Trust's 80G registration application not time-barred when filed within six months of provisional registration expiry

The ITAT PUNE held that a trust's application for 80G registration approval in Form 10AB was not time-barred. The CIT(E) had rejected the application solely on grounds of late filing. The ITAT ruled that for existing trusts with provisional registration, the time limit for regular registration is within six months of provisional registration expiry, not within six months of commencement of activities. The latter provision applies only to newly formed trusts that haven't started charitable activities. The ITAT directed the CIT(E) to treat the application as timely filed and verify the assessee's eligibility under the Act. The appeal was allowed for statistical purposes.

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Issues Involved:
1. Rejection of registration under Section 80G of the Income Tax Act, 1961.
2. Alleged violation of principles of natural justice due to insufficient opportunity to present details.
3. Evaluation of application based on merits versus technical grounds.

Summary:

1. Rejection of Registration under Section 80G:
The Commissioner of Income Tax (Exemption) rejected the assessee's application for approval under Section 80G of the Income Tax Act, 1961, on the grounds that it was filed beyond the specified time limit, thus being time-barred. The application was filed on 27.03.2023, whereas it should have been filed on or before 18.02.2023, as per the clause (iii) of the first proviso to Section 80G(5) of the Act.

2. Alleged Violation of Principles of Natural Justice:
The assessee contended that the Commissioner did not grant sufficient opportunity to submit details and information, thereby violating the principles of natural justice. The Tribunal noted that the Commissioner had not discussed the merits of the case and rejected the application solely on technical grounds.

3. Evaluation Based on Merits vs. Technical Grounds:
The Tribunal analyzed the statutory provisions, including the relevant part of Section 80G(5) and the amendments introduced by the Finance Act, 2020. It was noted that the amendments aimed to simplify the registration procedure for charitable trusts and institutions. The Tribunal emphasized that the interpretation of the provisions should avoid absurdity and align with the legislative intent to facilitate registration.

The Tribunal referred to the Hon'ble Supreme Court's observations in K P Varghese Vs. ITO, emphasizing that statutory provisions should be construed to avoid absurdity and mischief. The Tribunal concluded that the words "within six months of commencement of its activities" should apply to newly formed trusts/institutions that had not started charitable activities at the time of obtaining provisional registration, not to those already engaged in charitable activities.

Conclusion:
The Tribunal held that the assessee had applied for registration within the allowed time under the Act, making the application valid and maintainable. The Commissioner of Income Tax (Exemption) was directed to treat the application as filed within the statutory time and verify the assessee's eligibility as per the Act, granting the assessee an opportunity to present necessary documents. The appeal of the assessee was allowed for statistical purposes, and the case was set aside to the Commissioner for further verification. The Tribunal did not adjudicate each ground separately due to the decision to set aside the case.

Order Pronounced:
The appeal of the assessee was allowed for statistical purposes, with the order pronounced in open court on 5th January 2024.

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