2025 (7) TMI 1282 - AT - Income Tax

Rejecting the application for registration u/s 12A(1)(ac) - time limit for filing application for regular registration after provisional registration under section 12A(1)(ac) granted - as application is filed on 24.09.2024 accordingly Ld. CIT Exemption Pune was of the view that it is beyond the prescribed time limit allowed u/s 12A(1)(ac)(iii) HELD THAT - Respectfully following the decision of Mitcon Forum for Social Development 2025 (5) TMI 686 - ITAT PUNE and in the light of newly inserted proviso to sub clause vi of clause (ac) of sub-section (1) of section 12A wherein the PCIT or CIT have been empowered to condone the delay if they find that there was reasonable cause in not filing the application within the prescribed time limit we deem it appropriate to set-aside the order passed by Ld. CIT Exemption Pune and remand the matter back to his file with a direction to treat the application as filed within time and decide the issue afresh as per fact and law after providing reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by CIT Exemption Pune in this regard and produce relevant documents/evidences if any in support of application for registration u/s 12A(1)(ac)(iii) of the IT Act without taking any adjournment under any pretext otherwise Ld. CIT Exemption Pune shall be at liberty to pass appropriate order as per law.

Summary

ISSUES:

Whether the application for registration under clause (iii) of section 12A(1)(ac) of the Income Tax Act filed beyond the prescribed time limit can be condoned by the Principal Commissioner or Commissioner on the ground of reasonable cause.Interpretation of the time limit for filing application for regular registration after provisional registration under section 12A(1)(ac) of the Income Tax Act, specifically the meaning of "within six months from the date of commencement of its activities" in relation to trusts/institutions already carrying out charitable activities before obtaining provisional registration.Whether the application for approval under section 80G(5) of the Income Tax Act filed after provisional approval but before expiry of provisional approval is time barred.Whether the orders rejecting the applications for registration under section 12A(1)(ac)(iii) and approval under section 80G(5) can be set aside for de novo adjudication after treating the applications as filed within time.

RULINGS / HOLDINGS:

The Court held that under the newly inserted proviso to sub-clause (vi) of clause (ac) of sub-section (1) of section 12A, the Principal Commissioner or Commissioner "may, if he considers that there is a reasonable cause for delay in filing the application, condone such delay and such application shall be deemed to have been filed within time."The phrase "within six months of commencement of its activities" applies only to trusts/institutions which have not started charitable activities at the time of obtaining provisional registration, and not to those which had already commenced activities prior to provisional registration. Thus, the application filed by the assessee was held to be within the time allowed under the Act.Regarding approval under section 80G(5), since the assessee had provisional approval valid up to the assessment year 2024-25 and applied for permanent registration before expiry of provisional approval, the application was not time barred.The orders rejecting the applications were set aside and the matters remanded to the Commissioner of Income Tax (Exemption) for de novo adjudication after treating the applications as filed within time and providing the assessee reasonable opportunity of hearing.

RATIONALE:

The Court applied the statutory framework under sections 12A(1)(ac) and 80G(5) of the Income Tax Act, including the proviso inserted w.e.f. 01-10-2024 empowering the PCIT or CIT to condone delay for reasonable cause.The Court relied on a prior coordinate bench decision interpreting the time limit for filing registration applications to avoid "absurdity and mischief," citing the principle that "a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided."The Court referred to the Hon'ble Supreme Court's established rule of construction permitting modification of literal statutory language to prevent unjust or absurd results, emphasizing the need for a rational and sensible interpretation aligned with legislative intent.The Court noted reliance on the Speech of the Hon'ble Finance Minister and the Memorandum of Finance Bill, 2020, to support the interpretation of the statutory provisions.The Court emphasized procedural fairness by directing that the assessee be given reasonable opportunity to respond to notices and produce evidence, warning that failure to do so could result in appropriate orders as per law.