Britg Foundation Vs CIT (ITAT Visakhapatnam)
The case of Britg Foundation vs. CIT (ITAT Visakhapatnam) addresses the rejection of an application for registration under section 12AB of the Income Tax Act, 1961, and the subsequent cancellation of an earlier provisional registration. The assessee, Britg Foundation, had initially filed an e-application in Form 10A seeking registration. During this process, they inadvertently selected the incorrect section code, opting for section 12A(1)(ac)(i) instead of 12A(1)(ac)(vi). The latter was the appropriate choice given that the foundation did not possess an existing registration under section 12AA before April 1, 2021. Despite this error, the Centralized Processing Centre (CPC), Bangalore, had issued Form 10AC on February 8, 2022, granting provisional registration for five assessment years, from 2022-23 to 2026-27. When the assessee later applied for permanent registration by filing Form 10AB, the Commissioner of Income Tax (Exemption) [CIT(E)] identified the initial error in the Form 10A selection. Following a show cause notice and the assessee’s admission of the inadvertent mistake, the CIT(E) rejected the Form 10AB application as “infructuous” and cancelled the previously granted exemption, citing the incorrect quoting of provisions as the sole reason.
Aggrieved by this decision, Britg Foundation appealed to the Income Tax Appellate Tribunal (ITAT), Visakhapatnam. The appeal itself was filed with a delay of 90 days, which the ITAT condoned after reviewing the assessee’s affidavit. The affidavit attributed the delay to confusion regarding the appropriate forum for filing an appeal against dismissal orders from the CIT(E). The ITAT found this explanation to constitute a reasonable and sufficient cause. On the merits of the case, the assessee argued that the error was merely a technical or clerical oversight during the online application process and should not invalidate their substantive right to registration as a charitable institution. They contended that the cancellation of the earlier registration without a proper opportunity to be heard violated principles of natural justice, and that the CIT(E)’s action was disproportionate to the procedural lapse. The assessee also highlighted that the Income-tax Act allows for rectification of such mistakes and that their bona fide conduct and charitable work should be considered.
