Denial of approval under section 80G(5) for delayed Form 10AB treated as directory, matter remitted for fresh merits decision

Denial of approval for charitable tax registration based on alleged delay in filing Form 10AB is addressed by treating the prescribed time limit as directory rather than mandatory, permitting consideration on merits; consequent relief is set-aside of the impugned denial and remand to tax authority to decide afresh expeditiously. The decision requires verification beyond the memorandum of association regarding the nature of objects and genuineness of activities, and recognises that procedural noncompliance should not automatically preclude substantive approval when fairness and opportunity are provided.

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Issues: (i) Whether the application in Form No.10AB filed on 28.09.2023 under clause (iii) of the first proviso to section 80G(5) of the Income-tax Act, 1961 was barred by the prescribed time limit or is saved by extensions/relaxations; (ii) Whether the rejection of the application for registration under section 12A(1)(ac)(iii) of the Income-tax Act, 1961 for lack of evidence of activities and genuineness is sustainable.

Issue (i): Whether Form No.10AB filed on 28.09.2023 falls within the permissible time after taking into account CBDT circulars and the nature of the time limit under clause (iii) of the first proviso to section 80G(5).

Analysis: The decision examines the timeline of provisional approval and the sequence of CBDT circulars extending due dates for filing Forms 10A/10AB, including Circular No.6/2023 and Circular No.7/2024 which extended filing deadlines to 30.06.2024 and provided that pending applications may be treated as valid. The tribunal considered precedent treating the timeline under clause (iii) as directory rather than mandatory and noted provisional approval in force till 31.03.2024, making filing on 28.09.2023 within the extended/relaxed regime. The administrative power under section 119 to mitigate genuine hardship and treat pending applications as valid was applied to the facts.

Conclusion: The application in Form No.10AB filed on 28.09.2023 is not to be rejected as time-barred; conclusion is in favour of the assessee.

Issue (ii): Whether the rejection of registration under section 12A(1)(ac)(iii) for alleged absence of adequate proof of activities and genuineness is sustainable.

Analysis: The tribunal reviewed the impugned rejection reasoning that memorandum alone was insufficient and that no photographs or documentary proof had been produced. It found that the matters concerning nature and genuineness of activities require adjudication on merits after affording effective opportunity and that procedural technicalities should not foreclose consideration on merits. The tribunal noted that the impugned order failed to decide the merits and therefore remand for fresh decision was appropriate.

Conclusion: The rejection under section 12A(1)(ac)(iii) is set aside and matter is remitted for fresh adjudication; conclusion is in favour of the assessee.

Final Conclusion: The impugned orders rejecting the Form No.10AB application and denying registration under section 12A(1)(ac)(iii) are set aside; the matter is remitted to the Commissioner (Exemptions) for fresh decision on merits in accordance with law and after affording opportunity, giving effect to the administrative extensions and the directory nature of the contested time limit.

Ratio Decidendi: The time limit in clause (iii) of the first proviso to section 80G(5) is to be treated as directory in the transitional context, and CBDT circulars issued under section 119 extending due dates and validating pending applications operate to prevent rejection of Form No.10AB filed within those extended/relaxed timelines; procedural rejection without merit adjudication warrants remand for fresh decision.

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