AATMA PRAKASH MENTAL HEALTH FOUNDATION,INDORE vs. COMMISSIONER OF INCOME TAX (EXEMPTION), BHOPAL
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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
आदेश / O R D E R
Per B.M. Biyani, A.M.:
This appeal is directed against the order dated 19.10.2023 passed by the learned Commissioner of Income-Tax (Exemption), Bhopal [“CIT(E)”] by which the assessee’s application for grant of final approval u/s 80G(5) of Income-tax Act, 1961 has been rejected and the provisional approval u/s 80G(5) granted earlier has also been cancelled.
The background facts leading to present appeal are such that the assessee is incorporated on 29.10.2016 u/s 8 of Companies Act, 2013 as a
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Aatma Prakash Mental Health Foundation, Indore. ITA No. 107/Ind/2024
not-for-profit company, engaged in charitable purpose of promoting mental-
health awareness. On assessee’s applications, the authorities granted
provisional registration u/s 12A/12AB of Income-tax Act, 1961 vide order
dated 27.05.2021 as also provisional-approval u/s 80G(5) vide order dated
28.05.2021. Subsequently, when the assessee filed applications for grant of
final registration u/s 12A/12AB and final approval u/s 80G(5), the Ld.
CIT(E) granted final registration u/s 12A/12AB vide order dated 30.10.2023.
But, hwoever, rejected assessee’s application (in Form No. 10AB) dated
08.04.2023 for final approval u/s 80G(5) vide order dated 19.10.2023.
Therefore, the assessee is aggrieved by order dated 19.10.2023 passed by
CIT(E) rejecting assessee’s application for final approval u/s 80G(5) and
come in present appeal before us.
The registry has informed that the present appeal is delayed by 52
days and therefore time-barred. Ld. AR for assessee submitted that the
assessee has filed an application for condonation of delay supported by an
affidavit on stamp. The affidavit is deposed by Smt. Prarthana Sharma,
director of assessee. In the application/affidavit, it is stated that the
assessee is a not-for-profit company engaged in charitable activity for
mental health awareness and well being among children and youth in school
and non-school environment. In para 12 to 14, it is stated that the deponent
Smt. Prarthana Sharma was director of assessee who recently got married in
May, 2023 and moved to Delhi after marriage. She did not come to Indore
after passing of impugned order and could not co-ordinate with the counsel
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for filing of appeal. It is in first week of February, 2024 that she came to
Indore and thereafter discussed with the counsel in the matter. Then, the
counsel advised for filing of appeal. Therefore, the delay of 52 days has
occurred. Ld. AR very humbly submitted that there is no deliberate lethargy,
negligence, mala fide intention or ulterior motive of assessee in making delay
and the assessee does not stand to derive any benefit because of delay. He
further submitted that the sole reason of delay is genuinely explained in the
affidavit/application. He prayed to condone the delay in the situation for the
cause of justice. Ld. DR for Revenue left the matter to the wisdom of Bench.
We have considered the explanation advanced by assessee and in absence of
any contrary fact or material on record, the assessee is found to have a
‘sufficient cause’ for delay in filing present appeal. We find that section
253(5) of the Act empowers the ITAT to admit an appeal after expiry of
prescribed time, if there is a sufficient cause for not presenting appeal
within prescribed time. It is also a settled position by Hon’ble Supreme
Court in Collector, Land Acquisition Vs Mst. Katiji and others 1987 AIR
1353, 1987 2 SCC 387 that whenever substantial justice and technical
considerations are opposed to each other, the cause of substantial justice
must be preferred by adopting a justice-oriented approach. Thus, taking into
account the provision of section 253(5) and the decision of Hon’ble Supreme
Court, we take a judicious view, condone delay, admit appeal and proceed
with hearing.
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At first, we would like to reproduce the impugned order passed by
CIT(E) by which the assessee’s application has been rejected:-
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Ld. AR for assessee analysed above order in the open court and
submitted that the CIT(E) has rejected the assessee’s application (Form No.
10AB) on the premise that it was time-barred. The CIT(E) has arrived at
such a conclusion by observing that the provisional approval was granted to
assessee on 28.05.2021 and thereafter the assessee was required to apply
for permanent approval under clause (iii) of first proviso to Section 80G(5)
within six months from start of activities but since the assessee had already
started activity before getting provisional approval, the assessee was
required to apply ‘within 6 months from the date of provisional certificate’.
Then, the CIT(E) has noted that the assessee has applied on 08.04.2023
which is beyond the time-limit prescribed in clause (iii) of first proviso to
Section 80G(5) as extended by CBDT Circular No. 8/2020-22 dated
31.03.2022 upto 30.09.2022. The CIT(E) has also noted that though the
CBDT has once again extended/relaxed the date for filing of application for
registration u/s 12A or 10(23C) vide Circular No. 06/2023 dated 24.05.2023
(the extended date is 30.09.2023) but the said Circular does not grant any
extension/relaxation for filing application under clause (iii) of first proviso to
Section 80G(5). With this precise reasoning, the CIT(E) has rejected
assessee’s application treating the same as time-barred.
Having explained thus, Ld. AR contended that the order of CIT(E) is
fallacious due to below mentioned reasons:
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(6.1) The clause (iii) of first proviso to Section 80G(5) reads as under:
“Provided that the institution or fund referred to in clause (vi) shall make an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for grant of approval,- (i) XXX (ii) XXX (iii) Where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier.” [Emphasis by underline ours] Thus, the requirement is to file application ‘six months prior to expiry of the
period of the provisional approval or within six months of commencement of
activities, whichever is earlier’. Admittedly, in the present case, the assessee
had already commenced its activity prior to provisional approval. Therefore,
the second part of the provision specifying ‘within six months of
commencement of activities’ is useless and the CIT(E) has also accepted this
in his order. Accordingly, the CIT(E) has observed that the assessee was
required to file application within the time specified in first part of provision.
But, however, the CIT(E) is apparently wrong in reading first part itself. He
has wrongly read that the application is required to be filed ‘within six
months from the date of provisional certificate’ whereas the language of law is
‘six months prior to expiry of the period of the provisional approval’. Since the
provisional approval was granted to assessee for the period ‘from 28.05.2021
to AY 2024-25’ as mentioned in Column 8 of the aforesaid order dated
28.05.2021, copy filed at Page No. 13 of the Paper-Book, the period of
provisional approval would expire on 31.03.2024 and the assessee can very
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well file application at any time up to 30.09.2023 (six months prior to expiry
of provisional approval). Hence, the application filed by the assessee on
08.04.2023 is perfectly within the time. Ld. AR submitted that the CIT(E)
has treated assessee’s application as time-barred under mistaken reading of
law. Having explained thus, Ld. AR submitted that the case of assessee is
squarely covered by a recent decision of ITAT, Ahmedabad Bench in Rabdi
Vibhag Vs. CIT(E), I.T.A. No. 797/Ahd/2023 order dated 24.01.2024
wherein the ITAT has decided an identical issue having identical facts in
favour of assessee and directed the CIT(E) to re-consider the Form 10AB
filed by assessee for final approval u/s 80G. In coming to such conclusion,
the ITAT has considered the decisions of co-ordinate benches of ITAT
wherein the provisions of sub-clause (iii) of the Proviso to Section 80G(5)
and Circular No. 6 of 2023 dated 24-05-2023 have been extensively
analysed. We re-produce below the relevant paras of order of ITAT:-
“2. The brief facts of the case is that the assesse is a Trust created on 05.11.1981. The assessee Trust was granted permanent registration u/s 12A(1)(ac)(iii) by the Ld. CIT(E) vide order dated 06.04.2022. The assessee Trust also granted provisional registration u/s 80G(5) of the Act by Ld. CIT(E) vide order dated 13.05.2022. Thereafter the assessee Trust filed Form 10AB for final registration u/s 80G(5) of the Act on 23.02.2023 which was rejected by Ld. CIT(E) on the ground that the application was filed beyond the limitation period prescribed under the Act and also extended period of limitation granted by CBDT by various circulars issued from time to time. Thus, denying registration u/s 80G(5) of the Act and also cancelling provisional registration granted on 13.05.2022 to the assessee. 3. Aggrieved against the rejection order, the assessee is in appeal before us raising the following Grounds of Appeal: (not reproduced) 4. Ld. Counsel Shri Rasesh Shah appearing for the assessee submitted before us that this very same issue was held in favour of the assessee by the Co-ordinate Bench of this Tribunal in the case of Best Buds Pet Care vs. CIT(E) in ITA No. 731/Ahd/2023 vide order dated 30.11.2023, whereby set aside the rejection order with a direction to reconsider Form 10AB for final registration u/s. 80G of the Act. Similarly, the ld.
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Counsel placed various decisions passed by other Co-ordinate Benches of the Tribunals and decisions of the High Courts of Delhi.
Per contra, Ld. CIT-DR Shri Kamlesh Makwana appearing for the Revenue strongly opposed the plea of the assessee Trust and submitted that under the new provisions of the Act, strict time limit of six months period before expiry period of provisional registration or within six months of commencement of the activities of the Trust, whichever is earlier is prescribed under the Act. The above period was further extended upto 30-09-2022 by CBDT circular from 31st August, 2021. In the present assessee’s case Provisional Registration was granted on 13-05-2022 u/s. 80G(5)(iv) for a period of three years from A.Ys. 2022-23 to 2024-25. However, the assessee filed its application for Final Registration only on 23-02-2023 which is beyond the time limit prescribed under the Act and extended by the Board by way of various circulars. Thus, ld. CIT(E) is correct in denying Final registration u/s. 80G(5) of the Act, which is beyond the period of limitation prescribed under the Act. The above rejection order does not require any interference and therefore the assessee’s appeal is liable to be dismissed. The ld. Departmental Representative further submitted that if delay is condoned that will be an opening for such kind of litigations before this appellate forum and therefore requested to dismiss the appeal filed by the assessee.
We have given our thoughtful consideration and perused the material available on record. It is undisputed fact that the Trust was created on 25-11-1981 and Final registration u/s. 12AB of the Act was granted to the Assessee Trust vide order dated 06-04-2022 for the assessment years 2022-23 to 2024-25. Similarly, Provisional registration u/s 80G was granted on 13-05-2022. However, the assessee failed to file final registration under 80G(5) within six months period. On an identical issues, Co- ordinate Bench of this Tribunal in the case of Best Buds Pet Care (cited supra) held as follows:
“……….6.1 For better understanding, section 80G(5)(3) of the Act reads as follows:-
"(iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier;"
6.2 Reading of the above sub-section makes it clear that there is no provision to condone the delay in Registration of the Trust. However, the CBDT has extended the above time limits by invoking section 119 of the Act by issuing circular No. 8 of 2022, dated 31-03- 2022 extending the time limit upto 30th September, 2022. It is thereafter by circular No. 6 of 2023 dated 24- 05-2023 clarified as follows:-
“7. It may be also noted that the extension of due date as mentioned in paragraph 5(ii) shall also apply in case of all pending applications under clause (iii) of the first proviso to clause (23C) of section 10 or sub- clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act, as the case may be. Hence, in cases where the trust has already made an application in Form Ho. 10AB under the said provisions but such application has been furnished after 30.09.2022 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. Further, in cases where the trust had already made an application in Form No. 10AB, and
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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, the trust may furnish a fresh application in Form No. 10AB within the extended time provided in paragraph 5(ii) i.e. 30.09.2023.”
However, this clause (7) was not referred by the CIT(E) in his order while rejecting the registration u/s. 80G of the Act to the assessee on the sole ground that he has no power to condone the delay of belated filing of Form no. 10AB u/s 80G(5) of the Act.
6.3 Reading of the above circular makes it clear that the time is extended up till 30-09-2023, 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 24-05-2023, 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. Therefore, we hereby set aside the impugned order passed by CIT(E) with a direction to reconsider the From No.10AB for final registration u/s. 80G of the Act by giving proper opportunity of being heard to the assessee trust. Needless to say the assessee trust should co-operate by furnishing all the required details as mandated under the law for granting final registration u/s. 80G of the Act.”
Further the Surat Bench of this Tribunal in ITA No. 728 & 732/SRT/2023 vide order dated 09.01.2024 held as follows:
“…13. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We note that in the latest Circular No.6/2023 dated 24.05.2023, the date was not extended by the CBDT, so far as, filing of Form No. 10AB u/s 80G(5)(iii) of the Income Tax Act, 1961, is concerned.
We note that the extended period, as per Circular No.8/2022, as extended period declared by the Central Board of Direct Taxes (CBDT) is, on or before 30.09.2022, which has also expired, in the assessee`s case under consideration. However, after this Circular No.8/2022, the CBDT has issued another Circular No.6/2023 dated 24.05.2023 wherein in para-5, the CBDT has instructed as follows:
“5. In order to mitigate genuine hardship in such cases, the Board, in the exercise of the power under section 119 of the Act, extends the due date of making an application in,-
(i) Form No.10A, in case of an application under clause (i) of the first proviso to clause (23C) of section 10 or under sub-clause (i) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5) of section 80G of the Act, till 30.09.2023 where the due date for making such application has expired prior to such date;
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(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 122A of the Act, till 30.09.2023 where the due date for making such application has expired prior to such date.
However, in earlier Circular 8/2022, which was issued on 31.03.2022 the CBDT has given instruction about approval 80G(5) of the Act, which is reproduced below:
“1. On consideration of difficulties in electronic filing of form No.10AB as stipulated in Rule 2C or 11AA or 17A of the Income-Tax Rules, 1962 w.e.f. 01.04.2021, the Central Board of Direct Taxes (CBDT), in exercise of its powers under Section 119(1) of the Act, extends the due date for electronic filing of such Form as under:
(i) The application for registration or approval under Section 10(23C), 12A or 80G of the Act in form No.10AB, for which the last date for filing falls on or before 29th September, 2022, may be filed on or before 30th September, 2022.”
Thus, in the Circular No.8/2022 dated 31.03.2022, cited above, there is mention about Section 80G of the Act (in form No. 10AB) for registration or approval and extended date is mentioned as 30.09.2022. However, in the latest Circular No.6/2023 dated 24.05.2023, the CBDT did not clarify or did not mention about the extension of the time limit for Section 80G(5) of the Act, (in form No. 10AB). Therefore in the situation, it is difficult to interpret clause (iii) the 3rd proviso of Section 80G(5) of the Act, which states as follows:
“where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier.”
Therefore, it is undue hardship to the assessee, as the CBDT, in the latest Circular No.6/2023 dated 24.05.2023, about application for registration or approval under Section 80G, in form No. 10AB, did not mention the extended period. Thus, we find merit in the submission of Ld. Counsel to the effect that assessee is an old trust, which had registered on 29.11.2001 and commenced its activities from 2001, therefore, it is impossible to file the application u/s 80G(5) (iii) of the Act, “within six months of commencement of its activities’ as stated in above clause (iii) of 3rd proviso of section 80G(5) of the Act. Besides, as per circular No.8/2022 of CBDT dated 31.03.2022, the extended time is up to 30.09.2022, however, the assessee filed Form No.10AB u/s 80G(5)(iii) on 24.02.2023, therefore, application filed by the assessee before the ld CIT(E) is delayed by 147 days (approx.), and hence ld CIT(E) rejected application of assessee in Form No.10AB u/s 80G(5) (iii) of the Act, as not maintainable and also cancelled the provisional approval granted in Form No.10AC, under clause (iv) of first proviso to sub-section (5) of section 80G of the Act.
Therefore, in this ambiguity situation in circular No.8/2022 of CBDT dated 31.03.2022 and latest Circular No.6/2023 dated 24.05.2023, of the CBDT, we do not have any option but to condone the delay in filing application in Form No.10AB u/s 80G(5) of the Act. We note that Co-ordinate Bench of Jodhpur in the case of Bhamashah Sundarlal Daga Charitable Trust vs. CIT(Exemption) in
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ITA No. 278/JODH/2023 dated 10.11.2023 dealt with the issue of clause (iii) 3rd proviso u/s 80G(5) of the Act stating that “whichever is earlier” is applicable only to the newly constructed trust. The findings of the Co-ordinate Bench in the case of Bhamashah Sundarlal Daga Charitable Trust (supra) is reproduced below:
“10.1 In this background, we need to read the sub-clause (iii) of the Proviso to Section 80G(5) of the Act. For ready reference it is again reproduced here under :
“(iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier”
10.2 The sub-clause says that the Institution which have provisional registration have to apply at-least six months prior to expiry of the provisional registration or within Six months of commencement of activities, whichever is earlier.
10.3 In continuation of this when we read the ‘sub clause (iii) of Proviso’ of section 80G(5), which we have already reproduced above, it is clear that the intention of parliament in putting the word “or within six months of commencement of its activities, whichever is earlier” is in the context of the newly formed Trust/institutions. For the existing Trust/Institution, the time limit for applying for Regular Registration is within six months of expiry of Provisional registration if they are applying under sub-clause (iii) of the Proviso to Section 80G(5) of the Act. This will be the harmonious interpretation.
If we agree with the interpretation of the ld. CIT(E), then say a trust which was formed in the year 2000, performed charitable activities since 2000, but did not apply for registration u/s 80G, the said trust will never be able to apply for registration now. This in our opinion is not the intention of the legislation. This interpretation leads to absurd situation.
11.1 In this context, we will like to refer to observations of the Hon’ble Supreme Court in the case of K P Varghase (supra), where in Hon’ble SC observed as under :
Quote, “It is a well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the Legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement - the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price at which the property is sold by more than 15 per cent of such agreed price. This is not at all an uncommon case in an economy
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of rising prices and in fact we would find in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement. Can it be contended with any degree of fairness and justice that in such cases, where there is clearly no understatement of consideration in respect of the transfer and the transaction is perfectly honest and bona fide and, in fact, in fulfilment of a contractual obligation, the assessee who has sold the property should be liable to pay tax on capital gains which have not accrued or arisen to him. It would indeed be most harsh and inequitable to tax the assessee on income which has neither arisen to him nor is received by him, merely because he has carried out the contractual obligation undertaken by him. It is difficult to conceive of any rational reason why the Legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carries out such contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income which has neither arisen to the assessee nor has been received by him. If we may take another illustration, let us consider a case where A sells his property to B with a stipulation that after sometime, which may be a couple of years or more, he shall resell the property to A for the same price. Could it be contended in such a case that when B transfers the property to A for the same price at which he originally purchased it, he should be liable to pay tax on the basis as if he has received the market value of the property as on the date of resale, if, in the mean-while, the market price has shot up and exceeds the agreed price by more than 15 per cent. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply section 52(2) according to its strict literal construction. We must, therefore, eschew literalness in the interpretation of section 52(2) and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature, the Court may modify the language used by the Legislature or even 'do some violence" to it, so as to achieve the obvious intention of the Legislature and produce a rational construction -” Unquote.
11.2 Thus, as observed by Hon’ble Supreme Court, that the statutory provision shall be interpreted in such a way to avoid absurdity. In this case to avoid the absurdity as discussed by us in earlier paragraph, we are of the opinion that the words, “within six months of commencement of its activities” has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of Hon’ble Finance Minister and the Memorandum of Finance Bill 2020.
11.3 Therefore, in these facts and circumstances of the case, we hold that the Assessee Trust had applied for registration within the time
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allowed under the Act. Hence, the application of the assessee is valid and maintainable.
Even otherwise, the Provisional Approval is upto A.Y.2025-26, and it can be cancelled by the ld. CIT(E) only on the specific violations by the assessee. However, in this case the ld. CIT(E) has not mentioned about any violation by the Assessee. Therefore, even on this ground the rejection is not sustainable.
However, the ld. CIT(E) has not discussed whether the Assessee fulfils all other conditions mentioned in the section as he rejected it on technical ground. Therefore, in these facts and circumstances we hold that the Assessee had made the application in form 10AB within the prescribed time limit and hence it is valid application. Therefore, we direct the ld. CIT(E) to treat the application as filed within statutory time and verify assessee’s eligibility as per the Act. The ld. CIT(E) shall grant opportunity to the assessee. Assessee shall be at liberty to file all the necessary documents before the ld.CIT(E).
Accordingly, the appeal of the assessee is allowed for statistical purpose. Since we have set aside to Ld. CIT(E), we do not intend to adjudicate each ground separately.”
We note that the Co-ordinate Bench of ITAT Jodhpur in the case of Bhamashah Sundarlal Daga Charitable Trust (supra) dealt with only the issue/terminology of “whichever is earlier” which is applicable to new trust which have created recently, and it does not deal with condonation of delay in case of old trust who made the application before ld CIT(E ) very late, that is, the issue mention in clause (iii) of 3rd proviso of section 80(5), “where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval..” has not been adjudicated.
Now the next question before us is that whether Tribunal has power to condone the delay in filing the Form No.10AB u/s 80G(5) of the Act. The Tribunal is a final fact finding authority, and based on the assessee`s facts and undue hardship created by the clause (iii) of 3rd proviso of section 80(5) of the Act, the Tribunal may condone the delay in filing the Form No.10AB u/s 80G(5) of the Act. Therefore, we are of the view that delay in filing the Form No.10AB u/s 80G(5) should be condoned in the interest of justice. For that we rely on the judgment of Hon’ble Delhi High Court in the case of DCIT (Exemption) vs. Vishwa Jagriti Mission [2013] 30 taxmann.com 41 (Delhi) / [2013] 213 Taxman 65 (Delhi), wherein the Hon’ble Delhi High Court held as follows:
“18. The main question that falls for our consideration is whether the Tribunal was justified in condoning the delay in the filing of the application for registration under section 12A of the Act and whether the view taken by the Tribunal is perverse. The question whether there was sufficient cause for the delay is always a question of fact as has been held by two Division Bench judgments of this Court: (i) CIT v. Parma Nand [2004] 266 ITR 255/135 Taxman 100 (Delhi) and (ii) CIT v. ITOCHU Corpn. [2004] 268 ITR 172/139 Taxman 348 (Delhi). The Tribunal has, in an elaborate order in which all the facts and the rival submissions have been taken into consideration, held that there was sufficient cause for the delay on the part of the assessee-society in
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making the applications for registration under section 12A and 80G of the Act. It is not necessary, nor is it proper, for us to decide the culpability or otherwise of A.K. Sikri who was the Treasurer of the assessee-society. All that we need to examine is whether the Tribunal had valid materials before it on the basis of which it could have reasonably come to the conclusion that the assessee-society was prevented by sufficient cause in applying for the registration in time. It is manifest from a fair reading of the order of the Tribunal that it had weighed the circumstances in which the assessee-society was placed and the action it took immediately on receipt of the complaint from M.P. Mansinghka Trust of Mumbai; it has referred to the confession of Sikri in the meeting of the governing body owning up responsibility for having misled the assessee-society by representing that the necessary application for registration were made in time; it has also referred to the action taken by the assessee-society against Sikri when it found that Sikri was not taking adequate steps to remedy the situation; it has also referred to the police complaints filed not only by the assessee- society against Sikri, but also to the complaint filed by the income tax authorities against Sikri which indicated that they also viewed Sikri to be responsible for the mis-representation, fake certificates of registration, etc. Moreover, the Tribunal has taken note of the fact that the Metropolitan Magistrate, acting on the police complaint, remanded Sikri to custody and also referred to the fact that in the bail application, Sikri had again owned up responsibility for the fake certificates of registration. Taking an overall view of the facts and going by the preponderance of probabilities, the Tribunal came to hold the view that it was because of the irregularities, illegalities and mis-representations of Sikri that the assessee-society was led to believe that appropriate applications under the Act were already filed with the income tax authorities for registration. The assessee-society was thus under the belief, though mistaken but honest, that there was no delay and once it came to know on 06.12.2005 about the irregularities on a complaint from M.P. Mansinghka Trust of Mumbai and on further enquiry conducted on 14.12.2005 by the governing body, it hastened to take remedial action by filing applications for registration both under section 12A and 80G of the Act, which were followed up by another set of applications filed directly with the DIT (Exemptions) on 21.12.2005; these applications were obviously delayed and the condonation application was filed on 14.03.2006 narrating the events that led to the delay.
In the above circumstances, it seems to us that the Tribunal has acted judicially, taking note of all the facts and circumstances including probabilities of the case. In Esthuri Aswathiah v. CIT [1967] 66 ITR 478 (SC), the Supreme Court outlined the duties of the Tribunal in the following words: -
"The function of the Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it: for that purpose it must consider whether on the materials relied upon by the assessee his plea is made out. Conclusive proof of the claim is not predicated: the Tribunal may act upon probabilities, and presumptions may supply gaps in the evidence which may not, on account of delay or the nature of the transactions or for other reasons, be supplied from independent sources. But the
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Tribunal cannot make arbitrary decisions: it cannot found its judgment on conjectures, surmises or speculation. Between the claims of the public revenue and of the taxpayers, the Tribunal must maintain a judicial balance."
In Udhavdas Kewalram v. CIT [1967] 66 ITR 462 (SC) the very same Bench of three judges of the Supreme Court again observed as under: -
"The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act: it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law ......................................The Tribunal was undoubtedly competent to disagree with the view of the Appellate Assistant Commissioner. But in proceeding to do so, the Tribunal had to act judicially, i.e., to consider all the evidence in favour of and against the assessee. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence cannot be regarded as conclusively determining the questions of fact raised before the Tribunal."
We are satisfied that the Tribunal has, in making its decision, kept in mind the aforesaid principles adumbrated by the Supreme Court. Its order cannot, therefore, be branded as perverse or unreasonable or irrational.
That takes us to the question as to whether in condoning the delay the Tribunal committed any error of law or illegality. There is a wealth of judicial literature on the subject of condonation of delay and most of the cases have arisen under section 5 of the Limitation Act, 1963. The principles that are to be applied are, however, no different whenever the question of condonation of delay comes up for consideration under other statutes. In the oft quoted judgment of the Supreme Court in Collector, Land Acquisition v. MST. Katiji [1987] 167 ITR 471 it was observed as follows: -
"The Legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on the merits". The expression "sufficient cause" employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy."
The following general principles were laid down and it is these principles which guide the Court in approaching the question of condonation of delay: -
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"And such a liberal approach is adopted on principle as it is realized that:
Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
"Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner.
When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so."
In N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123 the Supreme Court again reiterated the approach. In Ram Nath Sao v. Gobardhan Sao [2002] 3 SCC 195 it was observed by the Supreme Court that acceptance of the explanation furnished should be the rule and refusal, an exception, more so when no negligence or inaction or want of bona fides can be imputed to the defaulting party. In the present case, the Tribunal has found that the assessee-society has taken prompt remedial action and put Sikri on the dock and he also admitted his fault, though he tried to shift the blame to his employee whose whereabouts were never known. Even in his bail application he had confessed to his role in the alleged irregularities and illegalities. There has been no want of bona fides on the part of the assessee, nor did it fail to take immediate action once it was apprised of the irregularities in its affairs by M. P. Mansinghka Trust of Mumbai. In these circumstances, we are unable to say that the Tribunal committed an error in condoning the delay.
On the question of perversity of the decision of the Tribunal we may also refer to the judgment of the Supreme Court in Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28. In that judgment, it was noted that
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only a question of law can be referred for decision of the Court and the decision of the Tribunal on a question of fact can be challenged only if it is not supported by any evidence, or is unreasonable or perverse. The following pithy observations of T.L. Venkatarama Aiyar, J. speaking for the Court are relevant:
" ....................... The point for decision is whether there arises out of the order of the Tribunal any question which can be the subject of reference under section 66 (1) of the Act Under that section, it is only a question of law that can be referred for decision of the Court, and it is impossible to argue that the conclusion of the Tribunal is anything but one of fact. It has been held on the corresponding provisions in the English Income-tax statutes that a finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, the decision of the Tribunal is final even though the Court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. In Great Western Railway Co. v. Bater (1), Lord Atkinson observed:
"Their (Commissioners') determinations of questions of pure fact are not to be disturbed, any more than are the findings of a jury, unless it should appear that there was no evidence before them upon which they, as reasonable men, could come to the conclusion to which they have come: and this, even though the Court of Review would on the evidence have come to a conclusion entirely different from theirs."
There is no need to further elaborate this position, because the law as laid down in these observations is well settled, and has been adopted in the construction of section 66 of the Act.”
This view was reiterated by the Supreme Court in CIT v. Daulatram Rawatmull [1964] 53 ITR 574 where it was held that "if there is some evidence to support the finding recorded by the Tribunal, even if it appears to the High Court that on re-appreciation of the evidence, it might arrive at a conclusion different from that of the Tribunal" the High Court has no power to interfere with the findings of the Tribunal. These decisions were applied by a Division Bench of this Court in CIT v. Baba Avtar Singh[1972] 83 ITR 738 where it was observed as under: -
"The submission made by Mr. Sharma does not appear to us to be correct. It is well-settled that the court cannot set aside the Tribunal's finding of fact if there is some evidence to support that finding even though the court itself might have come to a different conclusion upon the evidence."
The aforesaid principles govern the order of the Tribunal and the approach to be adopted by us in the present case. At best, what can be argued by the Revenue is only that another view was possible to be taken by the Tribunal and this Court should prefer the alternative view on the same facts and evidence and discard the Tribunal's view.
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Obviously the argument cannot be upheld, having regard to the above judgments. 27. For the above reasons we answer the substantial questions of law framed in ITA Nos.754, 773 and 775 of 2010 in the negative, against the Revenue and in favour of the assessee. Consequently the sole substantial question of law framed by us in ITA Nos.1092, 1101, 1103, 1104, 1112 and 1124 of 2010 is answered in the affirmative, against the Revenue and in favour of the assessee. The C.M. Application is disposed of. The appeals of the Revenue are accordingly dismissed with no order as to costs.” 20. Respectfully following the judgement of the Hon’ble Delhi High Court in the case of Vishwa Jagriti Mission (supra), wherein the delay in filing application for registration u/s 12A, was allowable/condoned, hence, we condone the delay in filing Form10AB u/s 80G(5) and remit the matter back to the file of Ld. CIT(E) with the direction to decide the application of assessee, in accordance with law. The assessee is also directed to file details and documents, before Ld. CIT(E), as and when, required by ld. CIT(E). For statistical purposes, the appeal of the assessee is treated to be allowed. 8. Respectfully following the above judicial precedents, we hereby set aside the impugned order passed by Ld. CIT(E) with a direction to reconsider Form 10AB for final registration u/s. 80G of the Act by giving proper opportunity of being heard to the assessee Trust and also restore the provisional registration already granted to the assessee. Needless to say, the assessee Trust should co-operate by furnishing all required details as mandated under the law for granting final registration u/s. 80G of the Act.” (6.2) Then, Ld. AR pointed out a very recent development in the matter. He
submitted that the issue that “the Circular No. 6 of 2023 dated 24.05.2023
issued by Central Board of Direct Taxes (CBDT) in so far it fails to extend the
due date for making application for approval under clause (iii) of the first
proviso to sub-section (5) of section 80G and hence is illegitimate, arbitrary
and ultra vires the Constition of India” has been decided by Hon'ble Madras
High Court in order dated 02.04.2024 in Writ Petition No. 27030 of 23 -
Sri Nrisimha Priya Charitable Trust vs. CBDT & Another. In this
petition, the issue before Hon’ble Court was that the Circular No. 6 of 2023
made a discrimination in so far as it allowed extension/relaxation for filing
of applications for final registration u/s 12A or 10(23C) upto 30.09.2023 but
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did not allow such extension/relaxation for filing of applications for final
approval under first proviso to section 80G(5). On consideration, the Hon’ble
High Court declared the Circular as unconstitutional. We re-produce below
only concluding paras that are sufficient to show this point:-
“6.6 In the instant case, the differential treatment is not based on any substantial distinction that is real and pertinent to the object of the circular. The discrimination is artificial. The respondents are evasive and could not provide any rationale for such a classification. Accordingly, we hold that the impugned clause (ii) of the Circular, dated 24.05.2023 is arbitrary and violative of Article 14 of the Constitution of India and accordingly, would be ultra vires the Constitution. 6.7 Because we find that clause (ii) of the impugned circular is unconstitutional, we direct the first respondent to consider the applications of the petitioners as to the recognition/approval in respect of clause (i) of the first proviso to sub-section (5) of section 80G of the Act as within time and consider the same and pass orders thereon on merits as per law. G. The Result : (7) In the result, these Writ Petitions are allowed on the following terms :- (i) The clause 5(ii) of Circular No. 6 of 2023 bearing F.No. 370133/06/2023-TPL, dated 24.05.2023 of the first respondent is declared as illegitimate, arbitrary and ultra vires the Constitution of India. (ii) The respondents are directed to consider the applications submitted by the petitioners as to the recognition/approval in respect of clause (i) of the first proviso to sub-section (5) of section 80G of the Act as within time and consider the same and pass orders thereon on merits, in accordance with law within six months from the date of receipt of a copy of this order” Ld. AR pointed out that post-decision of Hon’ble High Court, the CBDT has
issued another Circular No.7/2024 dated 25.04.2024 as under:-
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Thus, the CBDT has taken a decision to extend time-limit upto 30.06.2024
for applications in Form No. 10AB under Clause (iii) of first proviso to
section 80G(5).
Ld. Dr for revenue relied upon the order of CIT(E) but however made a
fair submission that all facts of present case and the position of law is before
the ITAT and the ITAT may take its view accordingly.
We have considered rival contentions of both sides and perused the
impugned order as well as the material held on record including the Judicial
orders and Circulars issued by CBDT from time to time. After a careful
consideration, we find that the case of assessee is fully covered by ITAT,
Ahmedabad Bench in Rabdi Vibhag Vs. CIT(E) (supra). That apart, the
CBDT has also issued a newer Circular No. 7/2024 dated 25.04.2024
giving time upto 30.06.2024 for filing applications in Form No. 10AB under
Clause (iii) of first proviso to section 80G(5) for grant of final approval. Since
the assessee’s application in Form No. 10AB is already on the record of
CIT(E), we hereby set aside the impugned order passed by Ld. CIT(E) with a
direction to reconsider the Form 10AB filed by assessee for final approval
u/s 80G by giving proper opportunity of being heard to the assessee and
also re-store the provisional registration already granted to the assessee.
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Resultantly, this appeal is allowed for statistical purpose.
Order pronounced in open court on 20.05.2024.
Sd/- sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 20.05.2024 CPU/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPYAssistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore
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