The Chennai Bench of Income Tax Appellate Tribunal (ITAT) directed the Commissioner of Income Tax(Exemption)[CIT(E)] to consider Form No. 10AB on merits after it was rejected due to an incorrect clause selection.
Ramajayam Educational Trust,appellant-assessee, challenged the rejection of its Form No. 10AB application filed on January 2, 2024, for approval under Section 10(23C)(ii) of the Act. The order was issued on June 27, 2024.A 28-day delay was noted, and the assessee counsel sought condonation with an affidavit from the managing trustee. After review, the delay was condoned.
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The application was rejected because it was filed under Clause (ii) of the first proviso to Section 10(23C) instead of Clause (iii). While reviewing the Form No. 10AB application submitted on January 2, 2024, the CIT(E) found that Form 10AC had already granted provisional approval for AY 2024-25 to AY 2026-27.
Since Clause (ii) applies to trusts seeking re-approval, the CIT(E) concluded that the application should have been filed under Clause (iii) and was, therefore, non-maintainable. The assessee aggrieved by the decision appealed before the tribunal.
Read More: Bonafide Mistake of Applying for Registration in Form 10 AB Instead of Form 10 A is Condonable: ITAT
The two member bench comprising Manu Kumar Giri (Judicial Member) and Manoj Kumar Aggarwal (Accountant Member) found that the application was rejected on a technicality. The assessee had provisional approval and sought permanent registration but mistakenly applied under Clause (ii) instead of Clause (iii). It was not given a chance to correct the error.
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The CIT(E), in the order dated June 27, 2024, advised filing a fresh application, citing Central Board of Direct Taxes(CBDT) Circular No. 07/2024, which extended the deadline to June 30, 2024. However, no opportunity was given to rectify the mistake, violating natural justice.
The appellate tribunal directed the CIT(E) to treat the application as filed under Clause (iii) and consider it on merits. The assessee was instructed to substantiate its application.
In conclusion,the appeal filed by the assessee was allowed for statistical purposes.
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