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Facts
The assessee filed an application for regular approval under Section 80G(5) of the Income Tax Act. The CIT(E) rejected the application, stating it was filed beyond the prescribed time limit. The assessee had obtained provisional approval and commenced activities before it.
Held
The Tribunal held that the CIT(E) erred in rejecting the application solely on the ground of delay without considering the merits. Following its own coordinate bench decisions, the Tribunal restored the matter to the CIT(E) for fresh adjudication.
Key Issues
Whether the application for regular approval under Section 80G(5) was filed within the prescribed time limit, and if not, whether the delay could be condoned or the matter should be decided on merits.
Sections Cited
80G(5)
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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI MANISH BORAD & MS. ASTHA CHANDRA
आदेश / ORDER
PER ASTHA CHANDRA, JM :
The appeal filed by the assessee is directed against the order dated 03.03.2025 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)”] whereby he rejected the application of the assessee filed on 18.09.2024 before him in Form No. 10AB under sub clause (iii) of first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 (the “Act”).
Facts of the case in brief are that on receipt of assessee’s application along with annexures thereto, with a view to verify the genuineness of the activities of the assessee and fulfillment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act, a notice was issued through ITBA portal on 05.11.2024 requesting the assessee to upload certain information/clarification contained therein. The assessee was requested to submit the compliance by 20.11.2024. The notice was duly served on the assessee through e-portal/email. As no compliance was made, another notice was issued on 16.01.2025 seeking compliance by 23.01.2025 specifying therein certain discrepancies noted by the Ld. CIT(E) which reads as under : "(i) You have furnished a general note on activities. Details like date and place of activity, details of beneficiaries, how they were identified, experts who rendered services, other relevant information has not been furnished. (ii) Major source of income in your case is from fees. Therefore, it appears that the activities are being conducted on commercial basis. Please comment with supporting documents.”
2.1 On verification of the details submitted by the assessee in response to the said notice and the documents submitted along with the application, one more notice was then issued to the assessee on 07.02.2025 seeking compliance by 14.02.2025 in respect of the following discrepancies : "(i) It is seen from your submissions that the date of commencement of your activities is 13/01/2022. 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 24/05/2022 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 before 23/11/2022. 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.”
2.2 In response to the above notice, the assessee furnished its response on 13.02.2025. However, the reply of the assessee was not found to be acceptable by the Ld. CIT(E) and he rejected the application of the assessee by observing in para 7 of his impugned order as under: “7. The assessee furnished its response on 13/02/2025. On the issue of delay the assessee has requested to condone delay in making the application stating that the delay was not intentional but was on account of technical error. The reply of the assessee is duly considered. However, the same is not accepted. As it is seen from the submissions that the activities were already commenced 13/01/2022. 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, the date of provisional approval is 24/05/2022. 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)(iv) is required to be filed within 6 months from the date of commencement of activities. Since, the activities were already commenced as on the date of provisional approval, the trust was required to file the present application within 6 months from the date of provisional approval i.e. on or before 23/11/2022. The extended time limit as per CBDT Circular No. 7 of 2024 was 30/06/2024. However, the present application filed by the trust is on 28/09/2024 i.e. after the expiry of period under clause (iii) of first proviso to section 80G(5) of the Act. Further, 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.”
Aggrieved, the assessee is in appeal before the Tribunal raising the following grounds of appeal :
1. The Ld. CIT Exemption erred in law and on facts in treating the application under Clause (1) of first proviso to sub-section (5) of Section 80G as non-maintainable on the ground of being flied beyond the statutory period as provided in Clause (i) of first proviso to Section 800(5) and thereby rejecting the same without going into the merits.
2. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.”
The Ld. AR, at the outset, submitted that the impugned issue is covered in favour of the assessee by catena of decisions of the Coordinate Bench of the Pune Tribunal wherein the Tribunal under the similar set of facts as that of the present assessee has set aside the matter to the file of the Ld. CIT(E) for denovo adjudication with a direction to treat the application for regular approval as filed within the prescribed time limit. In support thereof, the Ld. AR placed reliance on the following decision(s) of the Pune Tribunal: (i) T B Lulla Charitable Foundation Vs. CIT(Exemption), dated 05.01.2024; (ii) Heritage Youth Foundation Vs. CIT(Exemption), dated 19.06.2024; (ii) Adi Balbhim Vyayam Shala Vs. CIT(Exemption), ITA No. 779/PUN/2024, dated 12.07.2024; and (iv) Mitcon Forum for Social Development Vs. CIT(Exemption), ITA No. 613/PUN/2025, dated 24.04.2025.
4.1 The Ld. AR then referred to the proviso to section 80G(5) as applicable in the present case which is extracted below for ease of reference:
"Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval,- (i) ……………………. (ii) …………………… (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier.”
4.2 Referring to the relevant statutory provision stated above, the Ld. AR submitted that-
“(i) The clause (iii) of proviso provides that in case the institution has been provisionally approved, application in the prescribed form for grant of the requisite approval u/s.80G(5) is required to be made six months prior to expiry of the provisional approval or within six months of commencement of the activities whichever is earlier. (ii) CIT(E) is incorrect in considering time limit as within six months from date of provisional registration. Such time limit does not find place in the provisions and therefore the rejection of Application is unjustified. (iii) The Provisional Registration is from the period 24.05.2022 to AY 2025-26 as stated in the certificate. The period six months prior to expiry of the provisional approval ends on 30.09.2025. The assessee has filed application before CIT EXEMPTION, PUNE in Form No. 10AB under clause (ii) of first proviso to subsection (5) of section 80G of the Income Tax Act, 1961 on 18/09/2024 which is within the time limit as per the above proviso. (iv) The first limb of the proviso 'within six months of commencement of the activities whichever is earlier cannot be applied since the Trust had commenced the activities before the date of provisional Registration i.e. 13.01.2022. In view of the consistent view adopted by this Bench in several cases, the institutions which had commenced the activity much before the date of grant of provisional approval, the literal interpretation to comply with the time limits as within six months of commencement of the activities leads to hardship, absurdity or injustice as it is impossible. Thus, the provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature. The appellant trust is entitled to file the application for regular approval prior to six months of expiry of the provisional approval.”
The Ld. AR therefore requested that application filed by the assessee for regular approval under clause (iii) of first proviso to sub-section (5) of section 80G of the Act on 18.09.2024 may kindly be treated as filed within prescribed time and the matter may be set aside to the Ld. CIT(E) for fresh consideration after affording an opportunity of hearing to the assessee as the assessee is in a position to substantiate its case before the Ld. CIT(E) by filing all the relevant details/documents as may be required/called upon for deciding the issue afresh.
The Ld. DR, on the other hand, supported the order of the Ld. CIT(E).
We have heard the Ld. Representatives of the parties, perused the material available on records and various judicial precedents relied upon the Ld. AR. The assessee obtained provisional approval u/s 80G(5) read with clause (iv) of first proviso to section 80G(5) of the Act on 24.05.2022 granted for a period from 24.05.2022 to AY 2025-26. The assessee has filed application before the Ld. CIT(E), Pune in Form No.10AB under clause (iii) of first proviso to sub-section (5) of section 80G of the Act on 18.09.2024 for regular approval. The Ld. CIT(E) rejected the application on the ground that the application is not maintainable being filed beyond the time specified in the provisions of clause (iii) of first proviso to section 80G(5) of the Act for the reasons stated in preceding paragraphs. We find that the contentions raised by the Ld. AR duly finds support from the catena of decisions of the coordinate bench of the Pune Tribunal (supra) referred to in para 4 above wherein the impugned issue has been consistently decided in favour of the assessee. Nothing has been brought on record by the Revenue before us to rebut the claim of the assessee.
Considering the totality of the facts and in the circumstances of the assessee’s case and since no contrary judicial precedent of the higher forum has been brought on record by the Revenue, respectfully following the decisions (supra) of the Coordinate Bench of the Pune Tribunal, we are of the view that it would be judicially expedient and in the interest of justice and fair play if the matter is restored back to the file of Ld. CIT(E) to consider the assessee’s application for regular approval u/s 80G(5) of the Act filed on 18.09.2024 in Form 10B afresh with a direction to treat the same as filed within the prescribed statutory time-limit and decide the same on merits as per facts and law, after allowing reasonable opportunity of being heard to the assessee and present its case. Needless to say, the assessee shall provide the requisite support in terms of submitting the relevant details/documentary evidence as may be required/ called upon on the appointed date without seeking any adjournment unless for sufficient cause, failing which the Ld. CIT(E) shall be at liberty to pass appropriate order as per law. The solitary ground of appeal raised by the assessee is accordingly allowed for statistical purposes.
In the result, the appeal of assessee is treated as allowed for statistical purposes.
Order pronounced in the open court on 10th July, 2025.