2023 (9) TMI 1422 - AT - Income Tax

Exemption u/s 11 - application of assessee for final registration u/s 12AA/12A(1)(ac)(iii) rejected - HELD THAT - We find that only a single opportunity has given by the ld. CIT(E) to the assessee to present its case. The time period of issue of notice/letter and the date of fixing of hearing was very short. The proper opportunity in this case has not been granted by the ld. CIT(E) to the assessee. In view of this the impugned order of the CIT(E) is set aside and the matter is restored to the file of the CIT(E) for decision afresh on the application of assessee for final registration u/s 12AA/12A(1)(ac)(iii) of the Act. Final registration u/s 80G - Application for final registration was to be filed within six months from the commencement of its activities - final registration denied as delay on the part of the assessee in filing application in the prescribed form for grant of final registration under Clause (iii) of 1st Proviso to section 80G(5) - HELD THAT - The assessee was granted provisional approval on 30.11.2022 only and within a few days i.e. on 03.12.2022 the assessee applied for final registration u/s Clause (iii) of 1st Proviso to section 80G(5) of the Act. Though the assessee might have commenced its activities prior to grant of provisional registration but that does not mean that the assessee in that event will be precluded from applying for final registration even after the grant of provisional registration. The assessee as per statutory provision could not have directly applied for final registration without grant of provisional registration. The aforesaid proviso therefore is to be read as that after the grant of provisional registration if the assessee has not commenced its activities he may apply for registration within six months of the commencement of its activities or within the six months prior to the expiry of the period of provisional approval whichever is earlier. In any case the assessee is eligible to apply for final registration only after the grant of provisional approval. Therefore we hold that there is no delay on the part of the assessee in filing application in the prescribed form for grant of final registration under Clause (iii) of 1st Proviso to section 80G(5) of the Act. However since we have restored the matter to the ld. CIT(E) for decision afresh on merits on the application for final registration u/s 12A of the Act and since the registration u/s 80G(5) is dependent upon the registration u/s 12A of the Act therefore the application of the assessee for registration u/s 80G(5) is also restored to the ld. CIT(E) subject to the observations made above. Both the appeals of the assessee are treated as allowed for statistical purposes.

Summary

Issues involved:
The rejection of application for final registration under sections 12A(1)(ac)(iii) and 80G of the Income Tax Act.

Issue 1: Rejection of application under section 12A(1)(ac)(iii):
The appellant filed appeals against the rejection of the application for final registration as a charitable institution under section 12A(1)(ac)(iii) of the Income Tax Act. The appellant argued that the order by the Commissioner of Income Tax (Exemption) was ex parte, as the appellant did not receive proper communication regarding the hearing. The appellant contended that only a single opportunity was given to present its case, and the time period for issuing notice and fixing the hearing was inadequate. The Appellate Tribunal found that the appellant was not granted a proper opportunity by the Commissioner, and thus, set aside the impugned order and remanded the matter for a fresh decision.

Issue 2: Rejection of application under section 80G:
The appellant also appealed against the rejection of the application for final registration under section 80G of the Income Tax Act. The Commissioner concluded that the application was time-barred based on the proviso to section 80G(5), stating that the appellant had already commenced activities in the financial year 2020-21. However, the Appellate Tribunal clarified that the appellant could not have directly applied for final registration without provisional approval under section 80G(5)(iv) of the Act. The Tribunal held that there was no delay on the appellant's part in filing the application for final registration under section 80G(5), as the appellant applied for final registration shortly after receiving provisional approval. The matter was remanded to the Commissioner for a fresh decision on the application for final registration under section 12A, and consequently, the application for registration under section 80G(5) was also restored.

In conclusion, both appeals of the appellant were treated as allowed for statistical purposes by the Appellate Tribunal in Kolkata on 13th September 2023.