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Facts
The assessee, Umbrella Foundation, applied for approval under Section 80G of the Income Tax Act. The CIT(Exemptions) rejected the application, holding that the assessee had not commenced substantial activities towards its objects and had not submitted necessary documents.
Held
The Tribunal condoned the delay of 54 days in filing the appeal, finding sufficient cause. The Tribunal remitted the issue of 80G approval back to the CIT(E) for reconsideration, in light of a previous Tribunal order concerning the assessee's registration under Section 12AB, which had indicated that the activities had commenced.
Key Issues
Whether the delay in filing the appeal should be condoned and whether the CIT(E) correctly rejected the 80G approval based on the commencement of activities.
Sections Cited
80G, 253(5), 12AB
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Income Tax Appellate Tribunal, “B’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against the order of the ld. CIT(Exemptions) Bangalore dated 23.12.2024 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-25/1071488263(1) cancelling the approval u/s 80G of the Act of the Income Tax Act, 1961 (in short “The Act”).
In this appeal, the assessee has raised the following grounds of appeal:-
At the outset, there is a delay of 54 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee drew our attention to an application along with an affidavit filed for condonation of delay mentioning the reasons for the delay which are reproduced as below:
We have perused the details filed by the assessee to justify the delay and we are satisfied that there is no malafide intention on the part of the assessee in filing the appeal belatedly before us. It is to be noted that u/s 253(5) of the Act, the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exists a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflect sufficient and reasonable cause on the part of the assessee in not filing this appeal within the prescribed time.
Umbrella Foundation, Bangalore Page 6 of 12 4.1 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
(2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
4.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to Umbrella Foundation, Bangalore Page 7 of 12 legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.
4.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.
4.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 54 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the Umbrella Foundation, Bangalore Page 8 of 12 substantial justice, the delay of 54 days has to be condoned and accordingly we condone the delay and admit the appeal for adjudication.
Now brief facts of the case are that on receipt of application in form 10AB dated 26.06.2024 for approval u/s 80G(5) of the Act, the ld. CIT(E) granted opportunity of being heard to the assessee vide notice dated 4.11.2024, wherein the assessee was required to appear before the ld. CIT(E), either in person or through an authorized representative along with the documents/details.
5.1 The assessee’s CA attended hearing on 13.11.2024 and submitted the details. The ld. CIT(E) on perusal of the financials for the year ending 31.3.2022, 31.3.2023 and 31.3.2024 noticed that the assessee has not made any substantial expenditure towards the objects of the assessee and thus held that the assessee has not commenced its activity towards the attainment of the objects of the assessee. 5.2 Further, the ld. CIT(E) observed that the assessee has not received donations in last three years and there is also no expenses & accordingly concluded that the assessee has not commenced its activities and hence, the application in form no. 10AB dated 26/06/2024 filed for the approval u/s 80G(5) of the Act was rejected and the approval was cancelled.
Aggrieved by the order of the ld. CIT(E) dated 23/12/2024, the assessee has filed the present appeal before this Tribunal.
Before us, the ld. A.R. of the assessee submitted that the observations of the ld. CIT(E) that assessee has not commenced its activity are factually incorrect. Further the ld. AR of the assessee drew our attention to the order of this Tribunal in Foundation, Bangalore Page 9 of 12 148/Bang/2025 dated 19/03/2025 in case of the same assessee for registration u/s 12AB of the Act in which the Tribunal prima facie held that the activities of the assessee were duly commenced and accordingly remit the matter to the file of ld. CIT(E) & direct the ld. CIT(E) to consider the application along with documentary evidences afresh.
Ld. D.R. on the other hand relied on the order of ld. CIT(E) and submitted that the income & expenditure a/c reproduced by the ld. CIT(E) in her Order for the year ended 31/03/2022, 31/03/2023, 31/03/2024 as well as Provisional Income & expenditure A/c for the period ending 12/11/2024 clearly demonstrates that the assessee has not undertaken any charitable activities.
We have heard the rival submissions and perused the materials available on record. We are of the considered opinion that for the purpose of granting approval u/s 80G of the Act, the relevant section is sub-section (5). The ld. Commissioner(Exemptions) after receiving the application for granting approval u/s 80G of the Act shall call for such document or information and make such enquiry as he/she thinks necessary in order to satisfy himself/herself about the genuineness of the activity of such institution or fund and the fulfillment of all the conditions laid down in clause (i) to (v) as follows:
(5) This section applies to donations to any institution or fund referred to in sub- clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfills the following conditions, namely:-
(i)where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 [* * *] [ Certain words omitted by Act 21 of 1998, Section 29 (w.e.f. 1.4.1999).] [* * *] [ Certain words omitted by Act 20 of 2002, Section 30 (w.e.f. 1.4.2003).] [or clause (23-AA) or clause (23-C)] [ Substituted by Act 11 of 1987, Section 35, for " or clause (23-C)" (w.e.f. 1.4.1988).] of section 10:
[Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if- (a)the institution or fund maintains separate books of account in respect of such business; (b)the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c)the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business; (ii)the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii)the institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv)the institution or fund maintains regular accounts of its receipts and expenditure; ][*] [ The word " and" omitted by Act 32 of 1994, Section 24 (w.e.f. 1.4.1994).] (v)[ the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law, ] [Inserted by Act 11 of 1983, Section 39 (w.e.f. 1.4.1984).][* * *] [ Certain words omitted by Act 20 of 2002, Section 30 (w.e.f. 1.4.2003).][or is an institution financed wholly or in part by the Government or a local authority; ] [Inserted by Act 11 of 1983, Section 39 (w.e.f. 1.4.1984).][*] [ The word " and" omitted by Act 33 of 2009, Section 33 (w.e.f. 1.4.2009).] 9.1 In view of the above we are of the considered opinion that at the time of granting of approval u/s 80G of the Act, the authority has to satisfy herself that the chartable institution is established in India for charitable purposes and the activities of the assessee trust are genuine and the assessee trust also fulfilled all the conditions as mentioned above. On going through the order of the ld. CIT(E) we Umbrella Foundation, Bangalore Page 11 of 12 take a note of the fact that the sole reason for rejecting the application for approval u/s 80G(5) of the Act is that the assessee has not made any substantial expenditure towards the objects of the assessee & thus the assessee has not commenced its activity towards the attainment of the objects of the assessee.
9.2 However on going through the order of this Tribunal in dated 19/03/2025 in case of the same assessee for registration u/s 12AB of the Act in which the Tribunal prima facie held that the activities of the assessee were duly commenced and accordingly remitted the matter to the file of ld. CIT(E) with a direction to consider the application for registration u/s 12AB of the Act along with documentary evidences afresh.
9.3 We are of the considered opinion that since the sole ground for rejection of application for approval u/s 80G(5) of the Act is non- commencement of activity towards the attainment of the objects of the assessee trust & this Tribunal in dated 19/03/2025 had already held that the activities of the assessee were duly commenced & remitted the matter of registration u/s 12AB of the Act to the file of ld. CIT(E) & direct the ld. CIT(E) to consider the application along with documentary evidences afresh & therefore we are also remitting the present issue of 80G(5) of the Act to the file of ld. CIT(E) to examine consequent to the status of the registration u/s 12AB of the Act. Therefore, the issue in this appeal is also restored to the file of the ld. CIT(E). Needless to say, a reasonable opportunity of being heard must be granted to the assessee. It is ordered accordingly.
Umbrella Foundation, Bangalore Page 12 of 12 10. In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 3rd Sept, 2025