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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI MANISH BORAD & MS. ASTHA CHANDRA
PER ASTHA CHANDRA, JM : The above four appeals filed by the assessee are directed against the separate order(s) dated 20.12.2024 and 26.03.2024 of the Ld. Commissioner of Income Tax (Exemption), Pune [“CIT(E)"] rejecting the application(s) for grant of registration u/s 12A and approval u/s 80G of the Income Tax Act, 1961 (the “Act”) respectively. For the sake of convenience, all the four appeals were heard together and are being disposed of by this common order.
In ITA Nos.403 & 404/PUN/2025 filed against the rejection of applications for section12A and 80G of the Act vide order of the Ld. CIT(E) dated 26.03.2024, there is a delay of 324 days in filing of these appeals before the Tribunal for which the assessee has filed an affidavit explaining the reasons for such delay. He submitted that the delay is not intentional and is a bonafide one for the reasons beyond the control of the assessee as evident from the affidavit filed in support thereof and therefore prayed that the delay may be condoned and the appeal be admitted for adjudication.
1 The Ld. DR, on the other hand, strongly opposed the arguments advanced by the Ld. Counsel for the assessee.
2 We have heard the rival contentions and perused the record. It is an admitted fact that there is a delay of 324 days in filing of the appeal before the Tribunal. The assessee has filed an application stating the reason for such delay which are as under :
“1. The Assessee-Appellant viz. Minhaj Educational & Welfare Trust has preferred this Appeal before the Hon'ble ITAT-Pune.
The Appellant was granted provisional registration vide Form 10AB and 10AC with effect from February 08 to AY 2024-25. 3. Subsequently, the Assessee applied for approval registration on September 26, 2023. 4. The Ld. Commissioner of Income-tax Exemptions (CIT(E)) vide Orders dated March 26, 2024, the provisional registration was cancelled and the application for registration was rejected, and similarly, the provisional registration for section 80G of the Income-tax Act, 1961 (Act) was cancelled and the application for registration was rejected on the ground that the Appellant has violated section 36A(3) of the Maharashtra Public Trust Act, 1950. 5. There were certain sums advanced by the trustees to the Trust during for the objects of the Trust during AY 2015-16. The said sum was not a loan and the Trustees have not received any interest. Subsequently, the sums have been treated as donations made to the Appellant. The Trust has not violated any provisions of any other law, and there is no order or decree stating the same.
All details of advance of amount on the Trustees for the purpose of object of the trust was reflected in the accounts of the appellant which was filed before the Charity commissioner as well as details filed before the Assessing Officer from time to time. Neither the Charity Commissioner nor the Assessing Officer raised any objection in the earlier year when the amount was advanced by the Trustee.
The appellant trust is a small trust with no qualified chartered accountant.
The Accountant, Mr. AMEER MAVIYA ANSARI who is looking after the day- to-day accounts under the bona fide belief that CBDT Circular 7 of 2024 is applicable to the appellant's case filed another application for registration before CIT(E) on June 30, 2024. 9. The Ld. CITE) vide Orders dated December 20, 2024, rejected the application for registration under section 12 and section 80G of the Act.
Subsequently, the Appellant met a Senior Counsel who advised us to file an appeal against the Orders dated March 26, 2024 and December 20, 2024, before the Income-tax Appellate Tribunal - Pune.
The appellant is assessed to tax since 2015-16, and there has never been any delay in filing the return, The returns have been accepted under section 143 (1) of the Act.
The delay of 324 days in filing the appeal against the Orders March 26, 2024 and the same is bona fide and there are no mala fide intentions and the Appellant has not gained any undue advantage by doing so.
The reason for explaining the delay is supported by the Appellant's Managing Trustee, Mr. MOHAMMED RAFIQUE ABDUL LATEEF SHAIKH has filed an affidavit to support his bona fide belief and to condone the delay in filing the Appeal before the Hon'ble ITAT.
The delay that occurred in filing an appeal before the Income Tax Appellate Tribunal, Pune was unintentional, for bonafide reasons and due to the circumstances beyond the control of the Appellant.
The appellant submits that, the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 167 ITR 471 (SC) it was held that "Sufficient cause" for the purpose of condonation of delay should be interpretated with a view to do even-handed justice on merits in preference to approach which scuttles a decision on merits. The expression 'Sufficient cause" employed by the legislature is adequately elastic to enable the Courts to apply the law in a meaningful manner which subserves the ends of justice. The Appellant, therefore prays that the delay of 324 days may be condoned.
3 In light of the above, we find some merit in the submission of the Ld. Counsel for the assessee that there was a reasonable cause in not filing the appeal before the Tribunal within the stipulated time.
4 We find the Hon'ble Supreme Court in the case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra) has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.
5 We find recently the Hon'ble Supreme Court in the case of Inder has held as under:
“14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.”
6 Considering the totality of facts and in the circumstances of the case set out above and respectfully following the above decision(s) of the Hon'ble Supreme Court, we hereby condone the delay in filing of the appeal and admit the same for adjudication.
In ITA No.403/PUN/2025, the assessee has challenged the order of the Ld. CIT(E) dated 26.03.2024 in rejecting the application for registration u/s 12A of the Act while ITA No.404/PUN/2025 relates to the order of the CIT(E) dated 26.03.2024 in denying the approval u/s 80G of the Act.
Facts of the case in ITA No.403/PUN/2025, in brief, are that the assessee filed an application in Form No.10AB on 26.09.2023 for registration of the trust under clause (iii) of section 12A(1)(ac) of the Act. With a view to verify the genuineness of the activities of the assessee and compliance to requirements of any other law for the time being in force by the trust / institution as are material for the purpose of achieving its objects, a notice was issued through ITBA portal on 16.11.2023 requesting the assessee to upload certain information / clarification by 01.12.2023. In response to the same, the assessee filed certain details. The Ld. CIT(E) while going through those details found certain discrepancies in the submissions filed by the assessee for which he issued another notice on 28.02.2024 to clarify on those issues seeking compliance by 06.03.2024. The said discrepancies are listed in para 2.2 of the impugned order of the Ld. CIT(E) stating that the assessee trust has raised loans which are contrary to section 36A of the Maharashtra Public Trust Act, 1950. The assessee filed its response on 06.03.2024 contending that that the loan was raised for the purpose of free education to Orphan students in English Medium and campus requirement for the Orphan students, the trust borrowed interest free friendly loan from trustee and friends. As per the section 36(A)(3) the permission from Charity Commissioner was not required as the interest free loan was borrowed from the trustee and friends only.
1 However, the above contention of the assessee was not found to be acceptable by the Ld. CIT(E). He, therefore rejected the application filed by the assessee for grant of registration u/s 12A of the Act and also cancelled the provisional registration granted earlier u/s 12AB of the Act by observing as under:
“4. The contention of the trust is due considered. However, the same is not acceptable. In this regard, provision of sec. 36A(3) is reproduced for ready reference : "36A(3) No trustee shall borrow moneys (whether by way of mortgage or otherwise) for the purpose of or on behalf of the trust of which he is a trustee, except with the previous sanction of the Charity Commissioner, and subject to such conditions and imitations as may be imposed by him in the interest or protection of the trust. [Provided that, the Charity Commissioner or the Joint Charity Commissioner, as the case may be shall decide the application for borrowing money from the Bank or Financial Institution forthwith and preferably within a period of fifteen days, if the Bank of the Financial Institution has provisionally sanctioned the loan.].” It thus, appears that the assessee has misinterpreted the said provision and has contended that such permission is not required if the trust avails interest free loan from trustee and friends. Section 36A(3) of the BPT Act, 1950 provides that no trustee shall borrow moneys (whether by way of mortgage or otherwise) for the purpose of or on behalf of the trust of which he is a trustee, except with the previous sanction of the Charity Commissioner, and subject to such conditions and limitations as may be imposed by him in the interest or protection of the trust." Thus, said provision mandates the trust to obtain previous sanction from Charity Commissioner in respect of any loan. The assessee has, however, failed to comply with this statutory requirement Therefore, the undersigned is unable to draw any satisfactory
conclusion about the genuineness of activities of the assessee and compliance of requirements of any other law for the time being in force by the assessee as are material for the purpose of achieving its objects.
In view of the above, the application filed by the assessee is hereby rejected and the provisional registration granted on 08/02/2022 under section 12AB read with section 12A(1)(ac) (vi) of the Income Tax Act, 1961 is hereby cancelled.” Aggrieved with such order of the Ld. CIT(E), the assessee is in appeal before the Tribunal by raising the following grounds:
"
That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Exemptions) (CIT(E)) has erred in passing an order dated March 26, 2024 cancelling the provisional registration and rejecting the application filed by the Appellant.
That on the facts and circumstances of the case and in law, the CIT(E) has erred in passing an order dated March 26, 2024 cancelling the provisional registration and rejecting the application filed by the Appellant stating that the Appellant has violated section 36A(3) of the Maharashtra Public Trust Act, 1950, whereas the sums were advanced in earlier years for the object of the trust without any interest prior to the grant of provisional registration and the said advance was later converted as donation by the trustee who have advanced the amount as there is no contravention of the provision no action is initiated by the Charity Commissioner hence the cancellation of the registration is void ab initio hence may be quashed and set aside.
That on the facts and circumstances of the case and in law, the CIT(E) has erred in passing an order dated March 26, 2024 cancelling the provisional registration and rejecting the application filed by the Appellant stating that the Appellant has violated section 36A(3) of the Maharashtra Public Trust Act, 1950, whereas there is no decree or order passed against the Appellant regarding the said violation hence the cancellation of registration is bad in law.
That the appellant trust has not violated any of the conditions of provisional registration; hence, the cancellation of registration is bad in law.
Without prejudice to the above, the provisional registration was valid up to March 31, 2024 hence the Ld. CIT(E) ought not to have cancelled registration for the period up to March 31, 2024 hence, the cancellation of registration is bad in law.
Without prejudice to the above, if there is any delay in filing the application for the continuation of registration, the same may be condoned, and the CIT(E) may be directed to grant the registration.
The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal.”
The Ld. AR has filed a detailed written submission before us raising its various contentions in support of each of the grounds of appeal of the assessee. The relevant portion of the written submission filed by the assessee is reproduced below: “Prepositions: Ground 1 - General.
Ground 2 - The sum was advanced in an earlier year, even prior to the provisional registration. Ground 3 - The sum was advanced without interest Ground 4 - The sum was used for the objects of the Trust
Ground 5 - The sum was converted to a donation
Ground 6 - Without prejudice to the above, there is no order or decree holding that the Assessee has violated any law.
Ground 2 - The sum was advanced in an earlier year, even prior to the provisional registration.
Ground 3 - The sum was advanced without interest It is submitted that the advance was accepted in FY 2015-16 and the same was converted to a donation in FY 2023-24. The provisional registration was granted for AY 2022-23 to AY 2024-25; hence, the advance was not during the year under consideration. The Hon'ble ITAT Mumbai Bench in the case of DCIT(E) v. The Lohar Chawl Dawoodi Bohra Merchants' Association ITA 3635/MUM/2018 dated January 19, 2022 (Mum)(Trib) wherein it was held that where the assessee took an interest-free loan, and the loan was not for the year under consideration, there is no violation of section 36A of the Bombay Public Trust Act, 1950. (Para 11 on page 23; Page 5 to 27 of Paper Book - II) Hence, the cancellation of provisional registration and rejection of application for registration is bad in law.
Ground 5 - The sum was converted to a donation The said sum was converted into a donation during FY 2023-24. Hence, the cancellation of provisional registration and rejection of application for registration is bad in law.
Ground 6 - Without prejudice to the above, there is no order or decree holding that the Assessee has violated any law. Without prejudice to the above, it is submitted that there is no order or decree holding that the Assessee has violated any law, therefore, the order rejecting registration is bad in law. The Hon'ble ITAT Indore Bench in the case of Disha Education Society v. CIT(E) [2024] 158 taxmann.com 172 (Indore Trib.) where the assessee had violated various other laws as per section 12AB(1)(b)(i) of the Act on account of non-payment of loan and interest to bank, belated payment of TDS, non- deposit of PF and ESIC within the stipulated period, not making provisions for a retirement benefit of employees as per AS-15 and not charging GST on rental income, it was held that such defaults could not be considered as a non-compliance of any other law for time being in force in terms of section 12AB(1)(b)(i) of the Act as the main object of the assessee was education and there were no violations pertaining to the same. (Para 5.5-7 on page 35-36; Page 28 to 36 of Paper Book - II) Without prejudice to the above, assuming the compliance with the Charity Commissioner is material and the Assessee is in violation of section 36A of the Bombay Public Trust Act. There is no order passed by a quasi-judicial authority holding that there is a violation of the law, the said cannot be termed to have achieved finality. The Hon'ble ITAT- Cochin Bench in the case of Last Hour Ministry v. CIT(E) [2022] 139 taxmann.com 235 (Cochin) (Trib.) where assessees-trusts were granted registration under section 12A of the Act and Commissioner (Exemption) cancelled registration for reasons, inter alia, returns of income were incorrect and incomplete, amounts set apart for specific purposes were found to have been indiscriminately and improperly used, as in the instant case in terms of provisions of section 12AA(4) of the Act there was no assessment order nor any evidence found or established against assessees on issues raised by Commissioner (Exemption) by an order of quasi-judicial Authority, order of cancellation of registration was premature. (Para 5 on page 39; Page 37 to 39 of Paper Book - II)
Hence the cancellation of provisional registration and rejection of application for registration is bad in law."
The Ld. DR on the other hand strongly opposed the submissions made by the Ld. Counsel for the assessee and supported the order of the Ld. CIT(E).
Admittedly, the facts of the case in ITA No.404/PUN/2025 are similar to that of ITA No.403/PUN/2025 narrated above. It is the submission of the Ld. AR that since the Ld. CIT(E) has rejected the grant of registration u/s 12A of the Act and cancelled the provisional registration granted earlier and as per the Ld. CIT(E), the application filed by the assessee is delayed and not filed within the time-limit allowed under clause (iii) of first proviso to section 80G, he refused to grant approval u/s 80G of the Act without dwelling into the merits of the case.
Similar grounds have been raised in ITA No.404/PUN/2025 rejecting the assessee's application for approval under section 80G of the Act, which reads as under:
"
That on the facts and circumstances of the case and in law, the Commissioner of Income-tax (Exemptions) (CIT(E)) has erred in passing an order dated March 26, 2024 cancelling the provisional registration under section 80G of Income-tax Act, 1961 (Act)and rejecting the application filed by the Appellant.
That on the facts and circumstances of the case and in law, the CIT(E) has erred in passing an order dated March 26, 2024 cancelling the provisional registration under section 80G of the Act and rejecting the application filed by the Appellant stating that the application is delayed.
That on the facts and circumstances of the case and in law, the CIT(E) has erred in passing an order dated March 26, 2024 cancelling the provisional registration under section 80G of the Act and rejecting the application filed by the Appellant stating that the registration of the Appellant under section 12AB of the Act is rejected although the same is wrongfully rejected.
That on the facts and circumstances of the case and in law, the CIT(E) has erred in passing an order dated March 26, 2024 cancelling the provisional registration and rejecting the application filed by the Appellant stating that the Appellant has violated section 36A(3) of the Maharashtra Public Trust Act, 1950, whereas the sums were advanced in earlier years for the object of the trust without any interest prior to the grant of provisional registration and the said advance was later converted as donation by the trustee who have advanced the amount as there is no contravention of the provision no action is initiated by the Charity Commissioner hence the cancellation of the registration is void ab initio hence may be quashed and set aside.
That on the facts and circumstances of the case and in law, the CIT(E) has erred in passing an order dated March 26, 2024 cancelling the provisional registration and rejecting the application filed by the Appellant stating that the Appellant has violated section 36A(3) of the Maharashtra Public Trust Act, 1950, whereas there is no decree or order passed against the Appellant regarding the said violation hence the cancellation of registration is bad in law.
That the appellant trust has not violated any of the conditions of provisional registration; hence, the cancellation of registration is bad in law.
Without prejudice to the above, the provisional registration was valid up to March 31, 2024 hence the Ld. CIT(E) ought not to have cancelled registration for the period up to March 31, 2024 hence, the cancellation of registration is bad in law.
The Appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal.”
We have heard Ld. representatives of the parties, perused the order of the CIT(E) and the paper book filed on behalf of the assessee. We have also perused various decisions relied upon by the Ld. AR. The facts of the case are not in dispute. Perusal of the Ld. CIT(E)'s impugned order reveals that he rejected the application filed by the assessee for grant of registration u/s 12A of the Act and also cancelled the provisional registration granted earlier u/s 12AB for the reasons reproduced in preceding paragraph. Since the application for grant of registration u/s 12A of the Act was rejected and the provisional registration granted earlier was cancelled, he also rejected the application for approval u/s 80G of the Act along with the reason that the said application is delayed and not been filed within the prescribed time limit. Before us, the Ld. Counsel for the assessee has raised various contentions on merits in support of its grounds of appeal which are reproduced above. The Ld. AR has argued that the no action has been taken against the assessee by the Charity Commissioner against the alleged violation of the relevant provisions of the Maharashtra Public Trust Act, 1950 made by the Ld. CIT(E). Further, the assessee did not take any advance/loan in the current year under consideration. The advance was taken in earlier years which continued during this year (Page 56 of the paper book refers). These facts have been duly brought to the notice of the Ld. CIT(E) by the assessee, however, the same have not been considered by him (pages 10 to 69 of the paper book refers). Also, there is no delay on the part of the assessee in filing application for approval under section 80G as the application was filed prior to the expiry of six months of provisional registration. It is the submission of the Ld. Counsel of the assessee that since the Ld. CIT(E) has not examined the relevant facts /submissions filed by the assessee on merits pertaining to the discrepancies noted by him, the matter may be set aside to the file of the Ld. CIT(E) to decide the issue afresh on merits as per fact and law, after affording an opportunity of being heard to the assessee and substantiate its case before him.
Considering the totality of the facts and in the circumstances of the of the case and in the interest of justice, we deem it proper, to restore the appeal(s) to the file of the Ld. CIT (E) with a direction to decide the issues afresh on merits after granting one final opportunity to the assessee to substantiate its case before him, as per fact and law. The assessee is also hereby directed to submit any further details/documents as may be required/ called upon on the appointed date without seeking any adjournment under any pretext unless there is a reasonable cause, failing which the Ld. CIT(E) shall be at liberty to pass appropriate order(s) as per law. We hold and direct accordingly. The grounds raised by the assessee in both the appeals are accordingly allowed for statistical purposes.
In the result, both the appeals in ITA Nos.403 & 404/PUN/2025 filed by the assessee are allowed for statistical purposes. ITA Nos.401 & 402/PUN/2025
Since the issues involved in these appeals are similar to the appeals in ITA Nos.403 & 404/PUN/2025 and we have set aside the appeals in ITA Nos.403 & 404/PUN/2025 to the file of the Ld. CIT(E) for denovo adjudication vide our above order of even date, the ITA Nos.401 & 402/PUN/2025 become infructuos.
In the nutshell, the appeal of the assessee in ITA Nos.403 & 404/PUN/2025 is treated as allowed for statistical purposes and ITA Nos. 401 & 402/PUN/2025 are dismissed as infructuos. Order pronounced in the open court on 27th June, 2025. (Manish Borad) (Astha Chandra) ACCOUNTΤΑΝΤ ΜΕΜMBER JUDICIAL MEMBER पुणे / Pune; दिनांक / Dated : 27th June, 2025. रवि आदेश की प्रतिलिपि अग्रेषित /