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Facts
The assessee, a charitable trust, filed its application in Form 10AB for regularisation of provisional approval under Section 80G(5) with a delay of 29 days beyond the extended deadline. The delay occurred due to a bona fide belief that a single Form 10AB would suffice for both Section 12A and Section 80G registrations. The CIT(E) rejected the application, stating a lack of statutory power to condone the delay.
Held
The Tribunal acknowledged the assessee's bona fide mistake and emphasised the need for a pragmatic approach to procedural laws to ensure justice. It remitted the case back to the CIT(E) to consider the assessee's condonation petition, allowing an opportunity for the assessee to explain the delay based on principles of natural justice.
Key Issues
Whether the delay in filing Form 10AB for 80G registration due to a bona fide mistake can be condoned by the tax authorities or the Tribunal, balancing the strict interpretation of exemption provisions with the principles of natural justice and a pragmatic approach to procedural compliance.
Sections Cited
143(1)(a), 80G, 80G(5), 80G(5)(iii), 119, 12A, 12AB, 10B(8)
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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SMT. BEENA PILLAI & SHRI OMKARESHWAR CHIDARA
Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 22/01/2025 passed by CIT (Exemption), Mumbai on following grounds of appeal :
Narke Green Foundation Charitable Institution “1. On facts, in circumstances of the case and in law, the learned Commissioner of Income Tax Exemptionerred in rejecting the application of the appellant for regularisation of provisional application in Form 10AB. 2. The appellant craves leave to add, alter, modify or delete the above Grounds of Appeal
.” Brief facts of the case are as under:
2. The assessee is charitable trust and was established with the object to provide Education to students of weaker section. The assessee filed its return of income on 31/03/2018. 2.1 The CPC vide Order dated 16/03/2019 passed intimation under section 143(1)(a) of the IT Act by denying the registration u/s. 80G for belatedly filing Form 10B.
3. On an appeal before the Ld.CIT(A), the disallowance was upheld.
Aggrieved by the order of the Ld.CIT(A), assessee is in appeal before this Tribunal.
4. The only ground raised
by the assessee is against rejection of application made to regularise the provisional approval u/s. 80G(5) of Act. He submitted that, the rejection order was passed as the assessee filed Form 10AB with a delay of 29 days, beyond the last date of extension by the CBDT. In support he placed reliance on the decision of Coordinate Bench Hon’ble Surat Tribunal in case of Swachh Vapi Mission Trust vs. CIT(E) in ITA no. 583/SRT/2023. 4.1 The Ld.AR submitted that, the assessee is regular in complying with provisions of income tax law and timelines. He placed reliance on the Affidavit of Director Mr. Amit Narke to support the inadvertent omission in filing relevant Form 10AB Narke Green Foundation Charitable Institution Ld.AR submitted that, the assessee was under the bonafide belief that one Form 10AB is common to both regularisation under section 12A and section 80G. He submitted that, when Order for Regularisation of Registration under section 12AB was received on 26.06.2024, it was realised by the assessee that similar order under section 80G has not been received due to non filing of separate Form 10AB, Thereafter, assessee applied for filed form 10AB to Regularise the Registration under section 80G, causing delay of 29 days He submitted that the delay was beyond the last date of extension granted by CBDT vide Circular No. F No. 173/25/2024-ITA-I dated 25.04.2024. He submitted that it is due to bona fide reasons, and the same was unintentional and occurred under circumstances narrated in the Affidavit. 4.2 The Ld.AR submitted that, if the delay is not condoned it will adversely affect claim of donors under section 80G of the Income Tax Act, 1961 thereby genuine activities assessee will suffer badly. 4.3 On the contrary, the Ld.DR submitted that, it is only u/s. 119 of the act wherein the CBDT could consider the condonation of delay in filing Form 10B belatedly. Ld.DR filed following WS in support which is reproduced as under:
1. The present appeal filed by the assessee, M/s Narke Green Foundation, arises from the order of the Ld. Commissioner of Income Tax (Exemptions), Mumbai, dated 22.01.2025, rejecting the assessee's application made in Form 10AB for regularization of provisional approval under Section 80G(5) of the Income Tax Act, 1961. The application was rejected on the ground that it was not filed within the time limits prescribed under clause (iii) of the first proviso to Section 80G(5), and that there existed no statutory power with the Ld. CIT(Exemptions) to condone such delay.
The assessee was granted provisional approval under Section 80G(5) of the Act valid up to AY 2024-25. As per clause (iii) of the first proviso to Section 80G(5), where a trust has been provisionally approved, it is mandatorily required to apply for regular registration in Form 10AB either six months before expiry of the provisional registration or within six months from commencement of its activities, whichever is earlier. Therefore, by operation of law, the assessee was required to file Form 10AB for regularization of approval latest by 30.09.2023.
However, the application for regularization was admittedly filed belatedly on 29.07.2024 after even the extended deadline of 30.06.2024 prescribed by CBDT Circular No. 07/2024 dated 25.04.2024. It is most respectfully submitted that while CBDT had extended timelines for certain procedural compliances considering hardship, such extension merely extends the statutory deadlines prescribed under Section 80G(5)(iii). The assessee, having failed to comply with the express requirement of law within the statutory stipulated or extended timeline, was rightly denied approval by the Ld. CIT(Exemptions).
It is also pertinent to highlight that the Hon'ble Supreme Court in the landmark decision in Principal Commissioner of Income-tax v. Wipro Ltd. [2022] 446 ITR 1 (SC) has laid down the principle that when the legislature prescribes a specific mode and time frame for claiming an exemption or benefit under a taxing statute, such requirement is mandatory and cannot be diluted or construed as directory. The Court has further held that exemption provisions must be strictly construed, and non-compliance with procedural conditions disentitles the assessee from claiming such benefit. Applying this settled principle, the time limit prescribed under Section 80G(5)(iii) must be construed as mandatory, and failure to adhere to the same renders the application invalid 5. Further, to support for the Revenue's action also emerges decisively from the judgment of the Hon'ble ITAT Pune Bench in the case of Smt. Mangla Ramniwas Mandhani ABMM Awas Yojana Foundation v. CIT(Exemptions) [2024] 162 taxmann.com 842, (Pune - Trib.), where the Tribunal categorically upheld the rejection of an application filed under clause (iii) of the first proviso to Section 80G(5) on the ground of delay. In that case, although the assessee had filed Form 10AB just two months late, the Tribunal held that neither the Commissioner (Exemptions) nor the Tribunal is empowered to condone such delay, as there is no statutory provision under Section 80G(5) authorizing condonation. The Tribunal reinforced the well-established principle that in absence of legislative intent or express enabling power, procedural timelines under fiscal statutes-particularly in relation to exemption provisions are to be strictly construed. Therefore, this binding decision from a coordinate bench squarely supports the Revenue's stand in the present case, where the assessee filed Form 10AB not only after expiry Narke Green Foundation Charitable Institution of the six-month window but also beyond the outer limit prescribed even under the subsequent CBDT Circular, rendering the application non- maintainable.
The reliance placed by the assessee on its timely compliance in respect of Section 12A application, or on the bona fide belief that 80G(5) application was simultaneously submitted, is irrelevant. Each provision under the Act is governed by its own procedural requirements. It is trite law that a bona fide mistake or inadvertent omission cannot override a statutory limitation, especially when the authority concerned has no statutory discretion to condone delay.
It is further submitted that while the assessee has pleaded that the delay was inadvertent and due to oversight by the assessee while preparing Form 10AB, such explanation is not only an afterthought but also legally untenable. Ignorance or error on part of the assessee cannot justify breach of statutory timelines in the absence of any enabling provision for condonation. The law laid down by Hon'ble Apex Court in Wipro Ltd. (supra) leaves no room for discretionary leniency.
Hence, the rejection of the delayed application u/s 10AB by the Ld. CIT(Exemptions) is not only in consonance with the legislative scheme, but also in line with judicial dicta requiring strict interpretation of exemption provisions. The appeal thus deserves to be dismissed as devoid of legal merit.” He thus relied on the orders passed by authorities below. We have perused the submissions advanced by both sides in the light of records placed before us.
The only issue in this appeal is against the order of Ld.CIT(A) rejecting form 10AB filed by the assessee on 29/07/2024 treating it to be belated. 5.1. It is noted that the timeline prescribed for filing Form No. 10AB for registration u/s.12A/80G was extended to 30/06/2024 by CBDT Circular No.7/2024 dated 25/04/2024, after considering genuine hardship faced by charitable institutions. It is further noted that the CBDT vide notification dated 25/04/2024 it is noted that the assessee in the present facts filed form 12 AB 29/07/2024 thereby causing on a delay of Narke Green Foundation Charitable Institution approximately 29 days particular period that was extended by the CBDT. 5.2 The Ld.CIT(A) observed that due to filing form 10AB belatedly beyond the date extended by the CBDT vide circular no. 7/2024, application stood rejected. We do not find any illegality in the rejection of the application by the Ld. CIT(A). This is because the Ld.CIT(A) do not have power to condone such delays 5.3 Now coming to the practical aspect of hardship faced by the assessee due to the Form 10AB being filed with delay of 29 days even beyond extended time period by the CBDT, it is necessary to consider the circumstances under which such delay happened. The assessee has stated in an affidavit that it was on bonafide belief that form 10AB filed to register provisional registration u/s. 12AB is common for 80G. He submitted that, it is only when the assessee received the registration u/s. 12 AB on 26/06/2024 and 80G stood rejected, the assessee realised the mistake that, it should have filed a separate form in 10AB to requisition the provisional registration received under 80G. 5.4 In our considered opinion the above mistake is bonafide error without there being any malicious intention on the part of the assessee. 5.5 The Ld.DR placed reliance on decision of Hon’ble Supreme Court in case of PCIT vs. Wipro Ltd. (Supra), wherein the court held that, exemption provision must be strictly construed and non compliance with procedural requirement would disentitle the assessee from claiming such benefit. 5.6 On perusal of the above decision it is noted that, the view taken of Hon’ble Supreme Court is in the context of exemptions Narke Green Foundation Charitable Institution claimed by the assessee therein under chapter III of the Act. We refer to the specific observation of Hon’ble Supreme Court wherein Hon’ble Court drew distinction between the exemption provisions under chapter III and deductions under chapter VI-A as under: “11. Now so far as the reliance placed upon the decision of this Court in the case of G.M. Knitting Industries (P.) Ltd. (supra), relied upon by the learned counsel appearing on behalf of the assessee is concerned, section 10B (8) is an exemption provision which cannot be compared with claiming an additional depreciation under section 32(1) (ii-a) of the Act. As per the settled position of law, an assessee claiming exemption has to strictly and literally comply with the exemption provisions. Therefore, the said decision shall not be applicable to the facts of the case on hand, while considering the exemption provisions. Even otherwise, Chapter III and Chapter VIA of the Act operate in different realms and principles of Chapter III, which deals with "incomes which do not form a part of total income", cannot be equated with mechanism provided for deductions in Chapter VIA, which deals with "deductions to be made in computing total income". Therefore, none of the decisions which are relied upon on behalf of the assessee on interpretation of Chapter VIA shall be applicable while considering the claim under section 10B(8) of the IT Act” 5.7 In the present facts of the case is of exemption under chapter VI-A u/s. 80G of the Act. We therefore do not find any assistance to the revenue from the ratio of Hon’ble Supreme Court in the cast of PCIT vs. Wipro Ltd.(supra). 5.8 The Ld.DR also relied on the decision of Hon’ble Pune Bench in case of Smt. Mangla Ramniwas Mandhani ABMM Awas Yojana Foundation v. CIT(Exemptions) (2024) 162 taxmann.com 842. Wherein the Hon’ble Pune Tribunal upheld the rejection of application filed under for the regularising provisional registration u/s.80G on the ground of delay. 5.8.1 On perusal of the decision we note that, the Ld.CIT(E) did not have the benefit of circular no. 7 of 2024 dated 25/04/2024. The Tribunal thereafter upheld rejection by observing that the Narke Green Foundation Charitable Institution legislature did not vest upon the Tribunal the power to condone the delay in filing the forms. 5.9 At this juncture we refer to the pragmatic approach advocated by Justice V.R. Krishna Iyer, wherein he advocated a flexible approach to procedural law, that serve as “handmaid” to justice, and not a hinder it. The Principle of Justice Krishna Iyer emphasised that procedural laws should be tools to facilitate administration of justice various decisions of Hon’ble Supreme Court has emphasised to strike a balance between strict adherence to procedural rules and the need to ensure that justice is not denied due to technicalities. 5.10 We agree with the above preposition observed by Hon'ble Pune Tribunal. However genuine and bonafide reason stated by the assessee cannot be over looked. Further we also note that, flexible and pragmatic approach to such procedural laws is necessary as against recognising a strict adherence to do which could sometime lead to injustice. Hon’ble Supreme Court in plethora of cases always emphasised that while considering delay, one must first ascertain bonafides of the explanation offered by the party seeking condonation. Thereafter there must be sufficient cause which is substantianable based on the genuine reasonable explanation. 5.11 While condoning the delay it is crucial to ensure the party seeking condonation provide genuine explanation for the delay. In present facts of the case, we note that, the reason that caused delay is based on a bonafide belief on behalf of the assessee without there being any malafide intention.
Narke Green Foundation Charitable Institution 6. In our considered opinion assessee must get an opportunity to present its case before the Ld.CIT(E) and to explain the reason that caused the delay. The Ld.CIT(E) shall consider the application of assessee seeking condonation of delay in accordance with law keeping in view to the above principles of natural justice. We therefore remit this appeal to Ld.CIT(E) to consider the condonation petition of assessee in accordance with law Accordingly, the grounds raised by the assessee stands partly allowed for statistical purposes. In the result, the appeal filed by the assessee stands partly allowed for statistical purposes. Order pronounced in the open court on 22/05/2025 Sd/- Sd/- (OMKARESHWAR CHIDARA) (BEENA PILLAI) Accountant Member Judicial Member Mumbai: Dated: 22/05/2025 Poonam Mirashi, Stenographer Copy of the order forwarded to: (1)The Appellant (2) The Respondent (3) The CIT (4) The CIT (Appeals) (5) The DR, I.T.A.T. True Copy By order