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Facts
The assessee trust filed an application for approval under Section 80G of the Income Tax Act. The CIT(E) rejected the application, citing the trust's failure to provide complete details about its activities, beneficiaries, and the genuineness of its operations. The CIT(E) also noted issues with the trust's registration under Section 12A and the belated filing of the 80G application.
Held
The Tribunal noted factual inaccuracies in the CIT(E)'s order regarding the assessee's 12A registration and the date of filing the 80G application. Considering the totality of facts and in the interest of justice, the Tribunal restored the issue to the CIT(E) for fresh adjudication after giving the assessee an opportunity of being heard.
Key Issues
Whether the CIT(E) erred in rejecting the 80G approval based on perceived deficiencies in documentation and a delay in filing the application, and if the matter should be remanded for fresh consideration.
Sections Cited
80G, 80G(5), 12A, 12AB, 10(23AA), 10(23C), 12A(1)(ac)(i), 12A(1)(ac)(iii), 12A(1)(ac)(vi)
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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
This appeal filed by the assessee is directed against the order dated 14.01.2025 passed by the Ld. CIT(Exemption), Pune rejecting the application for grant of approval u/s 80G of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
Facts of the case, in brief, are that the assessee filed an application in Form No.10AB on 27.07.2024 for registration of the trust under clause (iii) of first proviso to sub-section (5) of section 80G of the Act. 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 of the Act, a notice was issued through ITBA portal on 03.09.2024 requesting the assessee to upload certain information / clarification. Although the notice was duly served on the assessee through e-mail portal, however, the assessee did not comply to the said notice for which another notice was issued to the assessee on 29.10.2024 asking the assessee to comply by 08.11.2024. The assessee submitted certain details in response to the said notice. Since the Ld. CIT(E) noticed certain discrepancies in the submissions made by the assessee, another notice was issued pointing out those discrepancies. The assessee responded to the same. However, the Ld. CIT(E) noted that the assessee has not furnished the full details as requested in the show cause notice. According to the Ld. CIT(E), the assessee was unable to provide the dates and locations of their activities. Further, details of beneficiaries and how they were identified have not been submitted. The assessee has not furnished the bills and vouchers for the expenses incurred while carrying out the activities except furnishing of certain photographs which according to him clearly do not depict the charitable nature of the activities. He, therefore, held that he is not in a position to draw any satisfactory conclusion about the genuineness of activities of the assessee and fulfillment of conditions laid down in clause (i) to (v) of section 80G of the Act. He further noted that as per the condition vide clause (i) of section 80G(5) of the Income Tax Act, 1961 the approval is available only if the income of the institution or fund is not be liable to inclusion in its total income under the provisions of section 11 and 12 or clause (23AA) / clause (23C) of section 10 of the Income Tax Act, 1961. Exclusions for the said condition are detailed in clause (a), (b) and (c) of proviso to clause (i) of section 80G(5) of the Act. Therefore, the institution/fund is required to be regularly registered / approved either under section 12AB or 10(23AA) or 10(23C) of the Income Tax Act, 1961 or the institution / fund shall be a Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependents.
In view of the above and observing certain other irregularities, the Ld. CIT(E) rejected the application for grant of approval u/s 80G of the Act by recording as under:
7.1 In the instant case it is noticed that the assessee is neither regularly registered u/s 12AB read with section 12A(1)(ac)(i) /12A(1)(ac)(iii) nor having regular approval under section 10(23C) read with clause (i)/(iii) of first proviso to the said section and the case is not covered under the exclusions provided vide proviso to clause (i) of section 80G(5) of the Act. The assessee is not approved under section 10(23AA) of the Act. The assessee is also not a Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependents. In fact, the application of the assessee in form No.10AB for registration u/s 12AB filed under the provisions of section 12A(1)(ac)(iii) of the Act has been rejected vide order dated 20/09/2023 and the provisional registration dt. 27/05/2021 u/s 12A(1)(ac)(vi) of the Act was cancelled. It is further noticed that the assessee has furnished copy of another provisional registration dt. 01/08/2024 u/s 12A(1)(ac)(vi) - Item 'A' of the Act. However, the present application has been made on 27/07/2024 which means the second provisional registration has been obtained after the present application was filed and hence, the assessee had no valid provisional registration u/s 12A(a)(ac)(vi) of the Act on the date of filing the present application. Therefore, the condition (i) of section 80G(5) of the Income Tax Act, 1961 is also not fulfilled in this case.
8. Without prejudice to the above, it is also seen that the date of expiry of provisional approval under section 80G(5)(vi) of the Act in the assessee's 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)(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. 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. The extended due date for filing of such application was 30/06/2024 as per CBDT, Circular No.7/2024, dated 25/04/2024. However, the present application filed by the trust is on 20/09/2023 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.
In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 26/03/2022 under clause (iv) for first proviso to section 80G(5) 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:
1. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Income Tax, Exemption, Pune (hereinafter called as CIT Exemption) erred in rejecting the approval sought for under section 80G(5) of the IT Act, 1961 to the applicant trust vide order dated 14/01/2025 and so also cancelling the provisional approval granted on 26/03/2022 under clause (iv) of first proviso to section 80G(5) of the Act observing and holding that the trust could not satisfy the genuineness of activities and fulfilment of the conditions laid down in clause (1) to (v) of section 80G(5) of the said Act, when all such details and documentary evidences had been furnished during the said proceedings before him. The order passed rejecting/cancelling such approval u/s.80G(5) of the Act being arbitrary, illegal and bad in law be quashed and the CIT(E) be directed to grant such approval.
2. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Income Tax, Exemption, Pune (hereinafter called as CIT Exemption) erred in rejecting the approval sought for under section 80G(5) of the I T Act, 1961 to the applicant trust vide order dated 14/01/2025 and so also cancelling the provisional approval granted on 26/03/2022 under clause (iv) of first proviso to section 80G(5) of the Act for the AYs. 2025-26 to 2027-28 observing and holding that in preceding AY 2024-25 the condition laid down in section 80G(5)(i) of the Act had not been fulfilled ignoring and without appreciating the facts that for the AYs. 2025-26 to 2027-28 the provisional registration u/s 12A(1)(ac) (vi)- Item 'A' of the Act had been granted by the said authority on 01/08/2024. The order passed rejecting/cancelling such approval u/s.80G(5) of the Act being arbitrary, illegal and bad in law be quashed and the CIT(E) be directed to grant such approval.
3. On the facts and in the circumstances of the case and in law the Ld. Commissioner of Income Tax, Exemption, Pune (hereinafter called as CIT Exemption) erred in rejecting the approval sought for under section 80G(5) of the IT Act, 1961 to the applicant trust vide order dated 14/01/2025 and so also cancelling the provisional approval granted on 26/03/2022 under clause (iv) of first proviso to section 80G(5) of the Act holding that the application for approval under the said section was filed on 27/07/2024 after the prescribed date 30/09/2023 as per Act and further after the extended due date for filing of such application i.e. 30/06/2024 as allowed vide CBDT's Circular No. 7/2024 dated 25/04/2024 without appreciating the facts that such application for approval u/s.80G(5) of the Act was made by the trust delayed by 27 days with an anticipation to file the application after getting the provisional registration u/s 12A(1)(ac)(vi) of the Act which in fact had been granted on 01/08/2024 by the CIT, Exemption, Pune and therefore such delay of 27 days could have been condoned by him considering it a directory provision and not mandatory when all other conditions for such approval had been fulfilled by the applicant trust. The order passed rejecting/cancelling such approval u/s. 80G(5) of the Act being arbitrary, illegal and bad in law be quashed and the CIT(E) be directed to grant such approval.
4. The appellant craves leave to add, alter, delete, amend, withdraw, modify, change or substitute any ground or grounds of appeal or to add any new ground or grounds of appeal during or before the hearing of the appeal.
The Ld. Counsel for the assessee at the outset submitted that the assessee trust has been granted provisional registration u/s 12A(1)(ac)(vi) of the Act on 01.08.2024. Therefore, the Ld. CIT(E) was not justified in denying the approval u/s 80G of the Act on account of non-availability of registration under section 12A of the Act. He submitted that the application for approval under the said section was filed on 27.07.2024 after the prescribed date 30.09.2023 as per the Act and further after the extended due date for filing of such application which was allowed vide CBDT Circular No.7/2024 dated 25.04.2024 by six months. Thus, the Ld. CIT(E) could have condoned the delay of 27 days in filing of the application. He submitted that all the details were furnished before the Ld. CIT(E) and therefore, the denial of granting approval u/s 80G of the Act is not justified. He accordingly submitted that the order of the Ld. CIT(E) be reversed and the assessee trust be granted approval u/s 80G of the Act.
The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(E). In his alternate contention, he submitted that the matter may be restored to the file of the Ld. CIT(E) with a direction to adjudicate the issue afresh.
We have heard the rival arguments made by both the sides, perused the order of the Ld. CIT(E) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find the Ld. CIT(E) in the instant case rejected the application for grant of approval u/s 80G of the Act on the ground that the assessee trust could not furnish the details as requested in the show cause notice. The assessee trust also was unable to provide the dates and locations of their activities except furnishing some photographs and without giving the details of beneficiaries and how they were identified. It was also his observation that the assessee trust was not granted registration u/s 12A of the Act and the application for grant of approval u/s 80G was filed belatedly. It is the submission of the Ld. Counsel for the assessee that the assessee trust is having valid registration u/s 12A and full details were furnished before the Ld. CIT(E) and there are certain factual inaccuracies in the order of the Ld. CIT(E). We find in paras 7 and 7.1 of the order, the Ld. CIT(E) has observed that the assessee trust does not have valid registration u/s 12A of the Act whereas the same is factually incorrect as the assessee trust is having valid registration u/s 12A of the Act. Similarly, at para 8, the Ld. CIT(E) has observed that the assessee trust filed the present application for grant of approval u/s 80G of the Act on 20.09.2023 whereas the assessee trust has filed the application for grant of approval u/s 80G on 27.07.2024 and there is a minor delay of 27 days in light of CBDT Circular No.7/2024 dated 25.04.2024 extending the date for such application upto 30.06.2024. Since it is the submission of the Ld. Counsel for the assessee that the assessee has filed all the relevant details and the assessee trust is having a valid registration u/s 12A of the Act and the application was also filed on 27.07.2024 with a delay of only 27 days, therefore, 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 adjudicate the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 12th June, 2025.