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Facts
The assessee trust filed an application in Form 10AB for approval under section 80G. The CIT(E) rejected the application, citing it was incomplete, filed beyond the allowed time, and that expenses on religious activities exceeded the permissible limit of 5%. The assessee explained the delay was unintentional due to administrative changes and misunderstanding of timelines, and that their religious expenses were nominal. The CIT(E) found the audited financial statements showed religious expenses significantly above 5%.
Held
The Tribunal noted that the explanation for the delay in the affidavit of the trustee (tax consultant's mistaken belief) differed from the reason provided to the CIT(E) (oversight due to administrative changes). The Tribunal held that ignorance of law is not an excuse and found no merit in the request for condonation of delay. Furthermore, the high percentage of religious expenses as per the audited statements was a clear violation of Section 80G(5B), which the assessee failed to controvert.
Key Issues
Whether the CIT(E) was justified in rejecting the application for approval under section 80G due to late filing and violation of the 5% limit on religious expenses, and whether the delay in filing should be condoned.
Sections Cited
80G(5), 80G(5B), 234B, 234C, 12A, 10AC
AI-generated summary — verify with the full judgment below
Before: SHRI SANDEEP GOSAIN & SHRI BIJAYANANDA PRUSETH
O R D E R PER BIJYANANDA PRUSETH, AM:
This appeal filed by the assessee emanates from the order passed by the CIT (Exemptions), Mumbai dated 23.06.2025. The CIT(E) rejected the application in Form No.10AB under Clause (iii) of 1st proviso to 80G(5) seeking approval u/s 80G of the Act as non-maintainable.
The grounds of appeal raised by the assessee are as under:
“1.The Ld. Commissioner of Income Tax (Exemption) [herein referred as Ld. CIT(Exemptions)], Mumbai erred in passing the order dated 23.06.2025 rejecting the application for approval under section 80G of the Income-tax Act, 1961 ("the Act") without appreciating that the Appellant fulfills all the conditions enumerated under clause (iii) of 1st proviso to section 80G(5) of the Act. The Appellant, therefore, prays that rejecting the application filed for approval under section 80G of the Act 2025-26 Jashwant Shah Charitable Trust is not at all justified and accordingly, the Ld. CIT(E) may be directed to grant approval under section 80G to the Appellant trust. 2.The Ld. CIT (Exemptions), Mumbai fell in error of law in rejecting the application for approval under section 80G of the Act for alleged violation of provision of section 80G(5B) of the Act without appreciating that the Appellant is not a religious trust and therefore, the expenses incurred on religious activities is without the permissible limits provided under section 80G(5B) of the Act. Hence, the Ld. CIT (Exemption) is not at all justified in rejecting the application for approval under section 80G of the Act and therefore, the Ld. CIT(E) may be directed to grant approval under section 80G to the Appellant trust.
3. The Appellant denies any liability to pay interest under section 234B and 234C of the Act. Hence, the same are not leviable. 4.The Appellant craves leave to add, alter, amend, delete, rescind, or withdraw any of the grounds of appeal mentioned hereinabove.”
Facts of the case in brief are that the assessee trust filed an application in Form 10AB under clause (iii) of the 1st proviso to Section 80G(5) of the Act seeking approval u/s 80G of the Act. The CIT(E), on verification, found that the application was not complete and all documents required were not furnished and he issued a notice, which was replied to by the assessee vide letter dated 07.04.2025. On going through the details, the CIT(E) noticed that the expenditure incurred by the assessee on religious activities was more than 5%, which was not allowable u/s 80G(5B) of the Act. The application was also filed beyond the time allowed under the Act. It was filed on 02.12.2024 in lieu of September, 2023. The assessee stated the delay was unintentional and happened due to oversight arising from change of administrative team as well as 2025-26 Jashwant Shah Charitable Trust misunderstanding of the applicable timelines. Regarding violation of the provisions of Section 80G(5B) of the Act, it was submitted that the religious expenses were nominal ranging from 2.15% to 2.50% in AYs 2022-23 to 2024-25.
The CIT(E) did not find the explanation of the assessee acceptable because it had filed the application on 02.12.2024 instead of the extended period upto 30.06.2024. The reasons given by the assessee was not considered as a reasonable cause for the delay. There was also no genuine hardship in filing the application within the due date. The CIT(E) also found from the audited financial statements submitted by the assessee that the percentage of religious expenses were 10.83%, 68.25% and 51.03% for AYs 2022-23, 2023-24 and 2024-25 respectively. The religious expense was more than 5% of the total income, which is a violation of the provisions of the 80G(5B) of the Act. Therefore, the application was rejected for late filing of the application and violation of provisions of Section 80G(5)(ii) and 80G(5B) of the Act.
Aggrieved by the order of the CIT(E), the assessee has filed the appeal before the Tribunal. The Ld. AR of the appellant filed an affidavit by Shri Mayank Jaswantlal Shah, trustee of the applicant for the delay of 154 days in filing the application. In the affidavit, it is submitted that the assessee trust was granted registration u/s 12A vide Form 10AC order dated 24.09.2021 which was valid for 5 years from AY 2022-23 to 2026-27. The trust also received provisional 3 2025-26 Jashwant Shah Charitable Trust registration u/s 80G vide order dated 24.03.2022 and was valid from 24.03.2022 to AY 2024-25. The CBDT extended the due date for filing application for final approval u/s 80G to 30.06.2024. It is also submitted that the trust instructed the tax consultant to look after the registration matter before the specified authority. However, the consultant was under mistaken belief that approval granted u/s 12A was provisional approval u/s 80G. When the appellant enquired in November 2024 about the status of the application u/s 80G, the consultant realized his mistake and filed the application for approval on 02.12.2024, which was delayed by 154 days. It is therefore, submitted that the delay was not because of any mala fide intention. Hence, the Ld. AR request to condone the delay.
On the other hand, the Ld. CIT (DR) of the revenue supported the order of the CIT(E). He submitted that there was no reasonable cause for delay in filing the application for approval u/s 80G of the Act. He also submitted that the expenses incurred by the appellant was more than 5% in each of the 3 AYs.
Hence, he requested the confirm the above order of CIT(E).
We have heard both parties and perused the materials on record. We have also gone through the relevant provisions of the fact. There is no dispute that the application for regularization of the provisional approval obtained u/s 2025-26 Jashwant Shah Charitable Trust 80G dated 24.03.2022 was filed on 02.12.2024. The due date for the same application was 30.06.2024. Hence, there was delay of 154 days. The reasons given by the appellant in the affidavit of the trustee is that the tax consultant was under mistaken belief that the approval u/s 12A was the approval u/s 80G of the Act. The explanation in the affidavit is different from the reason given before the CIT(E) where it was submitted that the delay occurred due to oversight arising from change in administrative team and misunderstanding of the applicable timelines. Ignorance of law cannot be an excuse. Therefore, we do not find any merit in the submission of the appellant in respect of condonation of delay.
6.1 Be that as it may, the appellant has also incurred religious expenses of Rs.5,05,000/- (10.83%), Rs.72,71,000/- (68.25%) and 28,05,250/- (51.03%) for AYs 2022-23 to 2024-25 respectively. This fact recorded by the CIT(E) at para 4.3 of the impugned order from the audited financial statement has not been controverted by the appellant by furnishing any proper and acceptable explanation or supporting evidence. As per sub-section (5B) of Section 80G, an institution or fund which incurs expenditure, during any previous year, which is of a religious nature, for an amount exceeding 5% of the total income, is not entitled for the benefit of deduction u/s 80G of the Act. In the instant case, there is clear violation of the provisions of Section 80G(5B) of the Act. The 5 2025-26 Jashwant Shah Charitable Trust appellant has not been able to controvert the findings of the CIT(E) on the subject issues by producing any contrary material or evidence on record. It has filed an affidavit for condonation of delay but nothing on merit of the case.
Hence, we do not find any infirmity in the order of CIT(E), which we confirm. The grounds of the appellant are, accordingly, dismissed.
In the result, the appeal of the assessee is dismissed.
Order is pronounced on 16.02.2025