ITAT Restores 12A Registration Application After Non‑Compliance Cited as Communication Lapse

ITAT Restores 12A Registration Application After Non‑Compliance Cited as Communication Lapse

The assessee company filed an appeal against the order of the CIT (Exemptions). The assessee company, in its defense, explained that it was operating in Uttar Pradesh at its other centre between June and September 2024, due to which correspondence from the Income Tax Department was not received at its registered office. It further stated that the registered email ID was handled only by the accounts staff, who, unfortunately, did not inform the management about the notices issued by the CIT(E). By the time the management became aware, the CIT(E) had already passed an order refusing registration under Section 12A.

Proceeding before CIT(E): The CIT(E) had provided three opportunities to furnish details in connection with Form 10AB filed under Section 12A(1)(ac)(iii). However, as the assessee did not respond to the notices, the CIT (Exemptions) denied the assessee company registration under Section 12A of the Income Tax Act and cancelled the granted provisional registration. The assessee, therefore, by way of appeal before ITAT, requested for grant of another opportunity to furnish the necessary details and present its case for registration.

Core Issue Before the Tribunal: Whether the assessee should be given another opportunity to pursue registration under Section 12A when non‑compliance resulted from a communication lapse.

ITAT Held: The Tribunal allowed the appeal for statistical purposes, holding that the assessee deserved another opportunity to present the necessary documents for its Section 12A application.

The tribunal observed that although the CIT(E) had issued multiple notices, the explanation provided that the lapse occurred due to internal miscommunication while the center was functioning outside the State, could not be ignored. The Tribunal also emphasized that registration under Section 12A is a means for availing exemption under Sections 11 and 12, and denial without giving the assessee a fair chance would cause undue hardship.

Relying on the principle that procedural lapses should not defeat substantive rights where bona fide and genuine explanations exist, the Tribunal remanded the matter back to the CIT(E) with directions to grant the assessee sufficient opportunity to submit documents and be heard before deciding afresh.

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