2024 (10) TMI 693 - AT - Income Tax

Rejection of application filed for approval u/s 80G(5)(iii) - delay of almost 11 months for filling application for approval - HELD THAT - Since in the instant facts, as it evident from the various dates mentioned above, the assessee / Applicant Trust had filed application for grant of final approval u/s 80G(5) of the Act on 28.04.2023 and as noted by us in the preceding paragraphs, the assessee could have filed application for grant of approval on or before 30.09.2023 which further stood extended to 30.06.2024 vide Circular No. 7/2024 dated 25.04.2024 then, in our considered view, the application for grant of final registration u/s 80G(5) of the Act could not be denied only on the ground that the same was not filed before 30-09-2023. Accordingly, matter is restored to file of Ld. CIT(E) de-novo consideration after giving due opportunity of hearing to the assessee, and then decide the application of the assessee, in accordance with law - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues Involved:

1. Rejection of Application for Approval under Section 80G(5)(iii) due to Delay.
2. Interpretation of Extension of Time for Filing Form 10AB.
3. Applicability of Circulars Extending Filing Deadlines.
4. Procedural Fairness and Natural Justice.

Issue-wise Detailed Analysis:

1. Rejection of Application for Approval under Section 80G(5)(iii) due to Delay:

The primary issue in this case is the rejection of the Assessee's application for approval under Section 80G(5)(iii) of the Income Tax Act, 1961, due to a delay in filing. The Assessee, involved in charitable activities, filed the application on 28.08.2023, whereas it was required to file the application by 30.09.2022. The delay was attributed to the Assessee being the sole individual managing the trust's activities and dealing with emergencies involving the beneficiaries. The Commissioner of Income Tax (Exemption) rejected the application as non-maintainable, emphasizing the mandatory nature of the prescribed time limits and the lack of power to condone such delays.

2. Interpretation of Extension of Time for Filing Form 10AB:

The Assessee argued that the timeline for filing Form 10AB should be interpreted in light of various extensions granted by the Central Board of Direct Taxes (CBDT) for similar provisions. The ITAT considered previous rulings, notably in the case of Adani Education Foundation, which suggested that there should not be a distinction in timelines for different forms under the same provision. The Tribunal highlighted that procedural provisions should aid justice and not hinder it, referencing the principle that technicalities should not obstruct substantial justice.

3. Applicability of Circulars Extending Filing Deadlines:

The Tribunal examined multiple circulars issued by CBDT, which extended deadlines for filing applications under different sections. Circular No. 8/2022 extended the deadline to 30.09.2022, but Circular No. 6/2023 did not extend the deadline for Section 80G(5)(iii). However, Circular No. 7/2024 further extended the deadline to 30.06.2024, acknowledging the difficulties faced by taxpayers in electronic filing. The Tribunal noted that the extensions provided for Section 12A should logically apply to Section 80G(5) as well, given the similar procedural context.

4. Procedural Fairness and Natural Justice:

The Tribunal emphasized the importance of procedural fairness and natural justice, noting that the rejection of the application solely based on procedural delay, without considering the merits, could lead to unnecessary hardship. The Tribunal referred to precedents where procedural timelines were treated as directory rather than mandatory, allowing for flexibility in cases of genuine hardship.

Conclusion:

The Tribunal set aside the order of the CIT(Exemption) rejecting the application and remanded the matter for reconsideration on merits, in light of the extended timelines provided by the CBDT. The appeal was allowed for statistical purposes, underscoring the need for a fair and just approach in procedural matters.