2024 (6) TMI 1281 - AT - Income Tax

Rejection of application filed in Form 10AB u/s 80G(5)(iii) - application filled beyond limitation period - scope of period as within six months of commencement of the activities - CIT(E) held that date of commencement of activities in the assessee s case is 23.12.1974 and the assessee was supposed to file application in Form 10AB u/s 80G(5) of the Act within six months or up to 30.09.2022 whichever is earlier however the assessee failed to submit the application within the above said period. HELD THAT - We note that the assessee- trust was incorporated on 23.12.1974 and started its activities from 23.12.1974. The assessee-trust has filed application in Form No.10AB u/s 80G(5)(iii) of the Act on 30.09.2023 and as per Circular No. 8 the assessee-trust was supposed to file the application in Form No. 10AB u/s 80G(5) of the Act on or before 30.09.2022 hence there is a delay for 365 days (one year approx).Considering the limitation period as mentioned in section 80G(5)(iii) of the Act as within six months of commencement of the activities whichever is earlier which is practically impossible for the existing trusts applying for the first time for approval u/s 80G(5)(iii) of the Act hence we note that there is ambiguity in the provisions of section 80G(5)(iii) of the Act vis- -vis CBDT circular No.6 /2023. Since the assessee- trust was incorporated on 23.12.1974 and therefore it was not possible to file the application within six months of commencement of its activities as per the provisions of Section 80G(5)(iii) of the Act therefore in these circumstances we do not have any option but to condone the delay in filing Form 10AB u/s 80G(5)(iii) of the Act and for that we rely on the judgment of the Co-ordinate Bench of ITAT Surat in the case of Vananchal Kelvani Trust 2024 (1) TMI 877 - ITAT SURAT Therefore we condone the delay in filing application in Form 10AB u/s 80G(5)(iii) of the Act and remit the matter back to the file of Ld. CIT(E) with a direction to decide the application of assessee in accordance with law. We also direct the assessee to file the details and relevant documents if any before Ld. CIT(E) as and when required by Ld. CIT(E) for disposal of this appeal. For Statistical purposes the appeal of the assessee is treated to be allowed.

Summary

Issues Involved:
1. Interpretation of limitation period for filing Form 10AB under Section 80G(5)(iii) of the Income Tax Act, 1961.
2. Rejection of final registration under Section 80G(5) due to delay in filing Form 10AB.
3. Consideration of extensions granted by CBDT circulars.
4. Lack of personal hearing opportunity before rejecting the application.

Issue-Wise Detailed Analysis:

1. Interpretation of Limitation Period for Filing Form 10AB:
The main issue revolves around the interpretation of the limitation period as stipulated in Section 80G(5)(iii) of the Income Tax Act, 1961, which requires filing "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." The appellant argued that this requirement is practically impossible for existing trusts applying for the first time for approval under Section 80G(5). The tribunal noted that the provision creates undue hardship for existing trusts, as it is not feasible for them to file within six months of commencement of activities if they have been operational for many years. The tribunal acknowledged the ambiguity in the provision and decided to condone the delay in filing Form 10AB.

2. Rejection of Final Registration Due to Delay in Filing Form 10AB:
The CIT(E) rejected the application for final registration under Section 80G(5) on the grounds of delay in filing Form 10AB. The tribunal observed that the assessee trust was incorporated on 23.12.1974 and had been granted provisional approval from 04.04.2022 to A.Y. 2024-25. The application in Form 10AB was filed on 30.09.2023, which was beyond the stipulated period. However, the tribunal found that the delay should be condoned due to the practical impossibility of complying with the provision for long-established trusts. The tribunal relied on similar judgments, such as the Co-ordinate Bench of ITAT Surat in the case of Vananchal Kelvani Trust, where the delay was condoned under identical circumstances.

3. Consideration of Extensions Granted by CBDT Circulars:
The tribunal examined various CBDT circulars, including Circular No. 12/2021, Circular No. 16/2021, Circular No. 8/2022, and Circular No. 6/2023. It was noted that Circular No. 8/2022 extended the date for filing Form 10AB to 30.09.2022. However, Circular No. 6/2023 did not extend the date for applications under Section 80G(5)(iii). The tribunal found that this created ambiguity and undue hardship for the assessee trusts. It was concluded that the extensions provided were not applicable to the specific clause under which the assessee had filed, thus justifying the condonation of delay.

4. Lack of Personal Hearing Opportunity:
The appellant contended that the CIT(E) erred in law by not providing a personal opportunity of being heard before rejecting the application in Form 10AB. The tribunal acknowledged this procedural lapse and emphasized the importance of granting a fair hearing to the assessee. The tribunal directed the CIT(E) to provide a fresh opportunity of hearing to the assessee and to decide the application in accordance with the law.

Conclusion:
The tribunal allowed the appeals for statistical purposes, condoning the delay in filing Form 10AB under Section 80G(5)(iii) of the Act. The matter was remitted back to the CIT(E) with directions to decide the application after providing a fair hearing to the assessee. The tribunal's decision was based on the practical difficulties faced by long-established trusts in complying with the stipulated limitation period and the ambiguity in the relevant provisions and circulars.