Appeal against Rejection of Registration under Section 80G: A Case Analysis

Introduction:

This article delves into an appeal filed by the assessee against the rejection of registration under Section 80G of the Income Tax Act, 1961 ("the Act"). The rejection was made through an order dated 14-08-2023 by the Commissioner of Income Tax (Exemption) [CIT(E)], Ahmedabad.

Background:

The appellant, in this case, is a trust established on 29-04-2021, focusing on animal welfare (JIBIVA) and aiding the poor and needy. The trust was granted Final Registration under Section 12AB(i) of the Act by the CIT(E) on 17-09-2022. Additionally, provisional registration under Section 80G(5) of the Act was granted on 01-10-2021. The rejection of the final registration under Section 80G(5) was based on the grounds that the application was filed beyond the prescribed time limit.

Grounds of Appeal:

The appellant, aggrieved by the rejection, raised the following grounds of appeal:

1. The rejection of the application under Section 80G(5) is incorrect and unlawful.
2. The rejection of the application under Section 80G(5)(iii) should be reconsidered, and the delay in filing condoned.
3. The order passed by the CIT(E) is alleged to be bad in law and contrary to legal provisions.
4. A request for leave to add, alter, or amend the grounds before the final hearing.

Arguments by the Assessee:

The counsel for the assessee argued that the delay in filing the application for final registration was due to a bona fide mistake. The new accountant appointed by the trust was unaware of the distinctions between provisional and final registration under Section 80G(5) of the Act. Upon realizing the mistake, the trust promptly filed the application for final registration on 28-02-2023. The counsel referred to legal precedents, including the Delhi High Court judgment in the case of Director of Income Tax (Exemption) vs. Vishwa Jagriti Mission, and requested the condonation of the delay.

Revenue's Counterargument:

The Commissioner of Income Tax-Departmental Representative (CIT-D.R.) opposed the appeal, arguing that the rejection was justified as the application was filed beyond the prescribed time limit. The D.R. emphasized the importance of strict adherence to the timelines set by the Act to avoid opening avenues for litigation.

Analysis and Decision:

The appellate body considered the facts, including the bonafide mistake made by the trust, the extension of the time limit by CBDT circulars, and the relevant legal provisions. It noted that the CIT(E) did not consider Circular No. 6/2023, which allowed for the acceptance of pending applications even if filed after 30-09-2022.

Conclusion:

In light of the above, the appellate body set aside the CIT(E)'s order and directed a reconsideration of the Form 10AB for final registration under Section 80G. The decision emphasized the need for the CIT(E) to follow the circulars issued by the CBDT and provide the assessee with a fair opportunity to present their case.

This case serves as a reminder of the importance of adhering to timelines, but also highlights the significance of considering exceptional circumstances and relevant circulars in the application of tax laws.

Topic- Best Buds Pet Care Versus Commissioner of Income Tax

Court-ITAT-Ahmedabad

Date-30/11/2023

Team Taxonation

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