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आदेश आदेश/O R D E R आदेश आदेश
PER MAKARAND V.MAHADEOKAR, AM:
This appeal is filed by the assessee against the order passed by the learned Commissioner of Income Tax (Exemptions), Ahmedabad [hereinafter referred to as “the CIT(E)”], dated 06.11.2024 rejecting the assessee’s application for approval under clause (iii) of the first proviso to sub-section (5) of section 80G of the Income Tax Act, 1961 [hereinafter referred to as “ the Act”].
Condonation of Delay 2.1 It is noted that there is a delay of 76 days in filing the present appeal before us. The assessee has filed an affidavit sworn by Shri Rangam Trivedi, Trustee, explaining the reasons for the delay along with a petition for condonation of delay. As per the affidavit, the delay occurred due to non- communication of the impugned order by the consultant who was handling the matter before the learned CIT(Exemption). It was stated that although the assessee had duly responded to the notice dated 10.09.2024 by filing a reply on 17.10.2024, the consultant remained under a bona fide impression that the department would issue a further notice of hearing or a show-cause notice before taking any decision. The assessee became aware of the rejection order only in February 2025, when it received a notice in the related proceedings under section 12A of the Act. Upon further inquiry, it was discovered that no appeal had been filed against the order passed on 06.11.2024. The trustees thereafter engaged another consultant, who filed the appeal in April 2025, resulting in a delay of 76 days.
2.2 The explanation tendered is duly supported by an affidavit and appears to be bona fide. The delay has occurred owing to circumstances beyond the control of the assessee and cannot be attributed to any deliberate or negligent act. The Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji (167 ITR 471) has held that while considering an application for condonation of delay, a liberal and justice-oriented approach should be adopted so that substantial justice is not defeated on technical grounds. Following this settled principle, and being satisfied that sufficient cause has been shown, we condone the delay of 76 days in filing the appeal and proceed to decide the matter on merits.
Facts of the Case 3.1 The facts in brief, as emerging from the record and the impugned order, are that the assessee is a Not-for-Profit Company registered under section 8 of the Companies Act, 2013. The main object of the foundation is to promote education and undertake charitable activities in the field of education in the State of Gujarat.
3.2 The assessee filed an application in Form No. 10AB on 30.06.2024 seeking approval under clause (iii) of the first proviso to section 80G(5) of the Act, for the purpose of enabling donors to claim deduction in respect of contributions made to the trust. Upon receipt of the said application, the learned CIT(E) issued a notice dated 10.09.2024, calling upon the assessee to submit requisite details and documentary evidences in support of its claim. The assessee, in compliance, filed a detailed reply on 17.10.2024, enclosing the relevant documents and also requesting the learned CIT(E) to keep the proceedings in abeyance pending disposal of its appeal relating to registration under section 12A, which was then sub judice before the Co- ordinate Bench.
3.3 The learned CIT(E), however, proceeded to pass an order dated 06.11.2024, rejecting the assessee’s application without entering into the merits of the case. The learned CIT(E) recorded that on perusal of the system records, it was noticed that the assessee had already been granted approval under clause (i) of the first proviso to sub-section (5) of section 80G vide Form No. 10AC, bearing URN No. AAGCN9314DF20214, issued on 31.05.2021, valid from A.Y. 2022–23. On this premise, it was concluded that the assessee was already holding a valid approval, and hence the fresh application made under clause (iii) was not maintainable.
3.4 Aggrieved by the aforesaid order, the assessee has preferred the present appeal before us raising following grounds:
1. The learned Commissioner of Income Tax (Exemptions), Ahmedabad ("the CIT") erred in fact and in law in rejecting the application for registration of the trust u/s. 80G(5)(iii) of the Income Tax Act, 1961 ("the Act").
2. The learned CIT erred in fact and in law in rejecting the application of registration of the trust without giving a proper opportunity of being heard.
3. Your Appellant craves the right to add, to alter, to substitute, delete or modify all or any of the above grounds of appeal
4. During the course of hearing, the learned Authorised Representative (“AR”) appearing on behalf of the assessee reiterated the factual background. The learned AR further submitted that the CIT(E) rejected the application without affording the assessee an effective opportunity of being heard. The assessee had, in response to the notice dated 10.09.2024, filed a detailed reply on 17.10.2024 and specifically requested that the proceedings be kept in abeyance pending the outcome of its appeal for registration under section 12A. However, the CIT(E) passed the order on 06.11.2024 without issuing any further communication or providing personal hearing, thereby violating the principles of natural justice.
4.1 The AR also submitted that the Co-ordinate Bench in the assessee’s own case in dated 09.01.2025, relating to rejection of its application under section 12A(1)(ac)(iii) has restored the matter to the file of the learned CIT(E) for fresh consideration on merits.
The learned Departmental Representative (“DR”), on the other hand, relied upon the findings recorded by the learned CIT(Exemption) in the impugned order. However, the learned DR fairly conceded that in the interest of justice, and considering that the Co-ordinate Bench in the assessee’s own case for registration under section 12A(1)(ac)(iii) has already restored the matter to the file of the CIT(E), he has no objection if the present matter is also remitted back to the file of the CIT(E) for deciding the assessee’s claim afresh on merits, after providing due opportunity of being heard.
We have carefully considered the rival submissions, perused the order of the learned CIT(E). The short controversy involved in this appeal is whether the CIT(E) was justified in rejecting the assessee’s application in Form No. 10AB for approval under clause (iii) of the first proviso to sub- section (5) of section 80G of the Income-tax Act, 1961 (“the Act”), by holding the same as non-maintainable.
6.1 The assessee, a company registered under section 8 of the Companies Act, 2013 and also registered under section 12AB of the Act, had been granted provisional approval under clause (i) vide Form No. 10AC dated 31.05.2021. Pursuant thereto, the assessee filed an application in Form No. 10AB on 30.06.2024, seeking regular approval under clause (iii). The CIT(E), however, rejected the application on the ground that the assessee already possessed a valid approval and that the subsequent application was non- maintainable.
6.2 On a plain reading of the statutory provisions and Rule 11AA, we are unable to agree with the conclusion of the learned CIT(E). The assessee’s earlier approval in Form No. 10AC was provisional and was valid only for a limited period. The law specifically mandates that such provisional approval must be followed by a fresh application in Form No. 10AB for regular approval under clause (iii) once the activities have commenced or before the expiry of the provisional period. Therefore, the assessee’s application was both proper and maintainable under the scheme of the Act. The reasoning of the CIT(E) that the existence of provisional approval rendered the fresh application redundant is contrary to the intent and framework of the amended law.
6.3 We also find merit in the assessee’s grievance regarding lack of adequate opportunity of hearing. The record reveals that only one notice dated 10.09.2024 was issued by the CIT(E), in response to which the assessee filed a detailed reply on 17.10.2024, enclosing all relevant details and explaining that the matter be kept in abeyance pending the outcome of its appeal for registration under section 12A. Thereafter, no further communication was made, and the order was passed on 06.11.2024 without any personal hearing. The denial of an effective opportunity of being heard, in our considered opinion, amounts to a violation of the principles of natural justice.
6.4 We find that the Co-ordinate Bench, while dealing with the assessee’s earlier appeal under section 12A, had indeed restored the matter to the CIT(E) after holding that a procedural lapse in selecting the appropriate clause cannot render a valid application non-maintainable. The Bench had directed the CIT(E) to treat the application as filed under the correct provision and to decide the same on merits. The facts and reasoning involved in the present appeal are identical — the rejection is again on the technical ground of maintainability without any examination of the substantive eligibility of the assessee.
6.5 In light of the foregoing discussion and following the consistent view taken by the Co-ordinate Bench in the assessee’s own case, we hold that the impugned order dated 06.11.2024 passed by the learned CIT(E) is not sustainable in law. We accordingly set aside the said order and restore the matter to the file of the CIT(E), with a direction to examine the assessee’s application afresh on merits in accordance with law. The CIT(E) shall afford due and effective opportunity of hearing to the assessee and shall pass a speaking order after verifying the relevant facts and compliance requirements. The assessee, in turn, is directed to extend full cooperation and furnish all requisite details to enable expeditious disposal of the proceedings.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the Court on 15th October, 2025 at Ahmedabad.