Case Law Details
LTCL Palaniappa Charities Trust Vs CIT (ITAT Chennai)
In a significant development, the Income Tax Appellate Tribunal (ITAT) Chennai has delivered a landmark verdict concerning the rejection of Section 12AB registration applications. This decision specifically addresses the appeals of LTCL Palaniappa Charities Trust Vs Commissioner of Income Tax (CIT), along with similar cases, providing a fresh perspective on the procedural aspects of charitable trust registrations under the Indian Income Tax Act, 1961.
Detailed Analysis
The core issue at hand revolved around the rejection of applications for registration under Section 12AB by the CIT (Exemption), Chennai. The appellants, including Arudhra Charitable Trust represented in ITA No.577/Chny/2023, faced rejections due to procedural errors in their application process, specifically, the filing of Form 10AB instead of the required Form 10A.
The appellants argued that the inadvertent error of filing Form 10AB, which requires similar, if not additional, information compared to Form 10A, should not disqualify them from registration under Section 12AB and the related provisions of Section 80G(5) of the Act. They highlighted subsequent CBDT circulars that condoned delays in filing Form 10A and extended the filing deadline, demonstrating an intent to accommodate genuine errors and oversights.
The ITAT, upon review, recognized the procedural misstep as a technical breach that did not warrant the outright rejection of the appellants’ registration applications. The tribunal noted the crucial fact that the CBDT had issued circulars to alleviate genuine hardships by extending deadlines for the filing of Form 10A. This acknowledgment paved the way for a pragmatic resolution, allowing the appellants to rectify their procedural errors by submitting the correct form.
Conclusion: The ITAT’s decision to remand the matter back to the CIT (Exemption) with instructions to allow the filing of Form 10A represents a significant relief for the appellants and sets a precedent for similar cases. This verdict underscores the tribunal’s flexibility in interpreting procedural requirements, prioritizing substance over form. It reaffirms the judiciary’s role in facilitating the operational realities of charitable trusts, ensuring that minor procedural lapses do not impede their critical social functions. This judgment is a testament to the evolving understanding of legal procedures in the context of charitable organization registrations, emphasizing a pragmatic and benevolent approach to inadvertent errors.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
These are six appeals filed by different assessees are directed against different orders of dated 30.03.2023, 06.03.2023, 30.03.2023, 06.03.2023, 30.03.2023 and 04.03.2023 of the ld. Commissioner of Income Tax (Exemption), Chennai.
2. Since, the identical facts and issues are involved in these appeals, we proceed to dispose the same vide this common order.
3. For the sake of convenience and clarity, the facts relevant in ITA No.577/Chny/2023 of Arudhra Charitable Trust are stated herein.
4. The only issue in this appeal of the assessee is with regard to the order of the ld. CIT(E) rejecting the application filed by the assessee for registration u/s.12AB of the Act. The assessee also raised the issue that the ld. CIT (E) should have allowed to file form No.10A instead of form filed by the assessee i.e form 10AB of the Act which is inadvertent error committed by the assessee.
5. The Brief facts are that the assessee is a charitable trust registered u/s.12AA of the Act vide order dated 05.12.1996. The assessee trust submits that section 12A(1)(ac)(i) of the Income Tax Act, 1961 mandated that existing charitable trust should apply for registration under section 12AB of the Act and the said provision was inserted with effect from 01.04.2021 and the application had to be made on or before 30.06.2021. Similar requirement was inserted in clause (i) of first proviso to section 80G(5) of the Act in respect of registration under section 80G(5) of the Act. Ld Counsel stated that it was required to make application in Form 10A under both the provisions. The assessee trust had incorrectly filed separate Form 10AB on 22.09.2022 for obtaining registration under 12A(1)(ac)(i) and clause (i) of first proviso to section 80G(5) of the Act. She stated that Form 10A and Form 10AB, in substance require similar information, particularly Form 10AB requires certain additional details and the assessee filed required relevant details. She stated that subsequently the CBDT vide Circular No.22 of 2022 dated 01.11.2022, considering the representations received with a view to avoid genuine hardship, had condoned the delay in filing form 10A upto 25.11.2022. The assessee trust further stated that as on 30.09.2022, Form 10A was open only in respect of cases falling under 12A(1)(ac)(vi) of the Act and the assessee’s case fell under section 12 (1)(ac)(i) of the Act and hence, could not file the application in form 10A. The assessee contended that the CIT(E) vide impugned orders rejected the application filed in Form 10AB on the ground that the assessee is not eligible for registration under section 12A(1)(ac)(iv) and clause (ii) of the first proviso to section 80G(5). The assessee trust claims that mere filing of wrong form does not disentitle the assessee to obtain the registration under section 12AB and the proviso to section 80G(5) of the Act, especially when the CBDT has subsequently condoned the delay vide Circular No.22 of 2022 dated 01.11.2022, and further extended the due date for filing Form 10A vide Circular No. 6 of 2023 dated 24.05.2023. In view of the circulars (supra), the assessee trust filed fresh Form 10A. However, the income tax portal did not permit the assessee to file fresh Form 10A and the ld. CIT(A) dismissed the appeal of the assessee by observing as under:-
”4. The applicant response is carefully considered. The applicant trust was registered u/s. 12A(a) on 02.02.1997 and was granted approval u/s. 80G on 25.06.2007.
5.The applicant is required to file application u/s. 12A(1)(ac)(iv) only when its registration has become inoperative due to the first proviso to sub-section (7) of section 11. But the applicant failed to demonstrate that its registration has become inoperative due to the first proviso to sub-section (7) of section 11. The applicant did not furnish any order of registration in Form 10AC/ Form 10AD issued by either Central Processing Centre (CPC) or Jurisdictional Commissioner of Income Tax.
Further, the applicant, did not provide any details regarding its registration u/s. 10(23C) or 10(46) etc, which had become inoperative inspite of specifically requesting to furnish the same vide item no. 6 of this office letter dated 29.12.2022.
6. In the light of the fact that the applicant had not furnished Form 10AC/ 10AD or any details related to its earlier registration u/s. 10(23C) or 10(46), as stated above, the present application in Form 10AB filed u/s. 12A(1)(ac)(iv) seeking registration is prima-facie non-maintainable.
7. On careful consideration of the above facts and circumstances, the above application filed on 22.09.2022 in Form 10AB u/s. 12A(1) (ac) (iv) is treated as infructuous, non-maintainable and hence, the same is rejected for statistical purpose”.
Aggrieved, the assessee preferred an appeal before us.
6. We have heard rival contentions and gone through the facts and circumstances of the case. We note that assessee trust is an existing charitable trust should have applied for registration u/s.12A of the Act in terms of Section 12A (ac)(i) of the Act and this provision of Section 12AB of the Act was inserted w.e.f. 01.04.2021 and the application had to be made by assessee on or before 30.06.2021. Similar requirement was inserted in clause (i) of first proviso to Section 80G (5) of the Act in respect of registration u/s.80G (5) of the Act. Assessee had incorrectly filed form 10AB on 22.09.2022 for obtaining registration u/s.12A(1) (ac) (i) and clause (i) of first proviso to Section 80G (5) of the Act. Ld. Counsel for the assessee stated that the form 10A and form 10AB in substance required similar information. She pointed that particular form 10AB required certain additional details. Assessee also filed required relevant details. Ld. Counsel for the assessee also explained the circumstance that subsequent CBDT vide Circular No.22 of 2022 dated 01.11.2022, considering the representations received from the public with a view to avoid genuine hardship had condoned the delay in filing form 10A upto 25.11.2022. She also stated that form 10A opened only in respect of cases falling under 12A (1) (ac) (vi) of the Act and assessee’s case fell under section 12A(1)(ac) (i) of the Act and hence could not file application in form 10A of the Act. She also stated that mere filing of wrong form does not disentitle the assessee for registration u/s.12AB of the Act. The proviso to Section 80G(5) of the Act especially when the CBDT had extended the due date and filing form 10A vide Circular No.6 of 2023 dated 24.05.2023. She also explained that assessee also attempted to file fresh form 10A and Income Tax portal did not permit the assessee to file the same. Hence, she requested that the order of the ld. CIT(E) may be quashed and the matter may be restored back to the file of the ld. CIT (E) to allow the assessee to file fresh form No. 10A of the Act and will consider granting of registration u/s.12A of the Act and also u/s.80G of the Act.
7. On the other hand, the ld. Senior Departmental Representative relied on the order of the ld. CIT(E).
8. We noted that the ld. CIT(E) simpliciter rejected the assessee’s application for registration only on the issue that assessee has not furnished form No.10AC/10AD and the present application u/s.10AB of the Act was filed u/s.12A(1) (ac)(iv) of the Act seeking registration is not maintainable and hence rejected. We are of the view that assessee has not filed application in form 10A and filed form no. 10AB of the Act which is merely a technical breach which can be cured by allowing the assessee to file application in form 10A of the Act alongwith other details. Hence, we set aside the appeal and the matter is remitted back to the file of the ld. CIT (E) who will allow assessee to file application in form No. 10A along with other required details and the ld. CIT (E) will examine entire aspect relating to registration u/s.12AB of the Act as well as u/s.80G of the Act and then will decide the appeal accordingly. In terms of the above, the appeal of the assessee in ITA No. No.577/Chny/2023 is allowed for statistical purpose.
9. ITA Nos. 575, 576, 578, 579 and 580/CHNY/ 2023,
Since, the facts in the present appeals are identical to the facts in ITA No.577/Chny/2023, for the reasons mentioned therein, we set aside the appeals filed by the assesses to the file of the ld. CIT (E) on the same lines in indicated in ITA No.577/CHNY/2023 supra. Hence, the above captioned appeals filed by the assesses are allowed for statistical purpose.
10. In the result, the appeals of the assessee in ITA Nos. 575 to 580/CHNY/2023 are allowed for statistical purposes.
Order pronounced in the open court at the time of hearing on 26th December, 2023 at Chennai.
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