THE MAHATMA CHARITABLE TRUST,GUNTUR vs. CIT(EXEMPTIONS), HYDERABAD

2 ITA.No.634/Hyd./2025 2. Briefly stated facts of the case are that, the assessee-trust viz., “The Mahatma Charitable Trust” was registered with Registrar of Trusts on 26.11.2004 and commenced it’s activities from the date of registration of the trust. The objects of the assessee-trust are to provide relief to the poor, education, medical relief, preservation of environment and advancement of any other objects of general public utility. The appellant-trust was granted provisional approval by CPC u/sec.80G(5)(iv) of the Income Tax Act, 1961 on 22.06.2022 up- to assessment year 2025-2026. The appellant-trust has started filing it’s returns of income from the assessment year 2015-2016 onwards, within the due date provided u/sec.139(1) of the Act along with Auditors Report in Form 10BB. Thus, the appellant- trust has duly filed it’s return of income and Auditor’s Report from the first year of operation within the due date. The appellant-trust has filed an application in Form 10AB submitting all documents on 29.09.2024 for permanent approval u/sec.80G of the Act, which is 6 months prior to the expiry of period of provisional approval and that, the provisional approval is valid in the case of appellant-trust is till 31.03.2026. The appellant-trust submitted that, the application for permanent approval was submitted on 29.09.2024 duly enclosing all documents i.e., 3 ITA.No.634/Hyd./2025 before 30.09.2024 which is also within the stipulated six months before the expiry of the period of provisional approval which is dated till 31.03.2026. However, the learned CIT(E) rejected the application filed by the assessee in Form 10AB for regular registration u/sec.80G of the Act by observing that, as per the Finance Act, 2020, the assessee should have applied Form 10AB for regular registration u/sec.80G, at least six months before the expiry of provisional registration or within six months from the date of commencement of activities, whichever is earlier. The learned CIT(E) further noted that, the CBDT vide Circular No.7 of 2024, dated 25.04.2024 has extended the time limit for filing of Form 10A/10AB till 30.06.2024. Since the assessee has applied Form 10AB for regular registration u/sec.80G on 29.09.2024 i.e., beyond the time limit prescribed for filing of Form 10AB, the learned CIT(E) rejected the application for regular registration u/sec.80G of the Income Tax Act, 1961, for the assessment year 2025-2026.

Aggrieved by the order of the learned CIT(E), the assessee now, preferred the present appeal before the Tribunal.

Shri P. Vinod, Advocate-Learned Counsel for the Assessee submitted that, the learned CIT(E) has rejected the 4 ITA.No.634/Hyd./2025 application filed by the appellant-trust in Form 10AB seeking for registration u/sec.80G of the Income Tax Act, 1961, without considering the relevant submissions made by the assessee only on the ground that, delay in filing of the application, although, the assessee has explained the reasons for delay in filing the said application. Learned Counsel for the Assessee further referring to various evidences including show cause notice issued by the learned CIT(E) on 03.12.2024 and 17.02.2025 submitted that, the assessee has furnished all the details as called for by the learned CIT(E). However, he has not considered any of the submissions of the assessee while rejecting the application filed by the assessee in Form 10AB. Further, the assessee has also explained reasons for delay in filing the application due to ambiguity in law and also there is no proper assistance from any professional on the issue. However, the said delay is unintentional and because of genuine hardship. Although, the assessee has explained the reasons, the learned CIT(E) has dismissed the application, without giving any reasons. Therefore, he submitted that, the matter may be remanded back to the file of learned CIT(E) to give one more opportunity of hearing to the assessee to explain it’s case.

We have heard both the parties, perused the material on record and the orders of the authorities below. The appellant-trust was established on 26.11.2004 with the main objects of providing relief to the poor, education, medical relief, preservation of environment and advancement of any other objects of general public utility. The appellant-trust has been granted provisional registration from 22.06.2022 up-to assessment year 2025- 2026. The appellant-trust claims to have started it’s activities and also filed relevant return of income for the assessment year 2015-2016 onwards on or before the due date provided u/sec.139(1) of the Income Tax Act, 1961. As per the provisions of sec.12A(1)(ac)(ii) and 80G(5)(iv) of the Income Tax Act, 1961, the appellant is supposed to file application in Form 10AB seeking for permanent registration u/sec.12AB and 80G of the Act, atleast six months before the expiry of the provisional registration or within six months from the date of commencement of the 7 ITA.No.634/Hyd./2025 activities, whichever is earlier. The CBDT has extended the said due date considering the hardship faced by various Trusts/Institutions vide Circular No.7 of 2024 dated 25.04.2024 up-to 30.06.2024. In the present case, the assessee has filed application in Form 10AB on 29.09.2024 which is beyond the due date provided under the Act i.e., within six months from the date of commencement of the activities. However, the application filed by the assessee is atleast six months before the expiry of the provisional registration. The assessee claimed to have explained the reasons for delay in filing of application and as per the submission of the assessee, there is genuine hardship due to ambiguity in law and also improper assistance from the professionals, but, the delay in filing of the application is unintentional and for want of any benefit.

We find that, the law has been amended in the case of trusts for procedure of registration and the same has been amended from time to time which is caused confusion in the minds of the public about the classification of Trust/Institution. Although, the CBDT has issued Circulars 8 ITA.No.634/Hyd./2025 from time to time and explained the procedure to be followed for obtaining registration, but, there is an ambiguity in law, which is difficult to understand by any layman. Therefore, in our considered view, when the assessee has filed it’s application for permanent registration atleast before six months from the expiry of provisional registration, the learned CIT(E) ought to have consider the application filed by the assessee on merits, when the assessee claims to have filed relevant evidences to prove carrying-out charitable activities in accordance with it’s objects. Further, the assessee claims to have filed a petition for condonation of delay in terms of amended provisions which is applicable from 01.10.2024. Therefore, considering the facts and circumstances of the case and also the fact that, the learned CIT(E) has rejected the application filed by the assessee in a routine manner without even considering the explanation for delay in filing of the application and also on merits, in our considered view, the issue needs to be set- aside to the file of learned CIT(E) to give another opportunity of hearing to the appellant-trust. Thus, we set-aside the 9 ITA.No.634/Hyd./2025 order passed by the learned CIT(E) in rejecting the application filed in Form 10AB seeking registration u/sec.12AB and u/sec.80G of the Income Tax Act, 1961 and restore the issues back to the file of learned CIT(E) for fresh consideration. The learned CIT(E) is directed to consider the application filed by the appellant-trust for condonation of delay and also the application filed by the appellant-trust on merits, after considering relevant details submitted by the appellant-trust to justify it’s case.

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