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Facts
The assessee, Paritrupti Foundation, applied for permanent registration under Section 80G of the Income Tax Act, 1961. They had commenced activities on 10.02.2022 and had obtained provisional registration. However, the application for permanent registration was filed on 02.09.2023, which was beyond the prescribed six-month period from the commencement of activities or the expiry of provisional approval.
Held
The Tribunal noted that while the CIT(E) rejected the application due to delay, a subsequent CBDT circular (No. 7/2024) allowed trusts to reapply if they missed the deadline. The Tribunal also referred to various judicial pronouncements that emphasized the importance of substantive justice over technicalities and the possibility of condoning delays in such applications.
Key Issues
Whether the delay in filing the application for permanent registration under Section 80G(5) should lead to its rejection, and whether the CIT(E) has the authority to condone such delays.
Sections Cited
80G(5), 12A, 10(23C)(vi)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”A” JAIPUR
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”A” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 519/JP/2024 cuke Paritrupti Foundation, CIT(E) Vs. 40 Ramdwara Colony, Mahaveer Jaipur Nagar, Tonk Road, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAMCP 4567 C vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Gorav Parasar, CA jktLo dh vksj ls@ Revenue by : Sh. Arvind Kumar, CIT-DR lquokbZ dh rkjh[k@ Date of Hearing : 27/06/2024 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 02/07/2024 vkns'k@ ORDER
PER: RATHOD KAMLESH JAYANTBHAI, AM
This appeal filed by assessee is arising out of the order of the
Commissioner of Income Tax (Exemption), Jaipur dated 23/02/2024 [here
in after ld. CIT(E) ].
In this appeal, the assessee has raised following grounds: - “1. The ld. CIT(Exemptions) has erred on facts and in law by not granting approval u/s 80G(5) of the act on the ground that assessee has not filed application for seeking permanent approval within 6 months of commencement of its activities and also cancelling the provisional approval dated 08/03/2023 which
2 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E) was granted under clause (iv) of the first proviso to section 80G(5).
The Ld. CIT(E) erred in rejecting the application filed for approval u/s 80G(5) of the act as.
The appellant leave to add to, amend or delete the above grounds of appeal carves.”
Succinctly, the fact as culled out from the records is that the
assessee filed online application in Form No. 10AB seeking approval u/s
80G of the Income Tax Act, 1961. The notices were issued in response to
that application filed by the assessee. While examining the details and
application of the assessee for registration u/s 80G of the Act, the ld.
CIT(A) noted that the assessee commenced its activities from 10.02.2022
and filed form 10AB on 02.09.2023 i.e. after delay of six months from
commencement of its activities. Since the assessee required to file an
application in Form No. 10AB u/s clause (iii) of first proviso to sub-section
(5) of sec. 80G of the Act within the time period of at least six months prior
to expiry of period of the provisional approval or within six months of
commencements of its activities, whichever is earlier. He further noted that
the time limit prescribed under sub-section 5 of section 80G of the Act for
filing form 10A and 10AB, mandatory. But considering the hardship of the
stake holder, the same was extended till September, 2022 and since the
application filed by the assessee is dated 02.09.2023, the same is not
3 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E) coming in the limit of 6 months or extended period by CBDT and therefore,
the application was rejected.
Aggrieved from the finding of ld. CIT(E), the assessee has preferred
the present appeal before this Tribunal on the ground as reproduced
hereinabove. To support the various grounds so raised by the ld. AR of the
assessee, he has filed the written submissions and the same is reproduced
herein below:
Facts: 1. The assessee is incorporated u/s 8 of the Companies Act, 2013 on 12.11.2021 (PB 18) with the main object to provide, support to rural children's education, nutrition, and healthcare, aids children with severe illnesses and orphans with HIV, and reunites destitute mental illness patients with families. It also promotes legal literacy, renewable energy, eco-friendly practices, and conducts health camps for public health awareness.(PB 5). 2. The assessce filed an application for provisional registration on 01.03.2023 in Form No.10A u/s 12 Clause (iv) of first proviso to section 80G(5) (copy enclosed). It was granted provisional registration in Form No. 10AC on 08.03.2023 (PB 36) from 08.03.2023 to AY 2025-26.
The assessee commenced its activities from 10.02.2022. Therefore, it filed an application in Form No. 10AB under clause (iii) of first proviso to section 80G(5) (PB 38-44) (copy enclosed) on 02.09.2023 for permanent registration.
The Ld. CIT(E) granted permanent registration in Form No.10AD u/s 12AB(1)(b) vide order dt. 20.02.2024 (PB 1-4) but refused the registration u/s 80G(5) by giving the following reasons:
(i) The application in Form No.10AB under clause (iii) of first proviso to sub- section 80G(5) is required to be filed at least 6 months prior to the expiry of
4 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E) provisional approval or within 6 months of commencement of its activities, whichever is earlier.
(ii) The assessee commenced the activities on 10.02.2022 and thus the application was required to be filed by 10.08.2022 which got extended till 30.09.2022 as per CBDT Circular No.8/2022 dt. 31.03.2022.
(iii) The assessee filed application for grant of permanent registration on 02.09.2023 & filed the Provisional Registration on 01/03/2023 which is after the extended due date. No power is given under the Act to CIT(E) to condone the delay and therefore the application filed by the assessee is rejected as non- maintainable for which reliance is placed on the decision of Hon'ble Kolkata ITAT in case of Bishnupur Public Education Institute 139 Taxman.com 121.
Submission:-
Section 80G allows deduction to an assessee in computing his total income in respect of donation paid to any fund or institution. However, under sub- section 5, the deduction is allowable only if such fund or institution is established in India for charitable purpose and it fulfills the following conditions:-
(i) The income of the fund or institution is exempt u/s 11 & 12. (ii) No part of income or asset of the fund or institution is used for any purpose other than a charitable purpose. (iii) The fund or institution is not for the benefit of any particular religious community or caste. (iv) It maintains regular accounts of its receipt & expenditure. (v) It is constituted as a public charitable trust or registered under Societies Registration Act, 1860 or u/s 8 of Companies Act, 2013. (vi) It is approved by the Commissioner. (vii) It prepares & delivers the statement of donation to the prescribed authorities. (viii) It furnishes to the donor a certificate specifying the amount of donation received. (ix) The assessee has satisfied all the conditions mentioned above. It is provisionally approved under clause (vi) of section 80G(5). However, clause (iii) of the proviso to section 80G(5) provides that where the institution or fund has been provisionally approved, it shall make an application for permanent registration within 6 months of commencement of its activities.
In the present case, there is a delay of approximately 5 months ( Form 30.09.2022 to 01.03.2023 )from the extended date of filing the application for provisional registration under section 80G(5)(vi). The critical question is whether this delay should lead to the rejection of the application or the cancellation of
5 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E) registration, and whether the Ld. CIT(E) has the authority to accept the application despite the delay.
It is submitted that condition of section 80G(5)(vi) is that institution or fund is for the time being approved by the PCIT or CIT. There is no dispute as to the fact that assessee is provisionally registered till AY 2025-26 vide order dt. 08.03.2023 (PB 36-47). Thus it has complied with section 80G(5). The proviso to this section only deals with the procedure as to the filing of the application. The law of procedure has to be approached, understood and appreciated as a helpmate in the course of the process of administration of justice. Procedural provision should be so construed as to sub serve the course of justice and not to hinder it. It is a settled proposition of law that technicalities should not come in way in imparting the substantial justice. In this regard reference is made to Hon'ble Supreme Court judgment in case of S. Nagaraj & Others Vs. State of Karnataka & Another [4 SCC 595] in para 18 of the order has held as under:
"18. Justice is a virtue which transcends all barriers. Neither the rules of procedure nor technicalities of law can stand in its way. The order of the Court should not be prejudicial to anyone. Rule of stare decisis is adhered for consistency but it is not as inflexible in Administrative Law as in Public Law. Even the law bends before justice. Entire concept of writ jurisdiction exercised by the higher courts is founded on equity and fairness. If the Court finds that the order was passed under a mistake, and it would not have exercised the jurisdiction but for the erroneous assumption which in fact did not exist and its perpetration shall result in miscarriage of justice then it cannot on any principle be precluded from rectifying the error. Mistake is accepted as valid reason to recall an order. Difference lies in the nature of mistake and scope of rectification, depending on if it is of fact or law. But the root from which the power flows is the anxiety to avoid injustice. It is either statutory or inherent. The latter is available where the mistake is of the Court. In Administrative Law the scope is still wider. Technicalities apart if the Court is satisfied of the injustice, then it is its constitutional and legal obligation to set it right by recalling its order."
In a case similar to the present one, the Hon’ble Income Tax Appellate Tribunal, Jaipur Bench, addressed the issue of a delay in filing an application for permanent registration under section 80G(5)(vi) in the case of Go Gram Eco Foundation vs. CIT(E) [ITA No. 504/JP/2023]. The appeal questioned whether the application should be rejected solely due to a delay and whether the CIT(E) has the authority to condone such a delay. The Tribunal observed that while section 10(23C)(vi) specifically lacks provisions to condone delays, section 80G(5) does not explicitly deny this power. Thus, it was argued that the CIT(E) inherently possesses the power to condone delays unless specifically restricted by the statute. The principle laid down by higher judicial authorities suggests that delays should not automatically result in the rejection of applications if such rejections impede substantial justice. Consequently, the Tribunal held that the delay in filing should not be the sole ground for rejecting the application.
6 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E)
Further, in similar case of Bhamashah Sundarlal Daga Charitable Trust vs. CIT(E) [ITA No. 278/JODH/2023] the Hon’ble Income Tax Appellate Tribunal, Jodhpur Bench while discussing the issue of applying for registration under section 80G of the Income Tax Act. The Hon’ble Tribunal highlighted the problem with a literal interpretation of tax provisions leading to absurd results. It emphasized the necessity of interpreting statutory provisions in a way that avoids unreasonable and unintended consequences. The Hon’ble Tribunal relied on the judgement of the Hon’ble Supreme Court's observations in K.P. Varghase's case wherein it was held that underscoring that statutory provisions must be construed to avoid absurdity and injustice.
In view of above, only because there is some delay in moving application for permanent registration u/s 80G(5) when the provisional registration is in force, cannot be a reason to reject the application only on the ground that CIT(E) has no power given in the Statue to condone the delay ignoring that an authority who has the power to grant has inherent power to condone the delay also unless such power is specifically denied as is in second and third proviso to section 254(2A) of the Act. Hence the Ld. CIT(E) be directed to grant permanent registration on the basis of application filed on 08.03.2023.
The Ld. CIT(E) has relied on the decision of ITAT, Kolkata Bench. This decision is with reference to exemption u/s 10(23C)(vi) where it was held that CIT(E) does not have any power to condone the delay in granting approval for earlier years. This decision is on section 10(23C)(vi) and thus not applicable. Even the principal laid down in this decision and the High Court decision referred therein is that even if application is filed late, the approval should be granted from the AY relevant to the PY in which the application is filed. Therefore, the permanent registration ought to have been granted to the assessee at least from the date when the application is filed instead of rejecting the application in toto.
It is submitted that Hon'ble Supreme Court in case of CIT Vs. Lok Sewa Sansthan Samiti 105 Taxmann.com 203 (copy enclosed) has dismissed the SILP filed by the revenue against the decision of Hon'ble Allahabad High Court where it was held that where the assessee stands registered as a charitable institution u/s 12A of the Act, the natural corollary is that its application under section 80G(5) of the Act also becomes liable to be allowed. In the present case also when the assessee has been granted permanent registration u/s 12A(1)(ac)(iii) on 29.06.2023 in pursuance to the application filed on 16.12.2022, the permanent registration u/s 80G(5) should also be allowed in pursuance to the application filed on same date.
Without prejudice to above, it is submitted that clause (iv) of the proviso to section 80G(5) has been substituted by FA, 2023 w.e.f. 01.10.2023 to provide
7 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E) that application can be made at any time after the commencement of the activities where the activities of the institution or funds have commenced and no income or part thereof has been excluded from the total income u/s 11 or 12 for any PY ending on or before the date of such application. In the present case also, when the assessee is given permanent registration u/s 12A of the Act, the application moved u/s 80G(5) after the commencement of the activities should be allowed since the amended section is to remove the genuine hardship to the assessee and therefore it has a retrospective application as held by Hon'ble Supreme Court in case of CIT Vs. Vatika Township Private Limited (2014) 367 ITR 466 where at Para 32 & 33 it is held that legislations which modify accrued rights or which impose obligations or impose new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect. However, if legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally and where to confer such benefit appears to have been the legislators object, then the presumption would be that such legislation, giving it a purposive construction, would warrant it to be given a retrospective effect. 14. It is further submitted that the benefit of section 80G is to the donors provided the fund or institution is approved u/s 80G(5). If the registration is not granted to the assessee for the sole reason of delay in filing the application, it would adversely affect the donors who have given the donation. Therefore also, the registration to the assessee should not be refused only because of small delay in filing the application.
In view of above, 1. We respectfully request the Hon'ble ITAT to direct the CIT(E) to extend the provisional registration granted on 08.03.2023 until the final order of rejection is issued by the CIT(E). This extension is crucial to ensure the uninterrupted functioning of our organization's activities during the evaluation period.
Ld. CIT(E) be directed to grant registration u/s 80G(5) of the Act in pursuance to the application filed on 02.09.2023.”
To support the contention so raised in the written submission reliance
was placed on the following evidence / records / :
S.No Particulars Pg No 1 Copy of Order in Form 10AD dated 20/02/2024 approving the assessee's registration u/s 12A of the Act 1-4
8 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E)
2 Copy of Article of Association and Memorandum of Association 5-17 3 Copy of Certificate of Incorporation issued by Ministry of Corporate Affairs 18 4 Copy of License u/s 8 issued by Registrar of Companies 19 5 Copy of audited Financial statements for FY 2022-23 20-32 6 Copy of Acnknowledgement of return filed for AY 2023-24 33 7 Copy of Computation of Income for AY 2023-24 34-35 Copy of Provisional Registration u/s 80G(5) of the Act in Form 10AC dated 8 08/03/2023 36-37 9 Copy of Application for Registration filed Form 10AB dated 02/09/2023 38-44 10 Copy of Notices dated 07/12/23,12/12/23,23/01/24&02/02/24 issued by the CIT(Exemption),Jaipur u/s 80G of the Act 45-50 11 Copy of Acknowledgement of Reply dated 05/02/2024 51-52
The ld. AR of the assessee in addition to what has been stated in the
written submission, he argued that the recently, the time limit for filing u/s
80G application which was last extended up to 30.09.2023 that extension
was given again for filing the application till 30.06.2024. Therefore, considering that circular No. 7/2024 dated 25th April 2024 the assessee
should not be deprived of benefit on that aspect of the matter.
Per contra, the ld. DR relied upon the order of ld. CIT(E) but at the
same time, he did not object to the prayer of the assessee for considering
the circular issued by the Board and prayer to set aside.
9 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E) 8. We have heard the rival contentions and perused the material placed
on record. The bench noted that in this case the assessee filed an online
application in Form No. 10AB seeking approval u/s 80G of the Income Tax
Act, 1961 on 02.09.2023. While examining the details and application of the
assessee for registration u/s 80G of the Act, the ld. CIT(A) noted that the
assessee commenced its activities from 10.02.2022. Whereas filed form
10AB on 02.09.2023 i.e. after delay of six months from commencement of
its activities. He also noted that since the assessee is required to file an
application in Form No. 10AB u/s clause (iii) of first proviso to sub-section
(5) of sec. 80G of the Act within the time of at least six months prior to
expiry of period of the provisional approval or within six months of
commencements of its activities, whichever is earlier. The ld. CIT(E) noted
that the time limit prescribed under sub-section 5 of section 80G of the Act
for filing form 10A and 10AB, mandatory. But considering the hardship of
the stake holder, the same was extended till September 2022. As the
application was filed by the assessee is dated 02.09.2023, the same is not
coming in the limit of 6 months or extended period by CBDT. Based on that
aspect of the matter the application for recognition u/s. 80G(5) of the Act
was denied to the assessee. Against that observation the ld. AR of the
assessee submitted that the ground for rejection are curable in nature and
10 ITA No. 519/JP/2024 Paritrupti Foundation vs. CIT(E) same in fact was cured by the circular No. 7/2024 dated 25th April, 2024
issued by the CBDT. The CBDT, considering the factual aspect of the
matter, allowed the trust to apply again if they fail to apply within the
timeline prescribed up to 30.06.2024. Since there is no other adverse
observation in the order under challenge and considering the CBDT circular
we deem it fit to set aside the matter before the file of the ld. CIT(E) to settle
the dispute raised hereinabove.
In terms of these observations the appeal of the assessee is allowed
for statistical purpose.
Order pronounced in the open court on 02/07/2024. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member
Tk;iqj@Jaipur fnukad@Dated:- 02/07/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Paritrupti Foundation, Jaipur 2. izR;FkhZ@ The Respondent- CIT(E), Jaipur vk;dj vk;qDr@ The ld CIT 3. vk;dj vk;qDr¼vihy½@The ld CIT(A) 4. 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 6. xkMZ QkbZy@ Guard File (ITA No. 519/JP/2024) vkns'kkuqlkj@ By order,
सहायक पंजीकार@Aेेज. त्महपेजतंत