03.2023 again treating the Trust as Registered under section 12A of the Act.

The ld. Authorized Representative thus submitted that the assessee was under bonafide belief that it is registered under section 12A of the Act, Accordingly, it applied for regular registration under section 12A(1)(ac)(iii) of the Act on 30.09.2022 which has been rejected erroneously without considering the outcome of rectification application filed u/s.154 of the Act. The ld. AR prayed that this application is to be considered in the light of outcome of rectification application filed u/s.154 of the Act.

The Senior Departmental Representative justified rejection on the ground that assessee Trust does not have provisional approval u/s. 12A of the Act. Further, the assessee has not preferred any appeal against the said order dated 21.09.2020 hence subsequent impugned orders dated 10.03.2023 are valid as per law.

We have carefully considered rival submissions in the light of above admitted factual matrix. We find that when a petition under section 154 of the Act dated 24.07.2021 which has been filed prior in time on 02.08.2021 is still pending adjudication before the Ld. CIT(E). The outcome of the same would have material bearing on present application, otherwise it will lead to inconsistency, incongruity and amount to forfeiting the statutory remedies of the assessee. Therefore, we restore the matter of registration back to the file of ld. CIT(E) for fresh consideration in the light of adjudication to assessee’s application u/s.154 of the Act after providing the assessee trust an adequate and proper opportunity of being heard. We make it clear that we have not made any comment on the merits of the petition filed under section 154 of the Act and it is left to the wisdom of the Ld. CIT(E) to decide in accordance with law. Similar directions are issued in ITA No.535/Chny/2023.

In the result, appeals of the assessees in & 535/CHNY/2023 are allowed for statistical purposes. Order pronounced on the 9th day of May, 2024, at Chennai.