Kakini Building Humanity vs Commissioner of Income Tax (Exemption)

1.

The Learned CIT (Exemptions) erred in law and on facts in rejecting the appellant’s application for registration under section 80G(5) by treating a departmental error as a “specified violation” under Explanation (g) to section 12AB(4).

2.

The Learned CIT (Exemptions) failed to appreciate that the appellant had never made any misrepresentation, false statement or suppression of material facts at any stage.

3.

The finding of “specified violation” is legally unsustainable, as Explanation (g) to section 12AB(4) applies only where registration is obtained by fraud or misrepresentation attributable to the assessee, which is absent in the present case.

4.

A mistake committed by CPC / Department cannot be used to penalise the appellant, nor can it form the basis for rejection or cancellation of registration.

5.

The Learned CIT (Exemptions) exceeded jurisdiction by refusing registration without examining the charitable objects and genuineness of activities, which is the only permissible scope of enquiry at the registration stage.

6.

The impugned order is mechanical and non-speaking, as it does not record any finding on the appellant’s eligibility under section 80G(5).

7.

The Learned CIT (Exemptions) has exceeded jurisdiction by rejecting the 80G application without conducting an independent evaluation of the statutory conditions.

8.

The order is violative of principles of natural justice, arbitrary, and contrary to the settled law laid down by the Hon’ble Supreme Court and High Courts.

The Learned CIT (Exemptions) erred in law and on facts in rejecting the appellant's application for registration under section 12AB by treating a departmental error as a "specified violation" under Explanation (g) to section 12AB(4).

2.

The Learned CIT (Exemptions) failed to appreciate that the appellant had never made any misrepresentation, false statement or suppression of material facts at any stage.

3.

The finding of "specified violation" is legally unsustainable, as Explanation (g) to section 12AB(4) applies only where registration is obtained by fraud or misrepresentation attributable to the assessee, which is absent in the present case.

4.

A mistake committed by CPC/ Department cannot be used to penalise the appellant, nor can it form the basis for rejection or cancellation of registration.

5.

The Learned CIT (Exemptions) exceeded jurisdiction by refusing registration without examining the charitable objects and genuineness of activities, which is the only permissible scope of enquiry at the registration stage.

6.

The rejection order is mechanical and non-speaking, as it does not deal with the appellant's detailed replies and submissions filed during proceedings.

7.

Initiation of cancellation proceedings is illegal and without jurisdiction, being consequential to an erroneous and unsustainable finding.

8.

The order is violative of principles of natural justice, arbitrary, and contrary to the settled law laid down by the Hon'ble Supreme Court and High Courts.

“….6. Reliance was placed on the order of the Income Tax Appellate Tribunal, Chennai Bench in the case of Sri Jeyamkonda Choleeswara Soundaranayakai Amman Kumbhabisheka Mala Kuzhu Vs. ITO (Exemptions) reported in [2024] 159 taxmnan.com 502 (Chennai- Trib.). In this case the ITAT has held as under :-

“5.

After hearing both the sides and going through the facts, it is noted that the assessee has simpliciter made a technical mistake in applying u/s. 12A(1)(ac)(ii) instead of 12A(1)(ac)(iii) of the Act. It was informed to the Bench by the ld. Counsel for the assessee that even now the assessee has filed fresh Form No.10AB seeking registration u/s.12A(1)(ac)(iii) of the Act, which can also be considered. In our view, the same purpose will be served by adjudicating the same application. Hence, we set aside the order of CIT(Exemption) and remand the matter back to his file for fresh adjudication, either considering the subsequent application of assessee u/s. 12A(1)(ac)(iii) of the Act or he can call a fresh application from the assessee. In term of the above, matter restored back to the file of the CIT(Exemption).”

7.

The Ld. DR supported the order of the Ld.CIT(E) and submitted that appellant has not moved the application as per Act. He moved the application under Section 12A (1) ac (ii) which was not maintainable. He, therefore, submitted that the order of the CIT(E) be upheld.

8.

From the perusal of the record it is evident that the appellant has made an application form 10AB for registration of trust under Section 12A(1)(ac)(ii) of the Act. The appellant has filed the duly rectified application on the prescribed form 10AB. The Ld. CIT(E) without considering the revised application of the appellant rejected it on the technical ground. The Ld. Sr. Counsel for the appellant also stated that Ld. ITAT has considered the similar issue in which the Ld. CIT (E) order was set aside by the ITAT Chennai Bench.

9.

As contended the appellant has committed a technical mistake in making the application under Section 12A(1)(ac)(ii) instead of clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. As pointed out the appellant has filed revised form 10AB for seeking registration under the correct provision i.e. Section 12A(1)(ac)(iii) which can also be considered.

10.

In consonance with the decision rendered by the co-ordinate Bench, the typographical error deserves to be corrected. Accordingly, the appeal deserves to be allowed and impugned order dated 15.03.2024 of Ld. CIT (E) is liable to be set aside. Hence, the appeal is allowed and we set aside the order of Ld. CIT(E) dated 15-03-2024 and remand the matter back to the file of the CIT(E) for fresh adjudication by considering amended application of the appellant under Section 12A(1)(ac)(iii) of the Act, or he can call for amended application from the appellant….”