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Income Tax Appellate Tribunal, “C” BENCH KOLKATA
Before: SHRI SONJOY SARMA & SHRI RAKESH MISHRA
Present for: Appellant by : S. Banerjee, A.R. Respondent by : Amitava Sen, Addl. CIT-DR Date of Hearing : 08.08.2024 Date of Pronouncement : 20.08.2024 O R D E R
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Exemption), Kolkata (hereinafter referred to as “the Ld. CIT(E)”) against the order for registration under section 80G(5) of the Income Tax Act, 1961 (for short ‘the ‘Act’) dated 07.11.2019.
2. The grounds of appeal raised by the assessee are reproduced as under:
“1. That the C.I.T.(E) was not justified in arbitrarily rejecting the application for registration under section 80G(5)(iii) of the I. T. Act 1961 submitted in Form 10 AB submitted by the Appellant Trust along with annexures on 24.5.23.
2. That the C.I.T.(E) was not justified in not considering the application for registration in Form No.10AB under section 12A(1)(ac) (iii) of the I. T. Act 1961 along with Annexures submitted along with Form 10 AB on 6.5.2022.
3. That the C.I.T.(E) was not justified in rejecting the present application filed in Form 10 AB u/s 80G(5)(iii) of the Act as not maintainable.
Nitdaa Foundation 4. That the entire financial transactions reflected in the audited accounts are verifiable which he did not make any effort. 5. That the C.I.T.(E) under the circumstances was not justified to cancel the provisional certificate issued to the assessee under section 80G.”
The facts of the case stated briefly are that the assessee is a charitable trust and had been granted provisional approval u/s 80G(5)(iv) of the Act in Form 10AC vide order dated 18.05.2023 for a period commencing from 18.05.2023 to AY 2026-27. Subsequently, the assessee also filed an application for registration u/s 80G(5)(iii) of the Act electronically on 24.05.2023 in Form No. 10AB under Rule 17A of the Income Tax Rules, 1962. However, the claim of the assessee was rejected by the Ld. CIT(E) wide order dated16.11.2023. Agree with the order of the Ld. CIT(E), the assessee has filed the appeal before the tribunal.
4. At the outset, it may be mentioned that the appeal is barred by limitation by 77 days and along with the memo of appeal, the assessee has filed an application for condonation of delay which is as under: “Sub-Condonation of delay in filing the Appeal against rejection of application in Form No.10AB u/s 80G(5) (iii) along with provisional certificate issued to the assessee. Before the Honourable Members I am making the following submissions for and on behalf of my client for your Honours kind and sympathetic considerations. The rejection order of Application in Form No.10 AB u/s 80G(5) (iii) along with the provisional certificate issued to the assessee was made on 16.11.2023 but the same was not served upon the assessee. Inadvertently the assessee downloaded from the system on 17.1.24 almost after a period of two months resulting in the delay of filing the present Appeal. Under the circumstances the Appellant prays for condonation of delay by 60 days in filing the hard copy of the Appeal before Your Honour. In the interest of justice I on behalf of The Appellant pray before Your Honour that the delay may kindly be condoned and the Appeal may be heard and disposed off as there is a gross error in the order of rejection as the CIT(E) inadvertently did not consider the application for registration in Form No.10 AB under section 12A(1)(ac) (iii) of the I.T. Act 1961 on 6.5.2022 along with annexures.”
5. In view of the submission made we are of the view that there is sufficient cause for the delay which was neither mala fide/intentional nor Nitdaa Foundation has given any benefit to the assessee. Hence, the delay of 77 days is hereby condoned and the appeal is adjudicated on merits. 6. During the course of the hearing, the Ld. AR was required to file an affidavit in this regard which has been filed as under: “I Probal Kumar Chakraverty son of late Dhabalangshu Kumar Chakraverty aged about 60 years do hereby solemnly declare and affirm as under:
1. 1. That I am a trustee of NITDAA FOUNDATION of FE261, Sector III, Salt Lake Kolkata 7000106, West Bengal.
2. That the rejection order of Application in Form 10AB under section 80G(5)(iii) along with cancellation of provisional approval was made on 16.11.2023 but the hard copy was not served upon the assessee and which we could download from the portal on 17.1.24 almost after a period of two months resulting in 79 days delay in filing the present Appeal before Income Tax Appellate Tribunal Kolkata Bench ‘C’.
3. Even the provisional approval granted by CIT(E) upto A.Y. 2026-27 under 12 clause (iv) of first proviso to sub section (5) of section 80G can be cancelled by him only on specific violation by the assessee. As such the rejection is not sustainable even on this ground as no violation was ever pointed by the C.I.T.(E) in the impugned order and the same was done arbitrarily.
4. While rejecting the Form 10AB the C.I.T.(E) did not discuss whether the assessee fulfils all other conditions mentioned in the section and documents enclosed along with the Form. Our counsel will argue on our grounds of Appeal
5. I, on behalf of the assessee most humbly submits that we have a good case before Your Honour for fair adjudication.
6. Under the circumstances the delay of 79 days may kindly be condoned by Your Honour and our Appeal be decided on merits in the interest of justice.”
7. The assessee was also required to inform whether any approval was granted under section 12AA or under section 80G of the Act earlier, in response to which, the Ld. AR filed a copy of the order No. ITBA/EXM/S/12AA/2019-20/1019905154(1) dated 07.11.2019 for registration under section 12AA of the Act from the AY 2020-21 and another order for approval under section 80G(5)(vi) of the Act, No. ITBA/EXM/S/80G/2019-20/1019905522(1), dated 07.11.2019 as per which the exemption under section 80G(5)(vi) of the Act was valid from the AY 2020-21 till it was rescinded. The assessee also filed a copy of Form Nitdaa Foundation No. 10A in which the date of incorporation/creation/registration of the charitable trust is mentioned as 10.05.2019. The assessee has relied upon the decision of Kolkata Bench of the Tribunal in the case of Shalimar Chemical Charitable Trust Vs. CIT (Exemption), Kolkata, dated 09.07.2024 in support of the claim of approval under section 80G of the Act. The Ld. DR supported the order of the Ld. CIT(E).
We have heard the rival contentions and perused the material available on record. In order to address the issue, it is relevant to reproduce the provisions of section 80G(5)(vi) of the Act as under: “(5) This section applies to donations to any institution or fund referred to in sub- clause (iv) of clause (a) of sub-section (2), only if it is established in India for a charitable purpose and if it fulfils the following conditions, namely:- (i) where the institution or fund derives any income, such income would not be liable to inclusion in its total income under the provisions of sections 11 and 12 [* * *] [or clause (23-AA) or clause (23-C) of section 10: [Provided that where an institution or fund derives any income, being profits and gains of business, the condition that such income would not be liable to inclusion in its total income under the provisions of section 11 shall not apply in relation to such income, if- (a) the institution or fund maintains separate books of account in respect of such business; (b) the donations made to the institution or fund are not used by it, directly or indirectly, for the purposes of such business; and (c) the institution or fund issues to a person making the donation a certificate to the effect that it maintains separate books of account in respect of such business and that the donations received by it will not be used, directly or indirectly, for the purposes of such business; (ii) the instrument under which the institution or fund is constituted does not, or the rules governing the institution or fund do not, contain any provision for the transfer or application at any time of the whole or any part of the income or assets of the institution or fund for any purpose other than a charitable purpose; (iii) the institution or fund is not expressed to be for the benefit of any particular religious community or caste; (iv)the institution or fund maintains regular accounts of its receipts and expenditure; [***] (v) the institution or fund is either constituted as a public charitable trust or is registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India or under section 25 of the Companies Act, 1956 (1 of 1956), or is a University established by law, or is any other educational institution recognised by the Government or by a University established by law, or affiliated to any University established by law, or [****] or Nitdaa Foundation is an institution financed wholly or in part by the Government or a local authority.[***] (vi) in relation to donations made after the 31st day of March, 1992, the institution or fund is for the time being [approved by the Principal Commissioner or Commissioner]” {emphasis supplied} (vii) ………………………………………….”
The Ld. CIT(Exemption) rejected the application for approval under section 80G(5)(iv) of the Act and the relevant paras from the order of the Ld. CIT(Exemption) are extracted as under: “The assessee was granted provisional approval u/s 80G(5)(iv) of the Act in Form No. 10AC vide order dated 18.05.2023 for a period from 18.05.2023 to A.Y., 2026- 27. Subsequently, an application for approval of the trust, u/s. 80G(5)(iii) of the I.T. Act, 1961 was filed electronically and as per data available in ITBA, the same is filed on 24.05.2023 by the assessee in Form No. 10AB under Rule 17A of the I.T. Rules, 1962.
A notice was issued to the applicant/assessee on 09.10.2023 and sent through ITBA on the e-mail id given by the applicant Trust/Institution in its online application, with a request to furnish detailed note on the activities carried out by the assessee, as well as certain details/documents as mentioned therein.
3. The above-mentioned inquiry about the actual activities of the trust is necessary in view of the mandatory provisions of the procedure for approval u/s 80G(5)(iii) of the Act, 1961 reproduced below: 80G(5)(iii) The Principal Commissioner or Commissioner, on receipt of an application made under the first proviso, shall – (i) where the application is made under sub-clause (i) of the said proviso, pass an order in writing granting it approval for a period of five years; (ii) where the application is made under sub-clause (ii) or clause (iii) of the said proviso,- (a) call for such documents or information from it or make such inquiries as he thinks necessary in order to satisfy himself about- (A) the genuineness of activities of the trust or institution or fund’ and (B) the fulfilment of all the conditions laid down in clauses (i) to (v); (b) after satisfying himself about the genuineness of activities under item (A) and the fulfilment of all the conditions under item (B) or Sub- clause (a)-, (A) pass an order in writing granting approval for five years; or (B) If he is not satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard.; (iii) where the application is made under-clause (iv) of the said proviso, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, and sent a copy of such order to the institution or fund.
In response to the said notice, the applicant/assessee has furnished certain details/documents. The submission of the assessee was examined. It was found Nitdaa Foundation that the assessee had already commenced its activities at least from F.Y 2019-20. The extended due date for filling application in Form 10AB was 30.09.2022 as per CBDT Circular No. 8/2022 dated 31.03.2022. However, the assessee did not file the form no- 10AB within the stipulated time limit. In view of the above facts, a show cause notice vide this office letter dated 07.11.2023 was issued and sent through ITBA to furnish its reply.
In response, the assessee furnished a reply as under: "With reference to your second specific query the order for registration under section AB of the Act in Form No. 10AC is enclosed for your ready reference from A. Y. 2022-23 to A.Y. 2026-27 is enclosed. The same was granted on 24.9.2021. My client filed the Form No 10 AB on 6.5.2022 and provisional registration was granted on 18.5.23 under section 80G(S)(iv) of the I.T. Act 1961. As per your requisition 3 I hereby submit that the Trust was earlier registered under section 12A and 80G of the Act. The certificates are enclosed. My client have not claimed any exemption prior to 1.4.2021 Should you require any further information I shall be happy to furnish the same " The submissions of the applicant/assessee have been considered carefully and found not acceptable. From perusal of details available on records it is observed that the assessee/applicant has filed Form 10AB u/s 80G(5)(iii) of the Act on 24.05.2023. It is seen from the documents submitted by assessee that its activities commenced at least from F.Y 2019-20.
6. Since, the applicant/assessee has filed the present application in Form No. 10AB u/s 80G(5)(iii) of the Act, so it is essential to analyse the provisions of sec 80G(5)(iii) of the Act, as it stands today, which stipulates as under: Provided That ---------------------------------------------------- that) (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 From the above, it is evident that the provisions of sec 80G(5)(iii) of the Act prescribed time limit within which the applicant/assessee is required to file application for approval u/s 80G(5)(iii). In the present case, the applicant/assessee is Provisionally approved u/s 80G(5)(iv) of the Act and therefore, the applicant/assessee was required to file application in Form No. 10AB u/s 80G(5)(iii) 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. From the provisions of 80G(5)(iii) of the Act, it is evident that the time limits prescribed therein is mandatory and the Commissioner of Income Tax has no power to condone the delay in filing application in Form No. 10AB.
The said legal position further gets fortified by the fact that the CBDT on multiple occasions had extended the time limit in filing the application in Form No. 10A and/or 10AB as under. a. The CBDT vide Circular No. 12 of 2021 dated 25.06.2021 in exercise of its power u/s 119 of the Act, provided relaxation for various compliances. including making application u/s 10(23C), 12AB, 35(1)(ii)(iia)/(iii) and 80G Nitdaa Foundation of the Act in Form No. 10A/10AB for registration/provisional registration/information/approval/provisional approval of Trusts/ Institutions/Research Associations etc, which were required to be made on or before 30th June 2021 was allowed to be made/filed on or before 31st August 2021. b. Thereafter, the CBDT vide Circular No. 16/2021 dated 29th August 2021, further extended the date of filing of Form 10A u/s 10(230), 12A, 35(1)(2)/(a)/(m) or 80G, which was required to be filed on or before 30th June 2021 upto 31 March 2022 and similarly for application for registration or approval u/s 10(230), 12A or 80G of the Act in Form 10AB, for which the last date for filing falls on or before 28th February, 2022 may be filed on or before 31 March, 2022. c. Thereafter, once again the CBDT vide Circular No. 8/2022 dated 31.03.2022 on consideration of difficulties in electronic filing of Form No.10AB as stipulated in Rule 20 or 11AA or 17A of the Income Tax Rules, 1962, stipulated that "The application for registration or approval under section 10(230), 124 or 80G of the Act, in Form No. 10AB, for which the last date for filing falls on or before 29th September, may be filled on or before 30th September, 2022 8. From the above, it is evident that the time limit prescribed u/s 80G(5)(iii) of the Act for filing Form No. 10A and 10AB, as the case may be is mandatory and therefore, after considering the hardship to the assessee the CBDT extended the said time limit on multiple occasions, for filing Form No. 10A and 10AB, u/s 119 of the Act, vide above referred Circulars. As per above referred CBDT Circular No. 8/2022, the applicant/assessee, whose last date for filing Form No. 10AB for registration u/s 10(23C)/12A/80G was falling on or before 29th September 2022, was extended up to 30th September 2022. Thereafter, there was no further extension for delay in filing Form No. 10AB was granted by the CBDT and the same is evident from CBDT Circular No. 22/2022 dated 01st November, 2022, through which the CBDT extended the time limit for filing application in Form No. 10A under various sections made therein, up to 25.11.2022, and further in said Circular No. 22/2022, no further extension of time was granted for filing Form No. 10AB.”
The Ld. CIT(Exemption) on perusal of the income and expenditure account for the year ended 31.03.2020 observed that the assessee had incurred expenses on account of donation of Rs. 10,000/- in the financial year 2019-20 which established the fact that the activities of the assessee had already commenced in the financial year 2019-20. Relying upon the decision of the Hon’ble Kolkata Tribunal in the case of Bishnupur Public Education Institute reported in 139 taxmann.com 121 which has discussed various decisions of the Hon’ble Supreme Court and the High Court, he held that application filed in Form No 10AB under section 80G(5)(iii) of the Act was non-maintainable as the Circular No. 6 of 2023, dated 24.05.2023 issued by Central Bard of Direct Taxes (CBDT) does not extend the benefit of extension and due date to 30.09.2023 to cases under Nitdaa Foundation section 80G(5)(iii) of the Act, which was only up to 30.09.2022. So, treating the application filed in Form No. 10AB under section 80G(5)(iii) of the Act as non-maintainable, he rejected the same and also cancelled the provisional certificate issued to the assessee w.e.f. date of its issue.
As is noted above, the assessee was an existing trust and had been granted approval under section 12AA of the Act as well as under section 80G of the Act earlier but instead of applying under clause (i) of the proviso to section 80G, it applied under clause (iii) as a new trust. If it had applied under clause (i), there was no need of issuing any provisional certificate and as per the second proviso to section 80G, the Principal Commissioner or Commissioner would have passed an order in writing granting it approval for a period of five years and there was no requirement for seeking any provisional approval which is required only for a new trust. Similar issue also came up for consideration in the case of Loyola Charitable Society Vs. CIT (Exemption), Kolkata, (ITA No. 580/KOL/2024, dated 19.06.2024) in which it was held as under:
5. Ground No. 1 relates to the rejection of the application of the assessee. It applied for approval u/s. 80G(5)(iv) whereas being an old trust and apparently granted approval earlier, the same should have been applied in clause (i) of the proviso to sub-section 5 of section 80G if the approval was granted earlier. The assessee applied for registration u/s. 80G(5)(iv) i.e. as a new trust erroneously and was granted provisional approval from 02.09.2022 to 2025-26 in Form No. 10AC. Subsequently, it applied for approval under clause (iii) of first proviso to sub- section (5) of section 80G of the Act on Form No. 10AB on 30.09.2023. Since it was an existing assessee and was granted approval from FY 2012-13 u/s. 12AA post the amendment in the provisions of section 80G(5), it was required to apply for registration under the amended provision under clause (i) of the proviso to section 80G(5) while it incorrectly applied under clause (iv), which is for the case of a new trust. Both the applications u/s. 80G(5)(iv) as well as 80G(5)(iii) were filed within time. The provisional approval clause applies to new applicant only whereas in the case of the assessee being an existing assessee, clause (i) of the proviso to section 80G(5) was applicable, therefore, clause (iv) was not applicable but clause (i) was applicable. Further, this fact also escaped the attention of the Ld. CIT(E). Similar issue had come up before the Coordinate Bench in Friends of Kolkata and vide order dated 01.04.2024, the Tribunal “B Bench has held as under: “5. As far as the details of application and their dates, there is not much dispute. The ld. CIT(Exemption) was of the view that activity of the assessee-Trust commenced in 2012 and, therefore, for grant of a regular registration, it ought to have applied within six months from the appointed date, i.e. 1st of April, 2021 extended upto 30th September, 2023. The Nitdaa Foundation assessee did not file such application. He further observed that the assessee has applied for grant of a provisional registration under sub- clause (iv) and immediately thereafter applied for grant of a regular registration under sub-clause (iii), which is meant for those Trust or Society, which came after April, 2021. In view of the above, he was of the opinion that being an old Trust, the assessee has applied for a provisional registration and thereafter regular registration. But such application is not in consonance with the procedure laid down under sub-clause (iii) as well as sub-clause (iv) and, therefore, on account of this technical aspect, he rejected the application of the assessee.
6. With the assistance of ld. Representatives, we have gone through the record carefully. As observed earlier, had application was moved under sub-clause (i) instead of applying for provisional registration, then no dispute would have come, because the assessee-Trust is an existing Trust and the time limit to move an application under sub-clause (i) has been extended upto 30th September, 2023. Its application alleged to be moved under sub-clause (iii) would have been under clause (i), then it would be construed as within time limit? 7. We are of the view that it is only a technical error. The ld. CIT(Exemption) ought to have looked into the matter on this aspect and call for a clarification from the assessee. Once he was seized of the matter and aware that the Trust was enjoying registration under section 80G under old regime, it fulfilled all other conditions, then on account of wrong mention of section (iii) instead of (i), in its application should have not been given much weightage for rejecting the application on technical grounds. Therefore, we set aside the impugned order and relegate this issue to the file of ld. CIT(Exemption) with a direction that application of the assessee be treated under clause (i) and it be decided on merit.”
Further, in another case in & 50/Kol/2024 Shree Ram Chandra Saraf Seva Nidhi dated 14.03.2024 decided by the Tribunal “C” Bench, Kolkata the Bench vide para 3 has held as under: “3. Considering the overall facts and circumstances of the case and also as observed by us in many cases that due to complexity of the newly inserted provisions even the ld. CIT(E)s also could not properly interpret the same, therefore, the assessee cannot be punished on this technical ground. The impugned orders of the CIT(E) are, therefore, set aside and it is directed that the ld. CIT(E) will consider the applications filed by the assessee in Form 10AB as being filed in the relevant prescribed form which is required for making applications for the institutions who are already registered as on 0l.04.2021 and the applications moved by the assessee will be treated as being moved u/s. 12A(ac)(i) of the Act and under Clause (i) to the First Proviso to section 80G(5) of the Act respectively and the CIT(E) will grant the provisional registration accordingly. The Ld. CIT(E) will decide both the applications of the assessee within two months of the receipt of copy of this order.”
Thus, the whole controversy arose due to incorrect mention of the clause under which the application was required to be filed, which was mentioned as clause (iv) of the first proviso to sub-section (5) of section 80G in column 6 of Form No. 10AC whereas the same should have been Nitdaa Foundation mentioned as clause (i) of the first proviso to sub-section (5) of section 80G and the Ld. AR also admitted this fact in the course of the hearing. Since, Form No. 10AC was filed in time, the error on the part of the assessee for mentioning the wrong clause is deemed to be a curable defect and the application on Form No. 10AC is deemed to be filed under clause (i) of the first proviso to sub-section (5) of section 80G. The order of the Ld. CIT(Exemption) is hereby set aside and he is required to consider the application as filed under clause (i) of the first proviso to section 80G(5) of the Act and consider the same for grant of approval under section 80G(5) to the trust in accordance with law within a period of 2 months from the date of receipt of this order. The assessee shall file all necessary evidence before him.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 20th August, 2024.