SURYA KIRAN HEALTH & EDUCATIONAL TRUST,MUMBAI vs. CIT(EXEMPTIONS), MUMBAI

The assessee is a Charitable Trust registered under Bombay Public Trusts Act, 1950 with Charity Commissioner, Mumbai. The assessee is registered under section 12A of the Act up to 31.03.2026 and is having provisional approval under section 80G granted up to 31.03.2024. The assessee made the application for final approval under section 80G on 10.05.2024 and the said application was rejected on ground that the application is made under the wrong section 80G(5)(iv)(B). The assessee subsequently submitted the second application on 18.10.2024 under correct section 80G(5)(iii) of the Act. The ld. CIT(E) has also refused to condone the delay stating that the assessee has not shown a reasonable cause for delay in filing the application. The CIT(A) further stated that the assessee has not filed any evidence of actual activity being carried on by the assessee. The assessee is in appeal before the Tribunal against the order of the CIT(E).

We heard the parties and perused the material on record. The assessee is a Charitable Trust having registration under section 12A of the Act. The first application made by the assessee for renewal of 80G which was rejected on the ground that the application is made under wrong section. The relevant observation of the CIT(E) in this regard are extracted below:

Under the relevant section 80G(5)(iv)(B) of the Act, in any other case, where activities of the trust or institution have “………. (B) commenced and no income or part thereof the said trust or institution has been excluded from the total income on account of applicability of sub- clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, or section 11 or section 12, for any previous year ending on or before the date of such application, at any previous year ending on or before the date of such application, at any time after the commencement of such activity.”

On verification of the facts and circumstances of the case, it is found that the trust was incorporated on 16.08.2002. Further, the assessee has already claimed exemption by filing ITR-7 for A.Y. 2022-23 & A.Y. 2023-24 i.e. before applying for approval in Form 10AB (Previous Years). 4. As per above mentioned provision of Income Tax Act, the assessee has to file Form 10AB u/s 80G(5)(iv)(B), if the assessee has not claimed exemption in Previous years. Since the assessee has claimed exemption in Previous years, therefore this application u/s 80G is not allowable Further, the assessee is not fulfilling the stipulated conditions prescribed for filing application for approval in Form 10AB.

In conclusion, this application for grant of registration stands rejected.”

Subsequently, the assessee made the second application under the correct section on 18.10.2024. The CIT(E) rejected the said application also on the ground that there was a delay in submitting the application for registration under section 80G according to which the application should have been made at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities. The CIT(E) also held that the assessee has not undertaken any activity. On perusal of the findings of the CIT(E) we notice that the CIT(E) did not condone the delay stating that the rejection of earlier application filed under incorrect sub-clause cannot be construed as a valid reason for delay. We further notice that the CIT(E) has held that commencement of activities is necessary before filing application in Form-10AB and the assessee did not file any proof to check the genuineness of the activities of the assessee. In this regard we notice that the Co-ordinate Bench has considered a similar issue of rejection of 80G application on the ground of incorrect mentioning of section in the case of Sarda Mission Sevasram vs. CIT (ITA No. 994/Kol/2023 dated 31.01.2024) where it has been held that “4. We have heard the rival contentions and gone through the record. In this case, the application of the assessee for final approval u/s 80G of the Act has been rejected because of technical reasons for which the assessee cannot be faulted with. All the facts were before id. CIT (Exemption) when the assessee for the first time applied for the final approval u/s 80G of the Act. Merely, because the assessee out of inadvertence had mentioned another Clause, the same was not an illegality but rather the same was a rectifiable mistake. The approved as a charitable institution u/s 12A as well as 80G of the Act. The assessee duly applied for provisional registration in view of the amended provisions. The same was also granted to the assessee. The next course for the assessee was to apply for the final registration u/s 80G of the Act which was also duly complied by the assessee within the time limit prescribed for the same. However, due to the mistake in mentioning the proper Clause, the assessee was told to withdraw the application and file a fresh application. The assessee filed the fresh application without any delay. However, Id. CIT (Exemption) completely ignored the events which occurred from the date of filing of the application for final approval and leading to the filing of the fresh application because of the technical mistakes. In fact, instead of getting the application withdrawn, Id. CIT (Exemption) was supposed to give opportunity to the assessee to rectify the mistake i.e. the mentioning of the appropriate Clause. Ld. CIT (Exemption) even could have suo-moto passed an order treating the said application under the relevant 'Clause-in' of Section 80G(5) of the Act.

Considering the overall facts and circumstances, the delay in filing the fresh application is, hereby, condoned. It is directed that the application of the assessee for final registration may be treated as filed within the time limit prescribed and the time consumed by the assessee in filing the revised application will not be taken into consideration. The matter is accordingly restored to the file of ld. CIT (Exemption) with a direction that Id. CIT (Exemption) will pass an order on merits irrespective of the delay occurred in filing the fresh application for final approval u/s 80G(5) of the Act.”

From the perusal of the above observations of the coordinate bench we notice that the facts are identical to assessee's case. Therefore we see merit in the submission that the ratio in the above decision is applicable to assessee's case also and accordingly the delay be condoned. From the perusal of the order of the CIT(E) we notice that the assessee has submitted a response to the notice issued by the CIT(E) explaining only the reason for delay in filing the second application under section 80G and that the assessee has not filed any details with regard query on the activities carried on by the assessee. We also notice that the CIT(E) has not examined the eligibility of the assessee on merits stating that the assessee has not filed any further details. Considering these facts peculiar to assessee's case and in opportunity to the assessee. Accordingly the delay in filing the application before the ld. CIT(E) stands condoned. We revert the application back to the CIT(E) to consider the application for registration under section 80G on merits by calling for relevant details and decide it in accordance with law. The assessee is directed to file all the required details as may be called by the CIT(E) and cooperate with the proceedings.

In result, appeal filed by the assessee is allowed for statistical purposes.