Anjuman Falahe Daren Vs Income Tax Department (ITAT Ahmedabad)
The ITAT Ahmedabad allowed the assessee’s appeal for statistical purposes and held that registration under Section 12A cannot be denied merely because of a bona fide error in mentioning the incorrect clause in the application form.
The assessee-trust had initially obtained provisional registration under Section 12A(1)(ac)(vi)(A) through an order dated 28.10.2022. Thereafter, it applied for final/regular registration before the Commissioner of Income Tax (Exemption) [CIT(E)]. However, while filing the prescribed form, the assessee inadvertently selected Section 12A(1)(ac)(ii) instead of Section 12A(1)(ac)(iii).
The CIT(E) rejected the application solely on the ground that his office could not suo motu change the clause under which the application was filed.
The Tribunal observed that after amendments effective from 01.04.2021, there had been widespread confusion regarding interpretation of the provisions, not only among assessees and tax professionals but also among tax authorities. It noted that even the CBDT had issued clarifications and extended timelines due to such confusion. The Tribunal further observed that coordinate benches had consistently held that assessees should not be penalized for genuine mistakes in mentioning incorrect clauses in application forms.
The ITAT noted that the CIT(E) was aware that the assessee was otherwise eligible for registration. Accordingly, the impugned order was set aside and the matter was restored to the CIT(E) with directions to treat the application as filed under Section 12A(1)(ac)(iii) and decide it afresh on merits in accordance with law.
