2024 (9) TMI 343 - AT - Income Tax

Denial of registration/approval u/s.80G (5) - application was furnished after the due date - Scope of amendments and circulars regarding the timeline for filing Form 10AB - HELD THAT - Considering the judgment of Sri Nrisimha Priya Charitable Trust 2024 (4) TMI 499 - MADRAS HIGH COURT observation of the CIT(Exemption) Bhopal based on which the application filed by the assessee society for registration u/s. 80G(5) of the Act had been rejected cannot be approved. At the same time concession has been provided by the aforesaid CBDT Circular No.7/2024 dated 25.04.2024 as per which liberty had been provided to any trust institution or fund where the Principal Commissioner or Commissioner had already passed an order rejecting the application filed by the assessee society in Form 10AB to furnish fresh application in Form 10AB within the extended time period i.e. till 30.06.2024. As the aforesaid CBDT Circular No. 07/2024 dated 25.04.2024 allows the assessee society in a case where its application for registration under clause (iii) of the 1st proviso to sub section (5) of Section 80G of the Act had already been rejected by the Pr. CIT inter alia for the reason that the same was filed beyond the due date to file a fresh application within the extended time period i.e. till 30.06.2024 therefore the assessee society in the present case before us remains at a liberty to approach the CIT(Exemption) Bhopal in the aforementioned manner i.e. by filing a fresh application in Form 10AB which the latter as per the aforesaid CBDT Circular No.7/2024 (supra) shall treat as a valid application - Assessee appeal allowed.

Summary

Issues Involved:
1. Validity of the order dated 15.02.2024 by the CIT(Exemption), Bhopal.
2. Rejection of the application for approval under Section 80G(5) of the Income-tax Act, 1961.
3. Cancellation of provisional approval granted under Section 80G(5) on 27.05.2021.

Issue-wise Detailed Analysis:

1. Validity of the Order Dated 15.02.2024 by the CIT(Exemption), Bhopal:
The assessee society challenged the order dated 15.02.2024 passed by the CIT(Exemption), Bhopal, claiming it was "bad in law and void ab initio." The CIT(Exemption) had rejected the application for approval under Section 80G(5) due to the application being filed beyond the stipulated time limit. The CIT(Exemption) relied on CBDT Circular No.06/2023, which did not extend the time for applications under Clause (iii) of the "1st proviso" to Section 80G(5). However, the Hon'ble High Court of Madras in the case of Sri Nrisimha Priya Charitable Trust vs. CBDT declared Clause (ii) of the CBDT Circular No.06/2023 as arbitrary and ultra vires the Constitution of India. Consequently, the CIT(Exemption)'s reliance on this circular was invalidated.

2. Rejection of the Application for Approval under Section 80G(5) of the Income-tax Act, 1961:
The CIT(Exemption) rejected the application on the grounds that it was filed beyond the time limit specified by the Act and not covered by the extensions provided in the CBDT Circulars. The assessee society argued that it was provisionally approved under Section 80G(5) and required to apply within six months of commencement of its activities or six months before the expiry of the provisional approval. Despite the extension of deadlines for other sections, the CIT(Exemption) maintained that no such extension was granted for Section 80G(5). The tribunal noted that the Hon'ble High Court's decision invalidated the differential treatment in the circular, thus impacting the rejection basis.

3. Cancellation of Provisional Approval Granted under Section 80G(5) on 27.05.2021:
The CIT(Exemption) also canceled the provisional approval granted on 27.05.2021, citing the second proviso to Section 80G(5). The tribunal observed that the CBDT Circular No.07/2024 dated 25.04.2024 extended the due date for filing Form 10AB until 30.06.2024, which applied to pending applications and those rejected solely for being late. Therefore, the assessee society was allowed to file a fresh application within the extended period.

Conclusion:
The tribunal concluded that the CIT(Exemption)'s rejection of the application based on the expired due date was no longer valid due to the Hon'ble High Court's ruling and the subsequent CBDT Circular No.07/2024. The assessee society was permitted to file a fresh application in Form 10AB by 30.06.2024. The appeal was allowed for statistical purposes, and the general ground of appeal was dismissed as not pressed. The order was pronounced on 27th June 2024.