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Facts
The appellant, Pracheen Shri Aggarwal Digamber Jain Panchayat Delhi, applied for approval under Section 80G(5)(iii) in Form 10AB. The CIT(E) rejected the application on 28.02.2024, considering it time-barred, as a provisional certificate u/s 10AC was issued on 25.10.2022 and Form 10AB was not filed within the initial statutory time limit. The appellant argued that CBDT circulars extended deadlines, and their activities commenced much earlier, making certain time-limit clauses inapplicable, and that their provisional approval was valid until 31.03.2025.
Held
The Tribunal held that procedural rules are directory, not mandatory, and the time limits for filing Form 10AB were extended by various CBDT circulars, including Clarification Calendar No. 6 of 2023 and Circular No. 07/2024, extending the deadline until 30.06.2024. Consequently, the CIT(E)'s order rejecting the application on technical grounds was set aside, and the matter was remanded back to the CIT(E) for a fresh decision on merits within three months.
Key Issues
Whether the application in Form 10AB for approval under Section 80G(5)(iii) was time-barred, considering CBDT's extended deadlines, and whether the CIT(E) could reject the application solely on technical grounds.
Sections Cited
Section 80G(5)(iii), Section 119, Section 10AC
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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 28.02.2024 passed by the Learned Commissioner of Income Tax (Exemption), Delhi (for the sake of convenience, hereinafter referred in short as Ld. CIT(E)] by which the application filed by appellant in ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat 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 by stating that provisional certificate u/s 10 AC has been issued on 25.10.2022 and application in Form 10AB has not been filed within statutory time limit.
Solitary issue exists in this appeal for adjudication that the Ld. CIT(E) rejected Form 10AB dated 28.03.2024 in which approval under clause (iii) of first proviso to section 80G of the Act was sought by assessee, by stated that filed belatedly or not..? For this purpose, assessee / appellant raised multiple grounds which are factual and argumentative, so it is not required to be produced.
3. Heard rival submissions and carefully scanned the material available on record before us.
4. The Ld. AR submitted that while deciding his application, the Ld. CIT(E) did not notice the “Clarification Calendar No. 6 of 2023 dated 24.05.2023”, wherein para 5 CBDT had in exercise of its power u/s 119 of the Act had extended the period of limitation till 30.09.2023.
ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat 5. 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 prior to F.Y. 2019-20 and the present application has not filed within time prescribed. Para no. 6.4 of impugned order is reproduced as below:
“6.4 From the above, it is evident that the activities of the applicant has commenced prior to FY 2019-20 and the present application filed in Form No.10AB under Clause (iii) of first proviso to sub-section (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. Therefore the above application is liable to be rejected as non maintainable, without going into the merits.”
In the course of hearing, the Ld. AR submitted that in the present case the period for which provisional approval had been granted was to expire only on 31.03.2025 and not before and the application presented for the purpose of grant of an approval in Form 10AB under the relevant provision within prescribed time limit i.e. prior to 31.03.2025. He further submitted that the second limb of the aforesaid clause is inapplicable in the present case, as much as the time of six months from the commencement of its Page 3 of 12
ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat activities could not be invoked, since it had been carrying on its activities since the dynasty rule of Aurangzeb in India, which is an admitted fact i.e. prior to enactment of the Act.
The Ld. AR further vehemently submitted that it is not known on what basis the Ld. CIT(E) has referred to in his order the period from F.Y. 2019-20, despite the fact, the activities of the appellant had commenced even much prior to year 1961 and as such no application could have been filed within six months from the commencement of activities. He further submitted that an application for the grant of approval u/s 80G of the Act in Form 10G had filed on which no order had been passed and since no order regarding approval or rejection was passed and Form 10G was replaced by Form 10A, he then filed another application for aforesaid purpose, and on said application provisional approval u/s 80G of the Act had been granted on 25.10.2022 and thereafter he filed form 10AB on 30.09.2023 for the grant of approval u/s 80G of the Act. So having granted the provisional approval on 25.10.2022, the approval sought as aforesaid could not been rejected only on the ground that application had not been filed within six months
ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat from the commencement of its activities, which was an impossibility.
The Ld. AR further argued that the solitary dispute involved in this appeal to be decided that whether the application filed by the assessee in Form 10AB on 30.09.2023 under rule 17A/11AA12e, 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 the second limb of clause could not been acted which was an impossibility and since the provisional approval had been granted till 31.03.2025. The application filed on Form 10AB on 30.09.2023 could not been treated as time barred.
In support of argument advanced on behalf of the assessee, following orders relied upon:
• CIT-1982 charitable Trust u/s ITO (2024) 160 taxmann.com 475 (Chennai) • (2024) 160 taxman.com 174 (Kolkata) Tomorrow’s Foundation v/s Commissioner of Income Tax (Exemption) • (2024) 160 taxman.com 624 (Kolkata) Anudip Foundation for social welfare v/s CIT (Exemption) Page 5 of 12
ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat • (2024) 160 taxman.com 154 (Pune) Birmani Charitable Foundation v/s CIT (Exemption)
It is submitted 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 Page 6 of 12
ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat recognition u/s.12A of the Act and also for filing Form No.10A for 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
ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat 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 and application for above purpose in Form 10AB should not reject on merely technical reasons.
In the course of hearing it was brought into our notice that further CBDT issued Circular No. 07/2024 dated 25.04.2024 by 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.
2. 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 Page 8 of 12 ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat 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 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 arguments by both sides at length, there is substance in the submission of the Ld. AR that in the instant case provisional approval u/s 80G of the Act had been granted to the Page 9 of 12
ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat appellant from 25.10.2022 to AY 2025-26, so period for which provisional approval had been granted was to expire only on 31.03.2025 and not before and further that the second limb of the aforesaid clause was inapplicable in appellant case.
We are of the considered opinion that rule of procedure are just to handmaid 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 / 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 Page 10 of 12
ITA No.- 1673-2024 Pracheen Shri Aggarwal Digamber Jain Panchayat receiving this order as far as possible. The present appeal is allowed as indicated above for statistical purpose.
Order pronounced in the Open Court on 20.08.2024