Procedural Compliance vs. Substantive Justice: Balancing Procedural Rigidity and Transitional Hardships in Section 80G Approvals

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..... come Tax Appellate Tribunal (ITAT), Chennai, in the case involving multiple assessees challenging the rejection of their applications for approval under Section 80G(5) of the Income Tax Act, 1961 . The appeals arise from orders passed by the Commissioner of Income Tax (Exemption) [CIT(E)], Chennai. This case highlights the procedural and substantive issues surrounding the approval process for char .....

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..... irements. Nature of the Provisions : The appellants posited that the timelines under clause (iii) to the proviso to section 80G(5) should be considered directory rather than mandatory, especially given the transitional nature of the amendments and the intent to facilitate smooth compliance. Substantive Compliance : They argued that their applications substantively complied with the requirements an .....

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..... maintaining the integrity of the tax system. Categorization of Trusts : The respondent distinguished between new trusts and old trusts applying for registration under the new regime, arguing that the same stringent timeline should apply uniformly to ensure consistent application of the law. Court's Analysis The ITAT, Chennai, examined the arguments presented and the relevant provisions of the .....

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..... T noted that procedural provisions should be interpreted to facilitate justice rather than hinder it. Remand for Merits Consideration : The ITAT set aside the orders of the CIT(E) rejecting the applications for being time-barred. The tribunal remanded the cases back to the CIT(E) for reconsideration on merits, directing that the applications be evaluated substantively rather than being dismissed o .....

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..... rdships, while the respondent emphasized strict adherence to specified deadlines. The tribunal acknowledged the genuine difficulties faced by charitable entities during the transition to a new regime and held that the timelines should be considered directory rather than mandatory. Consequently, the tribunal remanded the cases back to the CIT(E) for a merits-based evaluation, setting aside the reje .....

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