ITAT Orders CIT(E) to Grant Registration u/s 12AB, Finding No Exemption Claim u/s 11 After CPC Denial [Read Order]

The Ahmedabad Bench of Income Tax Appellate Tribunal(ITAT) ordered the Commissioner of Income Tax(Exemption)[CIT(E)] to grant registration under Section 12AB,of the Income Tax ACt,1961, finding no exemption claim under Section 11 for the Assessment Year(AY) 2022-23 after the Centralized Processing Centre(CPC) denial.

Swaminarayan Satsangis Organisation ,appellant-assessee, challenged the order passed by CIT(E) on 29/08/2024, denying the grant of registration under section 12AB of the Act.The counsel for the assessee argued that the denial of registration by the CIT(E) was based on an incorrect understanding of the facts.

Law and Procedure for Filing of Appeals

The assessee had applied for registration as a charitable entity under Section 12AB of the Act. It had begun its activities and was seeking registration for the first time under Section 12A(1)(ac)(vi) sub-clause (B) of the Act. This section required that the assessee had not claimed any exemptions under sections 11 or 12 in previous years.

The CIT(E) had rejected the application, finding that the assessee had claimed an exemption under section 11 for the AY 2022-23. The CIT(E) pointed out that the trust had filed an Income Tax Return(ITR) claiming exemption, but the return was still under processing at the time. The assessee had not provided all necessary details, including a rectification request.

Law and Procedure for Filing of Appeals

The counsel explained that the assessee had mistakenly claimed exemption under section 11 in its ITR, but this had been corrected by the CPC, in a subsequent intimation under section 143(1), which denied the exemption. He argued that the assessee had properly disclosed that it had not applied for registration, and since it had not claimed exemptions in any prior year, the CIT(E)’s denial of registration was unjustified.

The two member bench comprising T.R.Senthil Kumar(Judicial Member) and Annapurna Gupta(Accountant Member) after hearing both sides, agreed with the assessee’s counsel that the assessee had proven it did not claim any exemption under section 11 for AY 2022-23. Therefore, the reason for denying registration was no longer applicable. It instructed the CIT(E) to grant registration to the assessee under section 12AB of the Act. In short, the appeal filed by the assessee was allowed.

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