2024 (3) TMI 1201 - AT - Income Tax

Rejection of approvals u/s 80G - approval application filed belatedly - As per revenue Form 10AB has not been filed within the due dates as mentioned in the Act or within the time limits extended by CBDT - whether its is genuine hardship case? - HELD THAT - It is to be noted that the assessee trust has commenced its activities on 14.07.2017 and assessee is also provisionally approval u/s. 80G(5)(iv) - assessee trust was required to file application in Form No.10AB u/s. 80G(5)(iii) of the Act within the time period of six months prior to expiry of the period of provisional approval or within six months of commencement of its activities, whichever is earlier, in term of clause (iii) of first proviso to sub-section (5) of section 80G. We have gone through the CBDT Circular No.6 of 2023 dated 24.03.2023 and noted that the CBDT has clarified the provision relating to charitable and religious trusts and has extended the timeline for furnishing Form No.10A seeking provisional registration/approval within the extended period up-to 30.09.2023. Timeline prescribed for filing Form No.10AB for registration u/s. 12A of the Act in the case of assessee trust has been extended up-to 30.09.2023 after considering the genuine hardship faced by charitable institutions vide various CBDT circulars and finally, vide Circular No.6/2023 dated 24.05.2023. Similarly, the timeline prescribed for filing Form No.10A for recognition u/s. 80G of the Act was also extended up-to 30.09.2023 by the same circular for trusts filing registration under clause (i) to first proviso to section 80G(5) of the Act. Once, the CBDT has extended the timeline for filing Form No.10AB for recognition u/s. 12A of the Act and also for filing Form No.10A for recognition u/s. 80G of the Act extended up to 30.09.2023 for trusts filing registration under clause (i) of first proviso to section 80G(5) of the Act, we find no difference in continuing hardship as recognized by CBDT even in filing Form No.10AB for renewal of recognition u/s. 80G of the Act under clause (iii) of first proviso to section 80G(5) of the Act. In our view, this being a genuine hardship case, which is recognized by Revenue or CBDT by issuing a general circular, we are of the view that this specific provision of clause (iii) to first proviso to section 80G(5) cannot be excluded and or it has not been the intention of the CBDT while issuing the circular. In our view, we agree with the argument of assessee that the timeline prescribed under clause (iii) of first proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee s application in Form No.10AB only for this technical reason. Hence we remand the matter back to the file of the CIT(Exemption) to decide the issue on merits.

Summary

Issues Involved:
1. Rejection of Form No.10AB for approval under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961 as belated.
2. Interpretation of the timelines prescribed under section 80G(5)(iii) for filing Form No.10AB.
3. Authority of CIT(Exemption) to condone delay in filing Form No.10AB.
4. Applicability of CBDT Circulars extending timelines for filing Form No.10A and 10AB.

Summary:

Issue 1: Rejection of Form No.10AB as Belated
The appeals concern the rejection of Form No.10AB filed by the assessees seeking approval under clause (iii) of the first proviso to section 80G(5) of the Income Tax Act, 1961. The CIT(Exemption) rejected these forms as they were filed after the prescribed timeline, treating them as belated.

Issue 2: Interpretation of Timelines for Filing Form No.10AB
The assessees argued that the timelines prescribed for filing Form No.10AB should be considered directory and not mandatory, especially given the transitional nature of the new regime introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. They contended that the hardships faced by charitable entities should allow for a more flexible interpretation of the deadlines.

Issue 3: Authority of CIT(Exemption) to Condon Delay
The CIT(Exemption) noted that the time limit prescribed under section 80G(5)(iii) is mandatory and that there is no provision in the Act granting the authority to condone the delay in filing Form No.10AB. The CIT-DR supported this view, citing relevant case laws and emphasizing that the CIT(Exemption) does not have the power to condone such delays.

Issue 4: Applicability of CBDT Circulars
The assessees relied on various CBDT Circulars, particularly Circular No.6 of 2023, which extended the timelines for filing Form No.10A and 10AB due to the genuine hardships faced by charitable entities. They argued that similar extensions should apply to Form No.10AB for approval under section 80G, even though the specific circular did not explicitly mention such an extension for section 80G approvals.

Tribunal's Decision:
The Tribunal noted that the CBDT has extended the timelines for filing Form No.10A and 10AB in recognition of genuine hardships. It held that the same rationale should apply to Form No.10AB for approval under section 80G, treating the timeline as directory rather than mandatory. The Tribunal found that the intention of the CBDT's circulars was to mitigate hardships and that this should extend to applications under section 80G as well.

The Tribunal set aside the orders of the CIT(Exemption) and remanded the matters back to the CIT(Exemption) for re-adjudication on merits, directing that the applications should be considered valid and decided accordingly.

Conclusion:
The appeals were allowed for statistical purposes, with the Tribunal directing the CIT(Exemption) to re-decide the issue on merits, taking into account the extended timelines and the genuine hardships faced by the assessees.