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Facts
The assessee's application for registration under section 80G was rejected by the CIT(E) due to non-compliance with notices and perceived lack of clarity on the genuineness of its activities. The rejection was based on technical grounds, primarily the alleged late filing of the application and failure to provide requested documents.
Held
The Tribunal restored the matter to the file of the CIT(E) and granted the assessee one final opportunity to submit the required details and documents. The CIT(E) is directed to decide the case afresh after considering the submissions.
Key Issues
Whether the rejection of the 80G registration application on technical grounds without fully appreciating the assessee's explanation and activities was justified, and if a final opportunity should be granted.
Sections Cited
80G, 12A, 11AA(2)
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Income Tax Appellate Tribunal, “B” 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 20.03.2025 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 15.10.2024.
The assessee has raised the following grounds of appeal : “Ground No 1: Rejection of Application on technical reasons without appreciating the genuineness of the activities carried by the Appellant 1.1 The learned CIT Exemptions erred in law in rejecting the application and cancelling the provisional registration granted under clause (iv) of first proviso to section 80G(5) of the Act dated
08. February 2022 as the Appellant did not reply to the final notice dated
04. March 2025 without taking into consideration other documents demonstrating the genuineness of the activities carried out by the Appellant.
1.2 The learned CIT Exemptions erred in law and facts of the case in cancelling the provisional approval granted under clause (iv) of first proviso to section 80G(5) of the Act dated 08 February 2022 by merely concluding that the application was filed after the statutory deadline ie., 30 June 2024 without taking into consideration that the first application filed was within the time line. 1.3 The learned CIT Exemptions erred in law without appreciating the fact that the Appellant had filed the first application in Form 10AB on 18 April 2024, however the same was rejected vide order dated 27 September 2024 for statistical purposes without going into the merits of the case and no adverse inference was drawn against the Appellant. Hence the Appellant reapplied by filing form 10AB on 15 October 2024. 1.4 The learned CIT Exemptions erred in law on a without prejudice basis that the time limit for filing the application was six months before expiry of the provisional registration granted without taking into consideration the CBDT Circular No 7 of 2024 dated 25 April 2024 which categorically extended the due date till 30 June 2024. Ground No 2: Merits of the case 2.1 In the facts and circumstances of the case and in law, the learned CIT(E) erred in rejecting the application for registration without appreciating the evidence and submissions made by the Appellant which establishes the genuineness of its charitable activities and compliance with statutory requirements. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at, the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide this appeal according to law.”
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 28.11.2024 through ITBA portal requesting the assessee to upload certain information/clarification contained therein by 17.12.2024. 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 04.03.2025 duly served via e-portal/email, seeking compliance by 10.03.2025. The said discrepancies are reproduced below : "(i) Kindly furnish evidences claiming expenses on charitable activities such as bills/vouchers/invoices alongwith photographs of charitable activities actually carried out by your trust. (ii) It is seen from your submissions that the date of commencement of your activities is 29/05/1998. Further, as per the copy of order of provisional approval under section 80G(5) 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 08/02/2022. 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)(iv) of the Act, the application for regular approval under section 80G(5)(iv) is required to be filed within 6 months from the date of commencement of activities. Since, your activities were already commenced as on 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 before07/08/2022. However, the present application filed by you is on 15/10/2024 i.e. after the expiry of period allowed under section 80G(5)(iii) of the Act. The extended due date for filing of such application was 30/06/2024 as per CBDT, Circular no 7/2024, dated 25/04/2024. 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. (iii) Without prejudice to the above, it is seen that the date of expiry of provisional approval under section 80G(5) (iv) of the Act in your case is 31/03/2024. 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) (iv) of the Act, the application for regular approval under section 80G(5) (iv) 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. Since, the period of provisional approval was due to expire on 31/03/2024, the present application was required to be filed before 30/09/2023. However, the present application filed by you is on 15/10/2024 i.e. after the expiry of period allowed under clause (iii) of first proviso to section 80G(5) of the Act. 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 submit any explanation to the discrepancies communicated to it, the Ld. CIT(E) presumed that the assessee has nothing to say in the matter. Having been unable to draw any satisfactory conclusion about the genuineness of the activities of the assessee trust and fulfillment of conditions laid down in clause (i) to (v) of section 80G(5) due to non-furnishing of any supporting documents/ evidence despite of giving sufficient opportunity to the assessee, the Ld. CIT(E) proceeded to pass the impugned order rejecting the application of the assessee by observing as under: “7. 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.
8. In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 08/02/2022 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.
The Ld. Counsel for the assessee submitted that the assessee in response to the first notice has filed the various details. However, the assessee could not respond to the second notice issued by the CIT(E) on account of the mistake on the part of the employee of the trust. He submitted that the assessee already been granted registration under section 12A of the Act (page 2 to 4 of the Paper Book refers). He accordingly submitted that in the interest of justice, the assessee should be given an opportunity to substantiate its case by filing the requisite details before the Ld. CIT(E).
The Ld. DR had no objection the above request of the Ld. AR.
We have heard both the sides, perused the order of the Ld. CIT(E) 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 certain discrepancies found from the submissions made by the assessee earlier, for which he rejected the application filed by the assessee for grant of permanent approval under section 80G of the Act and also cancelled the provisional registration granted earlier. It is the submission of the Ld. AR that the non-compliance to the second notice was not intentional but it was due to the mistake of the employee of the trust. It is also his submission that given an opportunity, the assessee is in a position to substantiate its case by filing the requisite details/documents before the Ld. CIT(E) to his satisfaction. Considering the totality of the facts and in the circumstances of the case, we deem it fit and proper in the interest of justice and fair play, to restore the matter 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 and decide the same as per fact and law. The assessee is also hereby directed to submit the details/documents as 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 order accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal of the assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 29th July, 2025.