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Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: SHRI RAJPAL YADAV & SHRI RAKESH MISHRA
Present for: Appellant by : Shri Siddharth Agarwal, Advocate Respondent by : Shri Subhendu Datta, CIT, DR Date of Hearing : 13.06.2024 Date of Pronouncement : 19.06.2024 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)]” passed vide Form No. 10AD dated 22.02.2024 rejecting the application of the assessee for final approval as per the provisions of section 80G(5)(iii) of the Income tax Act, 1961 (hereinafter referred to as the “Act”) vide DIN No. ITBA/EXM/F/EXM45/2023-24/1061357388(1) dated 22.02.2024, whereby the provisional certificate issued to the assessee was also cancelled.
Grounds of appeal raised by the assessee read as under:
“1. For that on the facts and circumstances of the case, the Ld. CIT(Exemption), Kolkata was not justified in rejecting the application for grant of approval u/s. 80G(5)(iii) filed by the assessee trust in Form No. 10AB under Rule 17A of the Income Tax Rules, 1962. 2. The appellant craves leave to add further grounds of appeal or alter the grounds at the time of hearing.”
3. The brief facts of the case are that the assessee was granted provisional approval u/s. 80G(5)(iv) of the Act in Form No. 10AC vide order dated 02.09.2022. Subsequently, the assessee trust filed Form No.10AB read with Rule 17A of the Income Tax Rules, 1962 on 30.09.2023 for final registration u/s. 80G(5)(iii) of the Act, which was rejected by the Ld. CIT(E) vide order dated 22.02.2024 on the ground that the application was filed beyond the limitation period prescribed under the Act and extended period of limitation granted by the CBDT by way of various circulars issued from time to time and the Ld. CIT(E) also cancelled the provisional registration granted u/s. 80G(5) of the Act. 3.1. The Ld.CIT(E) has mentioned in the order that the submission of the assessee was examined and it was found that the assessee had already commenced its activities at least from FY 2020-21 and the extended due date for filing application in Form No. 10AB was 30.09.2022 as per the CBDT circular No. 8/2022 dated 31.03.2022. However, the assessee did not file Form No. 10AB within the stipulated time limit and the same was filed on 30.09.2023. A show cause notice was issued to the assessee and the assessee filed its reply mentioning that Loyola Charitable Trust was created on 15.10.2012 with the object of Educational and Charitable working since its inception. The trust was granted registration u/s. 12A on 01.04.2012 vide order dated 30.09.2013 and the last registration u/s. 12AB was applied on 24.09.2021 and it was granted registration for the period from AY 2022-23 to AY 2026-27 by the Ld. CIT(E). The trust was granted provisional registration u/s. 80G(5) of the Act vide order dated 02.09.2022 for the period from 02.09.2022 to AY 2025-26. The application for registration could not be filed in Form No. 10AB as the accountant of the trust was not aware of the latest amendment of the income tax provision. The delay in filing Form No. 10AB u/s. 80G(5) was due to bona fide reasons and there was no mala fide intention and the delay was owing to oversight. It was stated that the assessee cannot be penalised for the error of the accountant and the trust was carrying on charitable activities since inception and exemption had been claimed prior to 01.04.2021 also. The assessee requested for condonation of the delay. The Ld. CIT(E) observed that the assessee had filed Form No. 10AB u/s. 80G(5)(iii) of the Act on 30.09.2022 and the document submitted by the assessee showed that its activities commenced from 01.04.1912. After examining the circular issued by the CBDT, he was of the view that the last date for filing Form No. 10AB was 30.09.2023. As the limit was mandatory and in view of the decision in the case of Bishnupur Public Education Institute 139 taxmann.com 121 of the Hon’ble Kolkata Tribunal, wherein it has been held that the CCIT was not empowered to condone the delay for application u/s. 10(23C), he held the application filed in Form No. 10AB u/s. 80G(5)(iii) of the Act as not maintainable as the Circular No. 6/2023 dated 24.05.2023 of the CBDT does not extend the due date to 30.09.2023 in such cases which was 30.09.2022 in such cases. The provisional certificate issued to the assessee was also cancelled. 3.2. A perusal of the document filed before us shows that the approval u/s. 12AA was granted vide Memo No. 196/12AA/CIT(TECH)/SHG/2012- 13/3773-76 dated 30.09.2013. After the commencement of new provisions, the society applied for registration u/s. 12AB on 24.09.2021 and was granted registration vide Unique Registration No. AAAL6694AE20213 for the period from AY 2022-23 to AY 2026-27. Thereafter, the society applied for registration u/s. 80G(5)(iv) and got the registration on 02.09.2022 vide no. AAAAL6694AF20221 for the period from 02.09.2022 to 2025-26.
4. We have examined the matter and have heard the rival contentions. Ground No.2 is general in nature and does not require any separate adjudication.
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 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.”
6. 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 flied 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.”
Since it was a technical error due to change in the procedure, therefore, the same is liable to be corrected. Respectfully following the above decisions of the Coordinate Benches, cited supra, we allow the appeal and direct the Ld. CIT(E) to consider the application filed by the assessee in Form 10AB as being filed in the relevant prescribed Form which is required for making application for the institutions which are already registered on 01.04.2021 subject to the verification that approval u/s. 80G(5) was granted prior to 01.04.2021 as well and if it is so, the application filed by the assessee will be treated as filed under clause (i) of the first proviso to sec. 80G(5) of the Act.