Rejection of Section 80G Grant for Procedural Lapse Unacceptable: ITAT Ahmedabad

Bipin Biharidas Charitable Basis Vs CIT (ITAT Ahmedabad)
The scenario of Bipin Biharidas Charitable Basis v. CIT (ITAT Ahmedabad) revolves around the rejection of the assessee’s software for approval underneath Part 80G(5) of the Profits Tax Act, 1961 by the Commissioner of Cash flow Tax (Exemption), Ahmedabad.
The appellant, a charitable basis, experienced submitted an software seeking approval underneath Segment 80G(5) of the Act. However, the software was turned down by the Commissioner solely on the basis that it was submitted underneath Area 80G(5)(ii) as a substitute of Part 80G(5)(iii) of the Act. The appellant had presently been granted provisional approval under Clause (iv) of the Very first Proviso to Portion 80G(5) of the Act for the time period from Evaluation Calendar year (A.Y.) 2021-22 to A.Y. 2024-25.
Hard the Commissioner’s decision, the appellant elevated various grounds of enchantment. The crux of their argument was that the rejection solely centered on a procedural mistake of submitting the application under the erroneous clause really should not invalidate their eligibility for approval below Portion 80G(5)(iii). They argued that the Commissioner ought to have regarded the substantive eligibility of the rely on for this kind of acceptance inspite of the procedural lapse.
For the duration of the appeal listening to, the appellant’s counsel argued that the procedural error must have been condoned by the Commissioner, particularly considering the eligibility of the appellant for remaining registration. The counsel cited a judgment from the Kolkata Bench in support of their argument.
The Money Tax Appellate Tribunal (ITAT) Ahmedabad thoroughly viewed as the submissions made by equally get-togethers and examined the applicable lawful provisions and precedents. They also reviewed the judgment cited by the appellant’s counsel from the Kolkata Bench.
The ITAT acknowledged that the challenge experienced been dealt with in a similar manner by the Kolkata Bench, in which it was held that an assessee who experienced been granted provisional registration could utilize for final registration, irrespective of no matter whether they had commenced actions in advance of or right after the provisional approval. The ITAT emphasised that an software for final registration could only be created right after the grant of provisional registration.
Centered on their evaluation and the precedent set by the Kolkata Bench, the ITAT concluded that rejection of the grant underneath Area 80G solely on the foundation of a procedural error, these as filing the software under the completely wrong clause, was not acceptable. They stressed the worth of procedural fairness in the administration of justice.
Consequently, the ITAT established aside the Commissioner’s determination and directed them to reconsider the application below Portion 80G(5)(iii) of the Act, getting into account the appellant’s eligibility and without the need of becoming motivated by the procedural mistake. The attraction was permitted for statistical functions.
In essence, the ITAT’s final decision underscores the theory that procedural lapses ought to not override substantive legal rights, especially in matters concerning taxation and charitable actions. It highlights the have to have for authorities to undertake a pragmatic and truthful method while administering tax legislation, guaranteeing that procedural technicalities do not impede the reputable legal rights of taxpayers and charitable companies.
Complete Text OF THE Purchase OF ITAT AHMEDABAD
The instant appeal submitted by the assessee is directed in opposition to the order dated 07.11.2023 passed by the Ld. Commissioner of Revenue Tax (Exemption), Ahmedabad beneath Section 80G(5) of the Revenue Tax Act, 1961 (hereinafter referred to as ‘the Act’).
2. The assessee has elevated the pursuing grounds of attractiveness:-
“1. The order handed by CIT (Exemption) is negative in law and necessary to be quashed.
2. Ld. CIT (Exemption) erred in rejecting software for registration by observing that belief was provisionally registered beneath clause (iv) of very first proviso to segment 80G(5) and appropriately, impugned software was needed to manufactured less than clause (iii) of initial proviso as a substitute of clause (ii) of very first proviso.
3. Ld. CIT (Exemption) should to have regarded as the fact that submitting an software beneath incorrect clause of proviso does not change the objects or things to do of believe in and its procedural error or complex error and appropriately he ought to have granted registration.
4. Ld. CIT(Exemption) should to have thought of the simple fact that procedural or technical error does not take absent fundamental legal rights which are or else accessible to the applicant.”
3. The assessee right before us has challenged the buy passed by the Ld. CIT(Exemption) whereby and whereunder the software for grant of acceptance beneath sub-Portion (5) of Part 80G of the Act was rejected only on the plea that this sort of software for the yr less than thought was however essential to be submitted less than Section 80G(5)(iii) the very same was submitted less than Part 80G(5)(ii) of the Act by the appellant just before us. It is pertinent to point out that the appellant has also been granted provisional acceptance less than Clause (iv) of 1st Proviso to sub-Section (5) of Part 80G of the Act for the interval from A.Y. 2021-22 to A.Y. 2024-25.
4. At the time of listening to of the fast charm the Ld. Counsel showing for the assessee submitted in advance of us that as the assessee is suitable for remaining registration. Basically for the reason that of the application staying built below a distinct Clause (ii) of First Proviso of Area 80G(5) by mistake the exact could have been addressed by the Ld. CIT(E) beneath Clause (iii) of 1st Proviso of Section 80G(5). This procedural error could have been condoned /overlooked by the Ld. CIT(E) getting regard to the eligibility of the assessee for these kinds of grant. In reality, that is the sole rationale the Ld. A.R. is praying for remitting the problem to the file of the Ld. CIT(E) with a course on him to treat the stated software under Portion 80G(5)(iii) alternatively of 80G(5)(ii) and to pass orders appropriately. The Ld. A.R. additional relied upon a judgment handed by the Calcutta Bench in ITA No. 994/Kol/2023. Such submission designed by the Ld. A.R. has not been controverted by the Ld. D.R. with all his fairness.
5. We have read the rival submissions produced by the respective events, we have also perused the applicable materials readily available on history.
6. Contemplating the simple fact we have further perused the judgment by the Kolkata Benches. We come across when dealing with this issue the Ld. Bench was happy to notice as follows:-
“6. So much as the observation of the ld. CIT(E) that the assessee had now commenced its functions considering the fact that long and that as for each Clause (iii) of 1st Proviso to area 80G(5) of the Act, the software for last registration was to be submitted within six months from the commencement of its pursuits and for that reason, the software of the assessee for closing registration was time barred, is involved, we notice that the situation has currently been discussed and adjudicated by the Coordinate Bench of the Tribunal in the case of West Bengal Welfare Society vs. CIT (Exemption), Kolkata in ITA No. 730 & 731/Kol/2023 vide purchase dated 13.09.2023, whereby, it has been held that the assessee, who has been granted provisional registration, is suitable to apply for final registration irrespective of the reality that the assessee experienced now commenced its activity even prior to the day of grant of provisional approval. The appropriate element of the get of the Coordinate Bench is reproduced as less than:
6. We be aware that the ld. CIT(E) has misconstrued the aforesaid proviso to section 80G(5) of the Act. As per the provision, an application for closing registration can not be filed right up until and unless of course an assessee/have confidence in has been presented provisional acceptance u/s 80G(5)(iv) of the Act. The assessee was granted provisional acceptance on 30.11.2022 only, and inside of a few times i.e. on 03.12.2022, the assessee used for closing registration u/s Clause (iii) of 1st Proviso to portion 80G(5) of the Act. Although the assessee may have commenced its routines prior to grant of provisional registration but that does not imply that the assessee in that party will be precluded from applying for last registration even soon after the grant of provisional registration. The assessee as for each statutory provision could not have instantly applied for last registration without having grant of provisional registration. The aforesaid proviso, for that reason, is to be read as that following the grant of provisional registration, if the assessee has not commenced its actions, he may possibly utilize for registration in six months of the commencement of its routines or within just the 6 months prior to the expiry of the period of provisional acceptance, whichever is previously. In any case, the assessee is suitable to apply for ultimate registration only soon after the grant of provisional acceptance. Therefore, we hold that there is no hold off on the portion of the assessee in filing application in the prescribed type for grant of remaining registration less than Clause (iii) of 1st Proviso to portion 80G(5) of the Act.
6.1. In look at of the above observations, the subject is restored the file of the CIT(E) for choice afresh in the light of the observations built previously mentioned.
7. In the end result, attractiveness submitted by the assessee is dealt with as authorized for statistical reasons.”
8. Just after watchful studying of the buy passed by the authority beneath we uncover benefit in the circumstance of the assessee. Course of action is the handmade of justice. As a result, rejection of grant underneath Segment 80G just on procedural lapse by making software underneath Segment 80G(5)(ii) inadvertently in its place of below Section 80G(5)(iii) on the part of the assessee is not acceptable. Further more that obtaining regard to the identical info and situation of the issue in the situation relied on by the Ld. A.R. we established-apart the issue to the file of the Ld. CIT(E) with a route on him to address the explained software beneath Section 80G(5)(iii) of the Act and to pass orders strictly in accordance with law.
9. In the outcome, the attractiveness of the assessee is allowed for statistical applications.
This Get pronounced in Open Courtroom on 21/03/2024