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Facts
The assessee filed an application for approval under section 80G(5) of the Income Tax Act, 1961. The CIT(E) rejected the application for being filed beyond the prescribed time limit and also cancelled the provisional approval previously granted. The assessee failed to provide explanations to the show-cause notices issued by the CIT(E).
Held
The Tribunal restored the issue to the file of the CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case. The assessee is directed to submit details as called for by the CIT(E) without seeking adjournment.
Key Issues
Whether the CIT(E) was justified in rejecting the application for approval under Section 80G(5) solely on the ground of limitation without affording a proper opportunity to the assessee to explain the discrepancies.
Sections Cited
80G(5), 143(3), 10(23C), 12A, 35(1)(ii)/(üa)/(iii), 36A, 13(3), 119
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.K. PANDA & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 12.02.2025 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed before him in Form No. 10AB under clause (iii) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 (the “Act”) on 26.09.2024.
The assessee has raised the following grounds of appeal :
1. On the facts and circumstances of the case and in law, the LD. CIT Exemption in rejecting the Application of Approval u/s 80G(5) of the Income Tax Act.
2. On the facts and circumstances of the case and in law, the LD. CIT Exemption in rejecting the Application of Approval u/s 80G(5) of the Income Tax Act without providing reasonable opportunity.
3. The appellant humbly prays that Ld. CIT Exemption may please be directed to grant Approval u/s 80G(5) and relief may please be granted. The appellant craves leave to add, to alter, to amend, to amplify, to delete, or to revise any of the ground on or before the hearing.”
3. The brief facts are that on receipt of the assessee’s application filed in Form No. 10AB under clause (iii) of first proviso to section 80G(5) of the Act along with annexures thereto, with a view to verify the genuineness of the activities of the assessee and fulfillment of the conditions laid down in clauses (i) to (v) of section 80G(5) of the Act, the Ld. CIT(E) issued notice on 06.11.2024 through ITBA portal requesting the assessee to upload certain information/ clarification such as date of commencement of activity, date of expiry of provisional approval, details of any other law applicable for achievement of objectives and the proof of compliance of said law, proof of identity of main trustee/managing trustees/directors/president/secretary of the institution, year-wise list of donations received, note on activities carried out etc. The compliance was sought by 21.11.2024. On verification of the details submitted by the assessee, the Ld. CIT(E) noticed various discrepancies which were communicated vide issue of another notice dated 29.01.2025 duly served via e- portal/email, seeking compliance by 05.02.2025. The said discrepancies are reproduced below : “(i) As regard, the educational activities, please furnish the following: (i) Details of various institutes/schools/colleges run by the trust with granted non- granted status. (ii) Copies of affiliation certificates. (i) Details of institute wise fee structure, admission policy in respect of each of the institute and grant sanction letter in case of granted institution. (iv) Institute-wise Income & Expenditure and Receipt & Payment account for the last 3 years. (v) Complete Financial statements for the last 3 years with all Schedules / Annexures. (vi) Copies of Audit report for the last 3 years. (vii) Details of admissions given to students from financially weaker sections of the society with evidence and RTE norms followed with evidence. (viii) Institute wise details of ownership of land and building for with evidence. If rented, copy of rent agreement and proof of ownership of the owner. (ix) Details as to whether the land is owned by the persons covered u/s 13(3) of the Act. (x) Institute wise details of immovable properties and building constructions appearing in balance sheet. (xi) Detailed LIST of salary payments to teaching and non-teaching staff along with TDS made, PF deducted, Profession Tax Deducted and copies of TDS returns & Profession Tax Returns filed for the last 3 years. (xii) Year-wise details of addition to building fund and other funds with evidence of its source. (xiii) Complete details of loans raised, if any, for the last 3 years and its utilization for each of the institution / project along with copy of permission under section 36A of the Maharashtra Public Trust Act, 1950 from the Charity Commissioner. Please also ensure that the documents /information called for vide the earlier notice(s) are furnished. (ii) Without prejudice to the above, it is seen from your reply to notice dated 06/11/2024 that the date of commencement of your activities is 25/10/1966. Further, as per the copy of order of provisional approval under section 80G(5)(vi) read with clause (iv) of first proviso to section 80G(5) of the Income Tax Act, 1961 submitted by you, the date of provisional approval is 01/12/2022. As per the provisions of clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961, where a trust or institution has been provisionally approved under section 80G(5)(vi) of the Act, the application for regular approval under section 80G(5)(vi) is required to be filed within 6 months from the date of commencement of activities. Since, your activities were already commenced before the date of provisional approval, you were required to file the present application within 6 months from the date of provisional approval i.e. on or before 30/06/2023. The extended timelimit as per CBDT Circular No. 7 of 2024 was 30/06/2024, whereas you have filed the present application on 26/09/2024. Thus, it is seen that you have not filed the present application within the time limit allowed under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961. You are therefore, requested to show-cause as to why your application should not be rejected and the registration granted should not be cancelled."
3.1 As the assessee failed to furnish any explanation to the discrepancies communicated to it vide the above show cause notice / second notice, the Ld. CIT(E) presumed that the assessee has nothing to say in the matter and consequently, having been unable to draw any satisfactory conclusion about the genuineness of the activities of the trust and fulfillment of conditions laid down under section 8G(5((i) to (v) of the Act as well as for the reason that the application is barred by limitation, the Ld. CIT(E) proceeded to pass the impugned order rejecting the assessee’s application without going into the merits of the case and also cancelled the provisional approval earlier granted u/s 80G(5) of the Act by observing as under : “4. Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of sub- clause (a) of clause (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 as well as the provisions of Rule 11AA(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is unable to draw any satisfactory conclusion about the genuineness of activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act.
Without prejudice to the above, as per the provisions of clause (iii) of first proviso to section 80G(5) of the Act, where a trust or institution has been provisionally approved under section 80G(5)(vi) of the Act, the application for regular approval under section 80G(5)(vi) is required to be filed, at least six months prior to expiry of period of the provisional approval or within six months from the date of commencement of activities, whichever is earlier. As per the copy of form No.10AC, the date of provisional approval under section 80G(5)(vi) in this case is 01/12/2022. 5.1 Considering the above provisions, the assessee was specifically requested vide the initial notice itself to inform the date of expiry of provisional approval as well as the date of commencement of activities. The date of commencement of activities as per assessee's submission through e-portal is 25/10/1966. Therefore, it is seen that the activities of the assessee were commenced before obtaining provisional approval. However, if the actual date of commencement of activity in this case is considered for computation of limitation period for filing application under clause (iii) of first proviso to section 80G(5) of the Act, the assessee would never be eligible to file any such application. 5.2 For the sake of argument, take a hypothetical case of an assessee whose activities were commenced on 01/05/2022 but makes an application under clause (iv) of first proviso to section 80G(5) for provisional approval under section 80G(5) (vi) of the Act on 01/12/2022 i.e. after commencement of activities and gets such provisional approval on 15/12/2022. Such assessee would be required to file an application under clause (iii) of first proviso to section 80G(5) for regular approval under section 80G(5)(vi) of the Act on or before 30/11/2022 i.e. within six months from the date of commencement of activities. In such a case the assessee would be required to file an application for regular approval before making an application for provisional approval under section 80G(5)(vi) of the Act. However, the Statute does not permit for making application directly for regular approval. The assessee has to mandatorily get provisionally approved first, for being eligible for making any application for regular approval. The only remedy for such assessee would be to file an application for provisional approval before
commencement of activities and then only the assessee can observe the further timeline of clause (iii) of first proviso to section 80G(5) of the Act. In such a situation any assessee who misses the bus or an assessee who has commenced its activities before the implementation of newly inserted provisions of Law in this regard, will not get any approval under section 80G(5)(vi) of the Act. This definitely is not the purpose of bringing-in the new provisions for registration / approval of a charitable institution in the Statute. Considering the above, it is but natural that in case of an assessee who has already commenced its activities and intends to get approved under section 80G(5)(vi) of the Act, has to first get provisionally approved under section 80G(5)(vi) by making an application under clause (iv) of first proviso to section 80G(5) of the Act and then has to apply under clause (iii) of first proviso to section 80G(5) of the Act, for regular approval under section 80G(5)(vi) within 6 months from the date of provisional approval. In such a case, the date of commencement of activity would naturally be the date of provisional approval for computation of limitation period of six months for making an application under clause (iii) of first proviso to section 80G(5) of the Act. In view of the above, in the instant case, the limitation period for making application under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961 is required to be computed from the date of provisional approval. 5.3 Considering the above facts, it is seen that the assessee had commenced its activities before the date of provisional approval. Since, the activities of the assessee were already commenced before the date of provisional approval, the assessee was required to file the present application within 6 months from the date of provisional approval i.e. on or before 30/06/2023. The extended due date for filing of such application was 30/06/2023 as per CBDT, Circular No.7/2024, dated 25/04/2024. Whereas the present application filed by the assessee is on 26/09/2024, i.e. beyond the time limit allowed under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961. 5.4 The assessee was therefore requested vide the notice dated 29/01/2025 to show cause as to why the application should not be rejected and as to why the approval should not be cancelled. 5.5 However, the assessee has not furnished any reply to the show-cause notice. In absence of any reply / explanation from the assessee, it is presumed that the assessee has nothing to say in the matter. 5.6 From the provisions of clause (iii) of first proviso to section 80G(5) of the Act, it is evident that the time limits prescribed therein are mandatory and the Commissioner of Income Tax has no power to condone the delay in filing application in Form No.10AB. The said legal position further gets fortified by the fact that the CBDT on multiple occasions had extended the time limit in filing the application in Form No.10A and/or From No.10AB as under: (a) The CBDT vide Circular No.12 of 2021 dated 25/06/2021 in exercise of its power under section 119 of the Act, provided relaxation for various compliances, including making application under section 10(23C), 80G(5)(vi), 35(1)(ii)/(iia)/(iii) and 80G of the Act in Form No.10A /Form No.10AB, for approval / provisional approval /intimation / approval / provisional approval of Trusts / Institutions /Research Associations etc., which were required to be made on or before 30th June 2021 was allowed to be made / filed on or before 31st August 2021. (b) Thereafter, the CBDT vide Circular No.16 of 2021 dated 29/08/2021, further extended the date of filing of Form No.10A under section 10(23C), 12A, 35(1)(ii) / (iia) / (iii) or 80G, which was required to be filed on or before 30th June 2021 upto 31st March 2022 and similarly for application for approval or approval under section 10(23C), 12A or 80G of the Act in Form No.10AB, for which the last date for filing falls on or before 28th February, 2022 up to 31st March, 2022. (c) Thereafter, once again the CBDT vide Circular No.8/2022 dated 31/03/2022 on consideration of difficulties in electronic filing of Form No.10AB as stipulated in Rule 2C or 11AA or 17A of the Income Tax Rules, 1962, stipulated that 'The application for approval or approval under section 10(23C), 12A or 80G of the Act, in Form No.10AB, for which the last date for filing falls on or before 29th September, may be filed on or before 30th September, 2022'. (d) Thereafter, once again the CBDT vide Circular No.6/2023 dated 24/05/2023, further extended the date of filing of Form No.10A in case of an application under clause (i) of the first proviso to clause (23C) of section 10 or under sub-clause (i) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5)of section 80G of the Act, till 30/09/2023 where the due date for making such application has expired prior to such date; and Form No.10AB, in case of an application under clause (iii) of the first proviso to clause (23C) of section 10 or under sub-clause (iii) of clause (ac) of sub- section (1) section 12A of the Act, till 30/09/2023 where the due date for making such application has expired prior to such date. 5.7 It is evident from the above that the time limit prescribed under clause (iii) of first proviso to section 80G(5) of the Act for filing Form No.10A and Form No.10AB, as the case may be, is mandatory and therefore, after considering the hardship to the assessee the CBDT extended the said time limit on multiple occasions, for filing Form No.10A and Form No.10AB, under section 119 of the Act, vide above referred Circulars. As per above referred CBDT Circular No.8/2022, the applicant / assessee, whose last date for filing Form No.10AB for approval /approval under section 10(23C) or 12A or 80G(5) was falling on or before 29th September, 2022, was extended upto 30th September, 2022. Thereafter, there was no further extension for delay in filing Form No. 10AB was granted by the CBDT, till a new Circular dated 24/05/2023 is issued, and the same was evident from CBDT Circular No.22 of 2022 dated 01/11/2022, through which the CBDT extended the time limit for filing application in Form No.10A under various sections made therein, upto 25/11/2022, and in said Circular No.22 of 2022, no further extension of time was granted for filing Form No.10AB. It is also evident from the Circular No.6/2023, through which the CBDT has extended the time limit for filing of application in form No. 10A under various section, upto 30/09/2023 and also extended the time limit for filing of application in form No.10AB, only in case of application under clause (iii) of first proviso to clause (23C) of section 10 and under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act, up to 30/09/2023. Thus, no further extension of time has been granted for application under clause (iii) of first proviso to sub-section (5) of section 80G of the Act vide the said Circular dated 24/05/2023. 5.8 From the above, it is evident that the present application filed in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act, has not been filed within the time limit prescribed therein and therefore the same is liable to be rejected, without going into the merits. Reliance is also placed on the decision of the Hon'ble Kolkata Tribunal in the case of Bishnupur Public Education Institute, reported in 139 taxmann.com 121, wherein the Hon'ble Tribunal while adjudicating the issue of similar provisions of due date under section 10(23C) of the Act, after placing reliance on various decisions of the Hon'ble Supreme Court and that of Hon'ble High Court has held as under: '5. The Hon'ble Madras High Court in the case of All Angels Educational Society (supra) while considering the issue whether the Id. CIT (Exemption) has power to condone the delay in filing application for grant of approval under section 10(23C) or not, has considered the judgments of Hon'ble Supreme Court in the case of State of U.P v. Harish Chandra AIR 1996 SC 2173 as well as Union of India v. Kirloskar Pneumatic Co. Ltd. 1996 taxmann.com 575 (SC) and held that where there is no provision to empower the statutory authority to condone the delay, than the authority cannot condoned. The finding of the Hon'ble Court in Paragraphs no. 15 & 16 worth to note, which read as under :- '15. However, considering the legal position that there is no power to condone the delay in filing an application under section 10(23C) of the Act, this Court is not inclined to exercise its extraordinary jurisdiction to condone the delay. However, this Court is inclined to give appropriate direction to the respondent to consider the petitioner's application as an application for the subsequent assessment year, namely, 2013-2014 in accordance with law. Such direction is issued considering the peculiar facts and circumstances of the case and that the petitioner could not have made an application for the subsequent assessment year 2013-2014, since their application for assessment year 2012- 2013 was still pending consideration and the impugned order came to be passed only on 13-11-2013. The respondent is at liberty to consider the amended objectives of the petitioner Trust.
Accordingly, the writ petition is partly allowed and the finding rendered by the respondent that the petitioner's application cannot be considered as the same is time barred is affirmed and the finding with regard to objectives of the Society by respondent holding that the Society cannot be said to be solely for education purpose is set aside. Consequently, the matter is remanded back to the respondent for fresh consideration and the petitioner's application is directed to be considered for the assessment year 2013-2014 in accordance with law and while doing so, may consider the amendments made to the objectives of the petitioner Trust. No Costs. M.P. No. 1 of 2014 is closed.' 6. Similar is the view of Hon'ble Andhra Pradesh High Court propounded in Aurora Educational Society case (supra). The Hon'ble Orissa High Court has also considered this aspect in the case of Roland Educational & Charitable Trust (supra). The concluding paragraph of the judgment is worth to note in this aspect, which read as under :- 'Be that as it may, we are here concerned whether in the absence of any statutory provision to condone the delay in presenting the application under section 10(23C) (vi), the Chief Commissioner of Income-tax can exercise any such power'.
7. The adjudicating authorities under the Income-tax Act are quasi judicial authorities. They can grant approval with retrospective effect if such mechanism is provided in the Act. There is no such provision nor there is any power to condone the delay after considering the reasonable reasons. A reasonable cause can be taken into cognizance for condoning the delay, if such provision is provided in the Act while considering any issue for adjudication. Therefore, considering the above proposition, we are of the view that ld. CIT (Exemption) has rightly rejected the application of the assessee for grant of approval under section 10(23C)(vi) of the Income-tax Act. All these three appeals are rejected.
In the result, all the appeals of the assessee are dismissed.' 5.9 In view of the above, the present application filed in Form No.10AB under clause (iii) of first proviso to section 80G(5) of the Act is liable to be rejected without going into the merits since the assessee has not filed the present application within the time limit allowed under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961.
6. In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 01/12/2022 under clause (iv) for first proviso to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.”
Aggrieved, the assessee is in appeal before the Tribunal and all the grounds of appeal relate thereto.
5. The Ld. Counsel for the assessee submitted that the assessee in response to the initial notice has filed the various details. However, the assessee could not respond to the second notice issued by the Ld. CIT(E) because the concerned employee of the trust who was looking after this matter was on leave during the relevant time. Referring to the Paper Book comprising of 327 pages containing the submissions made before the Ld. CIT(E), the Ld. AR further contended that almost all the requisite details/ documents called upon by the Ld. CIT(E) in the second notice pointing out the discrepancies, are already available on record with him. It is also his submission that the impugned application is not barred by limitation as alleged by the Ld. CIT(E) in paragraph 5 of his impugned order. He also submitted that the assessee already has a valid Section 12A registration in place. He accordingly submitted that in the interest of justice, the assessee should be given an opportunity to present and substantiate its case by filing the requisite details before the Ld. CIT(E). He therefore prayed that in the interest of justice an opportunity may be granted to the assessee to substantiate and present its case before the Ld. CIT(E). Accordingly, the matter may be set aside to the file of the Ld. CIT(E) to adjudicate the same afresh on merits after affording an opportunity of being heard to the assessee.
The Ld. DR had no objection the above request of the Ld. AR.
We have heard the Ld. Representatives of the parties and perused the records and the paper book filed by the Ld. AR on behalf of the assessee. It is an admitted fact that the assessee did not respond to the second notice issued by the Ld. CIT(E) in which he has asked for certain details on account of some discrepancies found from the submissions made by the assessee earlier, for which he rejected the application filed by the assessee for grant of registration u/s 80G of the Act and also cancelled the provisional registration granted earlier. It is the submission of the Ld. Counsel for the assessee that the assessee could not respond to the second notice due to the absence of the employee of the trust from his duty at the relevant time. It is also his submission that the assessee has already filed almost the entire details/ documents called for by the Ld. CIT(E) vide his second notice and hence given an opportunity, the assessee is in a position to substantiate and explain its case by filing the requisite details as may be further desired by the Ld. CIT(E) to his satisfaction. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(E) with a direction to grant one final opportunity to the assessee to substantiate its case by filing the requisite details to his satisfaction and decide the issue afresh on merits as per fact and law. The assessee is also hereby directed to submit the details/documents as may be called for by the Ld. CIT(E) on the appointed date without seeking any adjournment under any pretext, failing which the Ld. CIT(E) is at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
8. In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 31st July, 2025.