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Facts
The assessee, a charitable trust, was granted provisional approval under Section 80G(5)(iii) and subsequently filed an application for final approval in Form 10AB. The CIT(E) treated the application as non-maintainable due to a delay in filing, cancelling the provisional certificate.
Held
The Tribunal held that the time limitation for filing the application under Section 80G(5) should be treated as directory, not mandatory. The case was restored to the CIT(E) to consider the Form 10AB filed by the assessee.
Key Issues
Whether the delay in filing Form 10AB for final registration under Section 80G is fatal to the application, and if the time limitation is directory or mandatory.
Sections Cited
80G, 10AC, 10AB, 12A, 143(3), 251(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Rajesh Kumar&Shri Pradip Kumar Choubey]
ORDER / आदेश Per Pradip Kumar Choubey, JM: This is the appeal preferred by the assessee against order of Commissioner of Income Tax (Exemption)- Kolkata (hereinafter referred to as the Ld. CIT(A)] dated 27.02.2024.
Brief facts of the case of the assessee is that the assessee has been granted provisional approval u/s 80G(5)(iii) of the Act in form 10AC for period of 24.09.2021 to AY 24-25. Subsequently, an application for approval of the trust u/s 80G(5)(iii) of Assessment Year: NA Parrot Dipankar Charitable Trust. the Act had already been filed and the same is filed on 08.09.2023 by the assessee in Form no. 10AB under Rule 17A. Notice was issued to the assessee with request to furnish detail note and the activities carried out by the assessee as well as certain details/documents. In response to the notice, the assessee submits details. The Ld. CIT(E ) after going over the submission held that the assessee has filed application in form no. 10AB and filing of form 10AB is mandatory and there was no further extension of time for filing form 10AB though from time to time CBDT has extended the time limit for filing application of form no. 10A, hence, the application of the assessee has been treated as non-maintainable and the provisional certificate issued has also been cancelled.
Being aggrieved and dissatisfied the assessee preferred an appeal before us.
It appears from the record that at the time of hearing none appeared on behalf of the assessee but D.R was present and bench has decided to pass order after hearing the D.R. The Ld. D.R submitted that since the assessee did not appear that goes to show that the assessee has not got no interest, so the appeal of the assessee be rejected.
We have gone through the order passed by the Ld. CIT(E ) and also gone through the various judicial pronouncement in this context. There are several judicial pronouncement passed by co-ordinate bench of Kolkata and one of them is that the case of Gyan Bharti Educational Trust vs. ITO in for AY 2022-23 dated 22.11.2024 in which the Co-ordinate Bench has discussed this issue regarding filing of form 10A and as well as form 10AB. The operative part has held thus:
“We have gone through the order of the ld. CIT(A) and facts of the case and find that assessee is a registered charitable Trust. It is also in the order that date of filing return of income for AY 2022-23 was on 07.11.2022 and it is a fact that assessee Trust was required to file Form- 10B by 07.10.2022 whereas the same was filed on 27.10.2022 and in this way there is a delay of 20 days. Ld. CIT(A) in its order has held that the assessee apparently not made any application for the condonation of delay in filing Form-10B belatedly. We have perused the cited decision in the case of Bangarh Educational Welfare Trust vs. ITO (Exemptions) in order dated 02.01.2022 and find that issue of the present case and the cited decisions are the same. In the above decision, the Hon'ble Members of the ITAT has discussed the issue of filing of audit report belatedly and held thus: “12. Now, the second reason for which lower authorities have denied the deduction u/s 11 of the Act is of filing the belated audit report on form 10B of the Act. Now, clause Assessment Year: NA Parrot Dipankar Charitable Trust. (b) of section 12A(1) of the Act provides for a condition that if the income of a trust exceeds a maximum amount which is not chargeable to tax in the previous year the account have to be audited and the person in receipt of such income furnishes the audit report before the specified date. In the case of the assessee, Form No.10B was to be filed and the relevant rule is rule 17B of the Income Tax Rules which provides that the report of audit of the accounts of a trust or institution which is required to be furnished under Clause (b) of section 12A, shall be in Form No.10B.
Now, on perusal of the Form 10B, we notice that the same is required to be submitted electronically, one month prior to the due date of the filing of return of income. Admittedly, in the case in hand, the audit report on form 10B has been uploaded on 30.03.2019 which is even after the date of filing the return of income on 15.11.2018. Now, before us, it has been contended by the Id. counsel for the assessee that filing of audit report is directory in nature and even if report is submitted in time before the conclusion of the assessment proceedings, the same needs to be considered. Though the assessee referred to the various decisions, we find it pertinent to refer to the judgment of the Hon hie Gujarat High Court in the case of Sarvodaya Charitable Trust vs. ITO(Exemption) (supra) wherein Para 32 of the said judgment reads as follows: “32. We may also refer to the decision of this Court in CIT v. Gujarat OU and Allied Industries Ltd. [1993] 201 ITR 325 (Guj), wherein it is held that the provision regarding furnishing of audit report with the return has to be treated as a procedural proviso. It is directory in nature and its substantial compliance would suffice. In that case, the assessee had not produced the audit report along with the return of income but produced the same before the completion of the assessment. This Court took the view that the benefit of exemption should not be denied merely on account of delay in furnishing the same and it is permissible for the assessee to produce the audit report at a later stage either before the Income-tax Officer or before the appellate authority by assigning sufficient cause.
In the above judgment, Hon hie Court has held that filing of audit report is directory in nature and its substantial compliance would suffice. The Id. Departmental Representative failed to place before us any other binding precedents of Hon’ble Jurisdictional High Court or the Hon’ble Apex Court. Therefore, considering the ratio laid down in the Hon’ble Gujarat High Court in the case of Sarvodaya Charitable Trust vs. ITO (Exemption) (supra), we find that though the audit report has been uploaded after the filing of return of income but the said report has been signed by the auditor on 28.10.2018 and the copy of this report is placed at 40-41 of paper book and the date of audit report is prior to the filing of the return of income, therefore, it is presumed that conducting of audit for preparation of audit report is before e-filing of the return of income but as claimed by the assessee due to technical glitches, the report was uploaded after filing the return of income.
Though the Hon hie Court holds that the report should be considered even filed in the course of assessment proceedings, or before in appellate authority, however, we notice that in the instant case, the case of the assessee was not selected for scrutiny assessment and it was mere processing of return by the computer with the set program. Had it been the case of scrutiny proceeding u/s 143(3) of the Act, the case could have been different. The Id. A.O may had an opportunity to go through the audit report. But still when the issue came before Id. CIT{A) who also possesses coterminus power with that of A.O and as per section 251(l)(a) of the Act, the Id. CIT(A) in disposing the appeal against order of assessment has the power to confirm, reduce, enhance or annul the assessment, therefore, though, it was not possible to entertain the audit report while Assessment Year: NA Parrot Dipankar Charitable Trust. processing the return u/s 143(1 )(a) of the Act, but the Id. CIT(A) was well within its power to have entertained the said report and examined the same as could have been done by the A.O.
We, therefore, in the given facts and circumstances and respectfully following the judgment of Hon’ble Gujarat High Court in the case Sarvodaya Charitable Trust vs. ITO (Exemption) (supra) , we are of the considered view that since the case of assessee is for A.Y 2018-19 and CBDT came up with a circular dated 23.04.2019 specially for A.Y 2018-19 providing that return of income to be filed within the time allowed u/s 139 of the Act, the assessee has complied with the conditions provided in sub-clause (b) and (ba) to section 12 and there is no dispute at the end of the revenue authorities that the assessee is carrying on charitable activities, for which it has been granted registration u/s 12A of the Act, the benefit of section 11 and 12 should be given to the assessee and deductions claimed by the assessee are, therefore, allowed. Thus, Ground Nos. 1 to 4 of the assessee are allowed.”
3. Keeping in view the above decision as well as catena of decision passed by several Benches of ITAT, we are in this view that the record of the assessee is sent back to the ld. CIT(A) to consider the case of the assessee that merely delayed filing of Form10B benefit of exemption should not be denied. The case of the assessee restored in the file of CIT(A) to decide it in accordance with law keeping in view of the observation made by us.”
In the present case, the assessee filed an application in clause (iii) first proviso to Sub-section 5 to Section 80G in form no. 10AB. It is not in dispute that the assessee had already been granted for provisional approval in form no. 10AC issued on 21.04.2019 for the period of 24.09.2021 to AY 2024-25. It is pertinent to mention here that time limitation prescribed under the first proviso to section 80G(5) should be treated as a directory and not mandatory. It is further important to mention here that the assessee filed form 10AC for the grant of final registration u/s 80G of the Act on 28.09.2023 within the extended time limit provided by CBDT Circular with respect to final registration of trust u/s 12A in Form no. 10AB i..e. 30.09.2023.
Going over the facts of the case as well as the judicial pronouncement in this context, we hereby allow the appeal of the assessee by restoring the case of the assessee before the Ld. CIT(E ) with a direction to consider the form 10AB filed by the assessee and then pass an order as it deems to be fit in law.