BANDI RAMESH SEVA SAMASTHA,HYDERABAD vs. CIT (EXEMPTIONS), HYDERABAD

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ITA 655/HYD/2025Status: DisposedITAT Hyderabad07 July 2025AY 2025-26Bench: SHRI RAVISH SOOD (Judicial Member), SHRI MADHUSUDAN SAWDIA (Accountant Member)8 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found the assessee's explanation for the delay, stemming from a bona fide misinterpretation of the law due to its complexity, plausible. It also noted that the CIT(E) rejected the application without granting a personal hearing, which violates principles of natural justice. Therefore, the Tribunal restored the matter to the file of the CIT(E) with a direction to re-examine the application afresh, consider the reasons for the delay, and provide the assessee an effective opportunity of being heard.

What were the facts?

The assessee, a charitable trust, obtained provisional registration under Section 12A(1)(ac)(vi) and subsequently applied for final registration under Section 12A(1)(ac)(iii). The application for final registration was filed on 29.09.2024, which was beyond the statutory six-month time limit from the commencement of activities (due date 29.07.2023), even after considering a CBDT extension till 30.06.2024. The Ld. CIT(E) rejected the application due to this delay, allegedly without providing the assessee an opportunity of being heard.

What were the issues?

Whether the CIT(E) was justified in rejecting the application for final registration under Section 12A(1)(ac)(iii) solely based on a filing delay, and whether the rejection without an opportunity of being heard violated natural justice.

Which sections of the Income-tax Act were involved?

Section 12A(1)(ac)(vi),Section 12A(1)(ac)(iii),Section 80G

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Hyderabad ‘A’ Bench, Hyderabad

Before: SHRI RAVISH SOOD & SHRI MADHUSUDAN SAWDIA

Hearing: 03/07/2025

आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M.: These two appeals are filed by M/s. Bandi Ramesh Seva Samastha (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Exemptions), Hyderabad (“Ld. CIT(E)”), dated 17.03.2025 & 13.03.2025 for the A.Y. 2025-26 respectively. Since these appeals belong to the same assessee and issues are identical, they are heard together and one consolidated order is being passed for the sake of convenience and brevity.

as lead appeal. The assessee has raised the following grounds of appeal :

1.

“ 1. The Rejection order dated 17-03-2025 in Form 10AD of the Income- tax Act, 1961 is erroneous and contrary to law and facts of the case and devoid of any merit.

2.

The CIT(E), Hyderabad failed to note that the amendments in Finance Act 2020 were introduced to simplify the procedure of registration of charitable trusts/Institutions and the amendments cannot be interpreted in a way that is prejudicial to the Trust/Institutions.

3. The CIT(E), Hyderabad failed to issue show cause notice and provide opportunity of being heard regarding delay in filing application before rejecting it and thereby violating principles of natural justice.

4.

The CIT(E), Hyderabad failed to consider the submission made regarding the objectives of the trust and instead focused only on technical aspects, the CIT (E), Hyderabad should have looked at the entire situation. The Supreme Court has ruled that when there is a choice between doing what is fair and just versus strictly following technical rules, the court should prioritize fairness. The court made it clear that no one should benefit from an unfair situation due to a delay that wasn't intentional.

5.

The CIT(E), Hyderabad failed to note that there is no specific violation by the appellant and complied with all other requirements/conditions for obtaining registration under section 80G of the Act.

6. For the above and such other grounds that may be raised at the time of hearing, it is respectfully submitted that the appeal be allowed and suitable directions be given to the CIT(E), Hyderabad to allow the claim of the Appellant.”

3.

The brief facts of the case are that the assessee, is a charitable trust registered with the Registrar of Trusts on 30.01.2023 with objectives including relief of the poor, education, and medical relief. The assessee obtained provisional registration under section 12A(1)(ac)(vi) of the Income Tax Act, 1961 (“the Act”), by filing Form no.10A on 13.02.2023, which was approved via Form no.10AC on 28.02.2023, granting provisional registration from A.Y. 2023–24 to A.Y. 2025–26. Subsequently, the assessee filed an application for final registration under section 12A(1)(ac)(iii) of the Act in Form no.10AB on 29.09.2024, which was beyond the statutory time limit of 6 months from commencement of activities (which began on 30.01.2023) — i.e., the due date being 29.07.2023. The Ld. CIT(E) rejected the Form no.10AB application vide order dated 13.03.2025, holding that the application was filed beyond the extended time limit (which was till 30.06.2024, as per CBDT Circular No. 7/2024 dated 25.04.2024), and hence not maintainable.

4. Aggrieved with the rejection order of the Ld. CIT(E), the assessee is in appeal before the Tribunal. The Ld. AR submitted that, the assessee is a charitable trust registered with the Registrar of Trusts on 30.01.2023 with objectives including relief of the poor, education, and medical relief. The assessee obtained provisional registration under section 12A(1)(ac)(vi) of the Act by filing Form no.10A on 13.02.2023, which was approved via Form no.10AC on 28.02.2023, granting provisional registration from A.Y. 2023–24 to A.Y. 2025– 26. Subsequently, the assessee filed an application for final registration under section 12A(1)(ac)(iii) of the Act in Form no.10AB on 29.09.2024, which was beyond the statutory time limit of 6 months from commencement of activities (which began on 30.01.2023) — i.e., the due date being 29.07.2023. The assessee, under a bona fide belief, construed that the filing was to be done at least 6 months before the expiry of the provisional registration period. The department issued notices dated 03.12.2024 and 07.02.2025 in connection with the delay. The assessee replied on 03.01.2025 and 22.02.2025. However, the CIT(E), Hyderabad, rejected the Form no.10AB application via Form no.10AD vide order dated 13.03.2025, holding that the application was filed beyond the extended time limit (which was till 30.06.2024, as per CBDT Circular No. 7/2024 dated 25.04.2024), and hence not maintainable. The Ld. AR further submitted that no opportunity of being heard was granted to the assessee before rejecting the application. Hence, the Ld. AR prayed before the bench for grant of one more opportunity to the assessee to prosecute its case on merits. Accordingly, the Ld. AR requested for setting aside of the issue to the file of Ld. CIT(E) to adjudicate on merits.

5. Per contra, the Learned Department Representative (“Ld. DR”) relying on the order of Ld. CIT(E), submitted that the assessee could not apply for the final registration u/s. 12A(1)(ac)(iii) of the Act within the stipulated time period. Therefore, there is no infirmity in the order of Ld. CIT(E) in rejecting the application of the assessee. Finally, the Ld. DR prayed before the bench to dismiss the appeal of the assessee.

6.

We have heard the rival submissions and also gone through the record in the light of the submissions made on either side. It is an admitted position that the assessee commenced its activities on 30.01.2023, and accordingly, under clause (iii) of section 12A(1)(ac) of the Act, the assessee was required to file Form no.10AB for final registration within six months from the date of commencement of activities, i.e. on or before 29.07.2023. Although the CBDT, vide Circular No. 7/2024 dated 25.04.2024, extended the time for filing Form nos. 10A/10AB to 30.06.2024, the assessee filed the form only on 29.09.2024, i.e., with a delay of approximately 3 months. However, the explanation provided by the assessee that the delay was due to a bona fide misinterpretation of the law, where it understood the due date as “six months prior to the expiry of the provisional registration” instead of “six months from the commencement of activities” appears to be plausible in view of the complexity introduced by multiple limbs of clause (ac) to section 12A(1) of the Act. As submitted by the Ld. AR that the CIT (E) rejected the application without granting any opportunity of personal hearing, which is contrary to principles of natural justice. Accordingly, we are of the considered view that the matter deserves to be restored to the file of CIT (E) with a direction to examine the application afresh, taking into account the reasons for delay and giving the assessee an effective opportunity of being heard, both on facts and law.

7.

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

8.

The issues involved in this appeal is identical to the issues involved in the appeals in wherein we have allowed the appeal of the assessee for statistical purposes. Therefore, our discussion and findings in are mutatis mutandis applicable to this appeal also. As the appeal of the assessee in ITA No.656/Hyd/2025 has been allowed, this appeal is also allowed for statistical purposes.

9.

In the result, both the appeals filed by the assessee are allowed for statistical purposes.

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