Income Tax Appellate Tribunal Ahmedabad “A” Bench allows appeal against rejection of registration under section 80G (of Income Tax Act, 1961)

Case Name:

Best Buds Pet Care vs. CIT (Exemption)

Key Takeaways:

1. The assessee trust had previously been granted provisional registration under section 80G(5) (of Income Tax Act, 1961).
2. The assessee filed an application for final registration under section 80G(5) (of Income Tax Act, 1961), but it was rejected by the Commissioner of Income Tax (Exemption) on the grounds of filing beyond the prescribed time limit.
3. The assessee appealed this decision, arguing that the delay was due to a bonafide mistake and should be condoned.
4. The Income Tax Appellate Tribunal set aside the rejection order and directed the Commissioner to reconsider the application for final registration, taking into account the circulars issued by the CBDT extending the time limit for filing the application.
5. The Tribunal noted that the Commissioner had not considered the relevant circular in his rejection order, and therefore, the rejection was against the circular issued by the CBDT.
6. The Tribunal emphasized that the assessee trust should cooperate by providing all the required details for granting final registration under section 80G (of Income Tax Act, 1961).

Case Synopsis:

The brief facts of the case are as follows:

Best Buds Pet Care is a trust that was created on April 29, 2021, with the objectives of animal welfare (JIBIVA) and helping poor and needy people. The trust was granted final registration under section 12AB(i) (of Income Tax Act, 1961) of the Act by the Commissioner of Income Tax (Exemption) [CIT(E)] on September 17, 2022. The trust was also granted provisional registration under section 80G(5) (of Income Tax Act, 1961) of the Act on October 1, 2021. However, the trust filed Form 10AB for final registration under section 80G(5) (of Income Tax Act, 1961), which was rejected by the CIT(E) on the ground that the application was filed beyond the limitation period prescribed under the Act.

Aggrieved by the rejection order, the assessee (Best Buds Pet Care) filed an appeal before the Income Tax Appellate Tribunal, raising the following grounds of appeal:

1. The rejection of the application filed under section 80G(5) (of Income Tax Act, 1961) is incorrect and unlawful, and the approval should have been granted to the appellant trust.
2. The delay in filing the application under section 80G(5)(iii) (of Income Tax Act, 1961) should be condoned, considering the bonafide reasons and circumstances beyond the control of the appellant trust.
3. The order passed by the CIT(E) is bad in law and contrary to the provisions of law and facts.

The counsel for the assessee argued that the delay in filing the application for final registration under section 80G(5) (of Income Tax Act, 1961) was due to a bonafide mistake made by the trust. The trust’s new accountant was not aware of the difference between provisional and final registration under section 80G(5) (of Income Tax Act, 1961). The trust immediately filed the application for final registration when the mistake was realized. The counsel relied on a Delhi High Court judgment and a decision of the Coordinate Bench, Ahmedabad, to support their argument.

The CIT-D.R. (Counsel for the Revenue) opposed the plea of the assessee trust, stating that the application was filed beyond the time limit prescribed under the Act and extended by the CBDT circulars. The CIT-D.R. argued that there is no provision to condone the delay in registration of the trust and that the rejection order does not require any interference.

After considering the arguments and perusing the material on record, the Income Tax Appellate Tribunal set aside the impugned order passed by the CIT(E) and directed the CIT(E) to reconsider the Form No. 10AB for final registration under section 80G (of Income Tax Act, 1961). The Tribunal noted that the CIT(E) had not considered a clause in the circular issued by the CBDT, which allowed for the filing of a fresh application in Form 10AB on or before September 30,

FAQ:

Q1: What was the appeal about?

A1: The appeal was filed by Best Buds Pet Care against the rejection of their registration under section 80G (of Income Tax Act, 1961).

Q2: Why was the registration rejected?

A2: The registration was rejected because the assessee filed the application for final registration beyond the prescribed time limit.

Q3: What was the argument of the assessee in the appeal?

A3: The assessee argued that the delay in filing the application was due to a bonafide mistake and should be condoned.

Q4: What was the decision of the Income Tax Appellate Tribunal?

A4: The Tribunal set aside the rejection order and directed the Commissioner to reconsider the application for final registration, taking into account the circulars issued by the CBDT extending the time limit for filing the application.

Q5: What did the Tribunal emphasize in its decision?

A5: The Tribunal emphasized that the assessee trust should cooperate by providing all the required details for granting final.