Loading judgment…
Facts
Roop V.K. Jain Foundation, a Public Charitable Trust, sought registration under Section 80G(5)(iii) of the Income Tax Act by filing Form 10AB. The application was initially filed with an incorrect section code, subsequently withdrawn, and refiled on 31.03.2023. The CIT(E) rejected this application as belated and non-maintainable, stating the trust's activities commenced in FY 2020-21 and the application was outside the prescribed time limits.
Held
The Tribunal condoned the delay in filing the appeal, finding that the timeline for Form 10AB filing is directory, not mandatory, especially considering the transitional amendments and CBDT circulars extending due dates (latest to 30.06.2024). It set aside the CIT(E)'s order and remanded the case for a fresh decision on merits within three months, taking into account technical issues and extended deadlines.
Key Issues
Whether an application for registration in Form 10AB under Section 80G(5)(iii) should be rejected solely on grounds of belated filing or incorrect section selection, considering CBDT circulars extending deadlines and the directory nature of such timelines.
Sections Cited
Section 80G(5)(iii), Section 80G(5)(ii), Section 119, Section 12A, Section 10(23C), Section 35(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH: ‘F’: NEW DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI SUDHIR PAREEK
The aforetitled appeal arising out of the order dated 21.09.2023 passed by the Learned Commissioner of Income Tax (Exemption), Chandigarh (for the sake of convenience, hereinafter referred in short as Ld. CIT(E)] by which the application filed by the Page 1 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion assessee / appellant in form 10AB under clause (iii) of first proviso to sub section (5) of Section 80G of the Income Tax Act, 1961 (in short “the Act”) rejected as non maintainable by stating that the activities of the appellant Trust has commenced during the F.Y.
2020-21 and the aforesaid application has not been filed within the time limit prescribed therein and not even within the extended time limit provided by relevant circulars of CBDT.
Solitary issue exists in this appeal for adjudication that whether the Ld. CIT(E) rejected Form 10AB dated 21.09.2023 in which approval under clause (iii) of first proviso to section 80G of the Act was sought by assessee, filed belatedly or not..?
Heard rival submissions and carefully scanned the material available on record before us.
From the perusal of record its reveals that present appeal is filed belated for which application filed for condonation of delay alongwith and also annexed the affidavit of Shri Gaurav Jain, Managing Trustee, in support of contents of application. Looking to the existing facts and circumstances and in the interest of Page 2 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion justice, we inclined to condone the delay and decide the appeal on its merits.
While reiterating the grounds of appeal, the Ld. AR submitted that Ld. CIT(E) has not considered the information / evidence brought on record in correct prospective and denied the registration u/s 80G(5)(iii) of the Act.
6. In the course of hearing, the Ld. AR submitted that assessee / appellant is a Public Charitable Trust, e-filed an application for registration u/s 80G(5) in Form 10A on 18.09.2022 for provisional registration and then the trust was granted the same in Form 10AC vide order dated 10.03.2022 from 10.03.2022 to A.Y. 2024- 2025. Thereafter Trust filed an application in Form 10AB on 30.03.2022. While filing the same online, the section clause under which applications was filed inadvertently selected on section 80(G)(5)(ii) instead of 80G(5)(iii). Then assessee / appellant requested the Ld. CIT(E) to treat the application on filed u/s 80G(5)(iii) as there was no any option on the IT portal either to amend or to revive the application. On request from assessee / appellant, the Ld. CIT(E) expressed his inability to rectify the Page 3 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion application as no option was available with him and in this context he advised to withdraw the application and file application with correct provision section code and in compliance of that, he withdrew the application on 13.09.2022..
It is also mentioned by the Ld. AR that while re-submitting the said application with correct section code, there were some technical issue due to which application could not be submitted within extended time and for which the assessee contacted the CPC help desk but it was unresponded. Finally on 31.03.2023 the Form 10AB submitted, but despite brought to notice all facts and circumstances in enquiry, the Ld. CIT(E) rejected the application.
The Ld. DR relied upon the order passed by CIT(E).
In the impugned order, the Ld. CIT(E) observed that activities of the applicant has commenced during F.Y. 2019-20 and the present application has not filed within time prescribed. The relevant part of para no. 13 of impugned order is reproduced as below:
“13. From the above, it is evident that the activities of the applicant has commenced during the to FY 2020-21 and the present application filed in Form No.10AB under Clause (iii), of first proviso to sub-section Page 4 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion (5) of section 80G of the Act has not been filed within the time limit prescribed therein and also the assessee has not filed its application within the extended time limit provided by CBDT vide its circular No. 12 of 2021 dated 25.06.2021, circular No. 16 of 2021 dated 29.08.2021 and circular No. 8 of 2022 dated 31.03.2022 which are discussed in para 8 above. Therefore the above application is liable to be rejected as non maintainable, without going into the merits.”
The Ld. AR further submitted that the solitary dispute involved in this appeal to be decided that whether the application filed by the assessee in Form 10AB on 31.03.2023 had been filed within the prescribed time under clause (iii) of the first provision to section 80(G) of the Act or not ? In this regards he submitted that the said application had been filed within prescribed time limit and in the existing facts & circumstances of this case. The application filed on Form 10AB on 31.03.2023 could not be treated as time barred.
It is also submitted on behalf of assessee / appellant that Form 10AB application for registration filed on 30.03.2022 and as
per communication between him and the Ld. CIT(E) dated 13.09.2022 (as enclosed with PB Page no. 37), it reveals that as per mutual discussion the assessee / appellant withdrawn above said
Page 5 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion application and a fresh application in Form 10AB u/s 80G(5)(iii) filed.
It is also argued by the Ld. AR that previously vide clarification circular no. 06/2023 dated 24.05.2023 CBDT had in exercise of its power u/s 119 of the Act, extended the period of limitation till 30.09.2023 by which limit had been since extended till 30.09.2023 for grant of approval. In this context, he also relied upon order of the ITAT Chennai Bench, dated 08.03.2024, CIT-1982 Charitable Trust v/s ITO (supra) in which held that since time limit had been extended till 30.09.2023, rejection for grant of approval termed an improper and unsustainable in law. The relevant para no. 7.8 is being reproduced as below:
“7.8 After hearing the arguments of ld. counsel for the assessee and Id. CIT-DR as noted above, we find from the facts that the timeline prescribed for filing Form No.10AB for registration u/s.12A of the Act in the case of assessee trust has been extended up-to 30.09.2023 after considering the genuine hardship faced by charitable institutions vide various CBDT circulars and finally, vide Circular No.6/2023 dated 24.05.2023. Similarly, the timeline prescribed for filing Form No.10A for recognition u/s.80G of the Act was also extended up-to 30.09.2023 by the same circular for trusts filing registration under clause (i) to first proviso to section 80G(5) of the Act. But the above extension was not extended beyond 30.09.2022, unlike other forms which were extended up to 30.09.2023 to the disputed forms namely Form No.10AB for renewal of recognition u/s.80G(5) of the Act under clause (iii) of the first proviso to section 80G(5) of the Act. Once, the CBDT has extended the timeline for filing Form No.10AB for recognition u/s.12A of the Act and also for filing Form No.10A for Page 6 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion recognition u/s.80G of the Act extended up to 30.09.2023 for trusts filing registration under clause (i) of first proviso to section 80G(5) of the Act, we find no difference in continuing hardship as recognized by CBDT even in filing Form No.10AB for renewal of recognition u/s.80G of the Act under clause (iii) of first proviso to section 80G(5) of the Act. In our view, this being a genuine hardship case, which is recognized by Revenue or CBDT by issuing a general circular, we are of the view that this specific provision of clause (iii) to first proviso to section 80G(5) cannot be excluded and or it has not been the intention of the CBDT while issuing the circular. There cannot be a distinction within the same provision without bringing out any exception and even this is for the benefit of provision the donors who are donating money to the charitable trusts for claiming exemption in their returns of income. In our view, we agree with the argument of Id. counsel for the assessee that the timeline prescribed under clause (ii) of first. proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee's application in Form No.10AB only for this technical reason. We are of the view that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No.10AB for recognition u/s.12A of the Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G of the Act also. Hence, we accept the plea of assessee and agree with the arguments of Id. counsel for the assessee and remand the matter back to the file of the CIT(Exemption) to decide the issue on merits. Hence, the order of CIT(Exemption) on this issue is set aside and matter is remanded back to the file of the CIT(Exemption) for re-deciding the issue on merits as per law. The appeal of the assessee is allowed for statistical purposes. “
In abovecited order of the Co-ordinate Bench, clearly held that the timeline prescribed under clause (iii) of first proviso to Section 80G(5) of the Act should be treated as directory not mandatory especially considering the transitional nature of the amendment as Page 7 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion brought out by the taxation of other laws (relaxation and amendment of certain provisions) Act, 2020 for bringing new regime and application for above purpose in Form 10AB should not reject on merely technical reasons.
During the arguments, the Ld. AR also relied upon order of ITAT, Ahmedabad Bench dated 30.11.2023 in ITA No.
731/Ahd/2023 titled Best Buds Pet Care vs. CIT(Exemption) by which on similar ground, Co-ordinate Bench remitted back the matter for reconsideration. Relevant part of above cited order is reproducing as below:
“6.3 Reading of the above circular makes it clear that the time if extended up till 30-09-20223, whereas the assessee filed belated application on 28.02.-2023. The above circular also clarified that even in case, where the application in Form No. 10AB was rejected by the CIT(E) on or before issuance of this circular dated 24-5-2023, the assessee trust can make fresh application in Form 10AB on or before 30-09-2023. Thus, the Ld. CIT(E) has not considered the clause 7 of the Circular no. 6 of 2023 thereby rejected the application which is in our considered view is against the circular issued by the CBDT.
In the course of hearing it was brought into our notice that further CBDT issued Circular No. 07/2024 dated 25.04.2024 by Page 8 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion which above time limit extended till 30.06.2024. The relevant portion of the aforementioned circular is reproduced as under:
“ On consideration of difficulties reported by the taxpayers and other stakeholders in the electronic filing of Form No. 10A/10AB, the Central Board of Direct Taxes (the Board) in exercise of its powers under section 119 of the Income-tax Act, 1961 (the Act) extended the due date for filing Form No. 10A to 31.08.2021 by Circular No. 12/2021 dated 25.06.2021, to 31.03.2022 by Circular No. 16/2021 dated 29.08.2021, to 25.11.2022 by Circular No. 22/2022 dated 01.11.2022 and further to 30.09.2023 by Circular No. 6/2023 dated 24.05.2023, and extended the due date for filing Form No. 10AB to 30.09.2022 by Circular No. 8/2022 dated 31.03.2022 and further to 30.09.2023 by Circular No. 6/2023 dated 24.05.2023.
Representations have been received in the Board with a request to condone the delay in filing Form No. 10A/10AB, as the same could not be filed in such cases within the last extended date, i.e. 30.09.2023.
On consideration of the matter, with a view to avoid and mitigate genuine hardship in such cases, the Board, in exercise of the powers conferred under section 119 of the Act, hereby extends the due date of making an application/intimation electronically in – i) Form No. 10A, in case of an application under clause (1) of the first proviso to clause (230) of section 10 or under sub-clause (1) of clause (ac) of sub-section (1) of section 12A or under clause (1) of the first proviso to sub-section (5) of section 80G or in case of an intimation under fifth proviso of sub- section (1) of section 35 of the Act, till 30.06.2024; ii) Form No. 10AB, in case of an application under clause (iii) of the first proviso to clause (23C) of section 10 or under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, till 30.06.2024.
It may also be noted that extension of due date as mentioned in paragraph 3(ii) shall also apply in case of all pending application under clause (iii) for the first proviso to clause (23C) of section 10 or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, as the case may be. Hence, in cases where any trust, institution or fund has already made an application in Form No.10AB under the said provisions on or before the issuance of this Circular, and where the Principal Commissioner or Commissioner has not passed an order before the Page 9 of 12 ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion issuance of this Circular, the pending application in Form No. 10AB may be treated as a valid application. 4.1 Further, in cases where any trust, institution or fund has already made an application in Form No. 10AB, and where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular, solely on account of the fact that the application was furnished after the due date or that the application has been furnished under the wrong section code, it may furnish a fresh application in Form No. 10AB within the extended time provided in paragraph 3(ii) i.e. 30.06.2024.
It is also clarified that if any existing trust, institution or fund who had failed to file Form No. 10A for AY 2022-23 within the due date as extended by the CBDT circular no. 6/2023 dated 24.05.2023 and subsequently, applied for provisional registration as a new trust, institution or fund and has received Form No. 10AC, it can avail the option to surrender the said Form No. 10AC and apply for registration for AY 2022-23 as an existing trust, institution or fund in Form No. 10A within the extended time provided in paragraph 3(1) i.e. 30.06.2024.”
Upon hearing rival submissions, we are of the considered opinion that rule of procedure are just to handmade to administration of justice and not to penalise anybody and object of procedure only for interest of justice and the time limit prescribed in aforementioned provisions and clauses in question is quite directory in nature, not mandatory and such a provision / clause should be dealt which in above manner in order to fulfil the end’s of justice. So looking into abovecited circulars, judicial precedents cited as above, we are inclined to accept the plea of assessee /
Page 10 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion appellant and remitting the matter back to the file of the CIT(E) to decide the issue afresh on merit, in accordance with law.
Consequently, the impugned order of the Ld. CIT(E) is hereby set aside and quashed on this point and matter be remitted back to file of the Ld. CIT(E) with the direction to decide expeditiously afresh in accordance with law within a period of three months from receiving this order as far as possible. The present appeal is allowed as indicated above for statistical purpose.
In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Open Court on 15.10.2024
Sd/- Sd/- (S RIFAUR RAHMAN) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 15/10/2024. Pooja/-
Page 11 of 12
ITA No.- 3445/Del/22023 Roop V.K. Jain Foundatiion Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT
ASSISTANT REGISTRAR ITAT NEW DELHI
Date of dictation 10.10.24 Date on which the typed draft is placed before the dictating Member 10.10.2024 Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order
Page 12 of 12