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Case Law Details

Case Name : Sri Jeyamkonda Choleeswara Soundaranayaki Amman Kumbhabisheka Malar Kyushu Vs ITO (ITAT Chennai)
Appeal Number : ITA No.: 978/CHNY/2023
Date of Judgement/Order : 31/01/2024
Related Assessment Year :

Sri Jeyamkonda Choleeswara Soundaranayaki Amman Kumbhabisheka Malar Kyushu Vs ITO (ITAT Chennai)

The case of Sri Jeyamkonda Choleeswara Soundaranayaki Amman Kumbhabisheka Malar Kyushu vs. ITO (ITAT Chennai) revolves around a trust’s erroneous application for registration under the Income Tax Act.

The trust in question mistakenly applied for registration under section 12A(1)(ac)(ii) instead of 12A(1)(ac)(iii) of the Income Tax Act. This error led to the rejection of the application by the Commissioner of Income Tax (Exemption) on technical grounds. However, upon appeal, the ITAT Chennai acknowledged the technical mistake made by the trust and directed for the matter to be reexamined.

The delay in filing the appeal was condoned by the ITAT, considering the circumstances beyond the control of the assessee. The ITAT emphasized the need for a fair opportunity for rectification before outright rejection of the application.

In its decision, the ITAT Chennai recognized the technical error and deemed it fit for reevaluation. The trust was advised to file a fresh application under the correct provision of the Income Tax Act. The ITAT’s directive aimed at ensuring procedural fairness and proper adjudication of the trust’s application.

The case of Sri Jeyamkonda Choleeswara Soundaranayaki Amman Kumbhabisheka Malar Kyushu vs. ITO (ITAT Chennai) highlights the importance of accuracy in compliance with tax regulations. The trust’s inadvertent error in the application process led to a series of legal proceedings, ultimately resulting in the ITAT’s directive for reevaluation. This case underscores the significance of procedural diligence and the necessity for fair consideration of technical mistakes in tax matters.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Exemption), Chennai in Form 10AD of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide Application No. CIT(Exemption), Chennai/2022-23/12AA/11960 dated 04.03.2023.

2. At the outset, it is noticed that the appeal filed by the assessee is barred by limitation by 135 days. The impugned order passed by the CIT(Exemption) dated 04.03.2023 was served on the assessee on 04.03.2023. The appeal has to be filed on or before 03.05.2023 but it was actually filed on 15.09.2023 with a delay of 135 days. The assessee has filed affidavit along with condonation petition stating the reason that the CIT(Exemption has rejected the assessee’s application in Form 10AB seeking registration as infructuous and non-maintainable that means a technical error and assessee was under the impression that it could be corrected. But, how-ever seeking professional advice, the assessee was advised to file another application in Form No.10AB, which he did. However, assessee was also advised to file an appeal before the Tribunal against the rejected application. Hence, this delay was caused, which is beyond the control of the assessee. When this was confronted to ld.CIT-DR, he objected to condone the delay. We find the cause as reasonable and hence, condone the delay and admit the appeal.

3. The only issue in this appeal of assessee is rejecting the application filed in Form No.10A u/s.12A(1)(ac)(ii) of the Act, as infructuous and non-maintainable and rejected on technical ground bwithout affording opportunity to rectify the application.

4. Brief facts are that the assessee trust was created on 21.09.2021 as a charitable trust for providing relief to the poor and to provide education and medical relief. The assessee filed application for registration in Form No.10A u/s.12A(1)(ac)(ii) of the Act on 30.05.2022 and consequently, Form No.10AC was issued on 20.06.2022 granting provisional registration u/s.12A(1)(ac)(vi) of the Act for the AY 2023-24 to AY 2025-26. Subsequently, on 03.09.2022, six months prior to expiry of provisional registration, the assessee filed Form No.10AB seeking registration u/s.12A(1)(ac)(ii) of the Act. The assessee received hearing notices, which was responded by the assessee but the CIT(Exemption) vide his order in Form No.10AD on 04.03.2023 rejected the assessee’s application treating it as infructuous and non-maintainable by stating the reason that the assessee ought to have applied u/s.12A(1)(ac)(iii) of the Act instead of 12A(1)(ac)(ii) of the Act. The CIT(Exemption) recorded the fact and rejected the application by observing as under:-

4. While processing the said application, it is noticed from the applicant’s Form 10AC issued by the Central Processing Centre (CPC) that the applicant has been granted provisional registration (fresh registration) for the registration period of 3 years (from AY 2023-24 to AY 2025-2026).

4. As the applicant’s case is that of fresh registration, the applicant ought to have filed its application u/s. 12A(1)(ac)(ii). But, the applicant has erroneously filed its present application in Form 10AB seeking registration u/s. 12A(1) (ac) (iii) which covers the cases of trust which are already registered and seeking re-registration.

5. Subsequently, the applicant filed submission on 30.12.2022, which has been duly considered.

6. In the light of the fact that the applicant had been granted only provisional registration for a period of 3 years (from AY 2023-24 to AY 2025-2026) as stated above, the present application in Form 10AB filed u/s. 12A(1)ac)(i) seeking registration is prima-facie non-maintainable.

7. On careful consideration of the above facts and circumstances, the above application filed on 20.09.2022 in Form 10AB u/s.12A(1)(ac)(ii) is treated as infructuous, non-maintainable and hence, the same is rejected for statistical purpose. However, no adverse inference is drawn against the applicant’s existing and valid registration, if any, as per law u/s. 12AB.

Aggrieved, assessee came in appeal before the Tribunal.

5. After hearing both the sides and going through the facts, it is noted that the assessee has simpliciter made a technical mistake in applying u/s.12A(1)(ac)(ii) instead of 12A(1)(ac)(iii) of the Act. It was informed to the Bench by the ld.counsel for the assessee that even now the assessee has filed fresh Form No.10AB seeking registration u/s.12A(1)(ac)(iii) of the Act, which can also be considered. In our view, the same purpose will be served by adjudicating the same application. Hence, we set aside the order of CIT(Exemption) and remand the matter back to his file for fresh adjudication, either considering the subsequent application of assessee u/s.12A(1)(ac)(iii) of the Act or he can call a fresh application from the assessee. In term of the above, matter restored back to the file of the CIT(Exemption).

6In the result, the appeal filed by the assessee is allowed for statistical purposes.

Order pronounced in the open court at the time of hearing on 31st January, 2024 at Chennai.

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