Trust's late Form 10AB filing under section 80G should not face automatic rejection, timeline directory not mandatory

ITAT Chennai held that a trust's belated filing of Form 10AB under section 80G should not result in automatic rejection. The assessee trust commenced activities in July 2017 and received provisional approval under section 80G(5)(iv) but filed the renewal application beyond statutory timelines. The tribunal noted CBDT Circular 6/2023 extended deadlines for similar forms recognizing genuine hardship faced by charitable institutions. Finding no distinction between different provisions under section 80G(5), the tribunal ruled the timeline should be treated as directory rather than mandatory, especially given the transitional nature of amendments. The matter was remanded to CIT(Exemptions) for decision on merits rather than technical grounds.

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Issues Involved:
1. Rejection of Form No.10AB for approval under clause (iii) of first proviso to section 80G(5) of the Income Tax Act, 1961 as belated.
2. Interpretation of the timelines prescribed under section 80G(5)(iii) for filing Form No.10AB.
3. Authority of CIT(Exemption) to condone delay in filing Form No.10AB.
4. Applicability of CBDT Circulars extending timelines for filing Form No.10A and 10AB.

Summary:

Issue 1: Rejection of Form No.10AB as Belated
The appeals concern the rejection of Form No.10AB filed by the assessees seeking approval under clause (iii) of the first proviso to section 80G(5) of the Income Tax Act, 1961. The CIT(Exemption) rejected these forms as they were filed after the prescribed timeline, treating them as belated.

Issue 2: Interpretation of Timelines for Filing Form No.10AB
The assessees argued that the timelines prescribed for filing Form No.10AB should be considered directory and not mandatory, especially given the transitional nature of the new regime introduced by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020. They contended that the hardships faced by charitable entities should allow for a more flexible interpretation of the deadlines.

Issue 3: Authority of CIT(Exemption) to Condon Delay
The CIT(Exemption) noted that the time limit prescribed under section 80G(5)(iii) is mandatory and that there is no provision in the Act granting the authority to condone the delay in filing Form No.10AB. The CIT-DR supported this view, citing relevant case laws and emphasizing that the CIT(Exemption) does not have the power to condone such delays.

Issue 4: Applicability of CBDT Circulars
The assessees relied on various CBDT Circulars, particularly Circular No.6 of 2023, which extended the timelines for filing Form No.10A and 10AB due to the genuine hardships faced by charitable entities. They argued that similar extensions should apply to Form No.10AB for approval under section 80G, even though the specific circular did not explicitly mention such an extension for section 80G approvals.

Tribunal's Decision:
The Tribunal noted that the CBDT has extended the timelines for filing Form No.10A and 10AB in recognition of genuine hardships. It held that the same rationale should apply to Form No.10AB for approval under section 80G, treating the timeline as directory rather than mandatory. The Tribunal found that the intention of the CBDT's circulars was to mitigate hardships and that this should extend to applications under section 80G as well.

The Tribunal set aside the orders of the CIT(Exemption) and remanded the matters back to the CIT(Exemption) for re-adjudication on merits, directing that the applications should be considered valid and decided accordingly.

Conclusion:
The appeals were allowed for statistical purposes, with the Tribunal directing the CIT(Exemption) to re-decide the issue on merits, taking into account the extended timelines and the genuine hardships faced by the assessees.

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