Charitable trust wins appeal after Section 80G(5) approval rejection for late filing reversed

The ITAT Ahmedabad allowed the appeal of a charitable trust whose application for final approval under Section 80G(5) was rejected for being filed belatedly. Following the precedent in CIT-1982 Charitable Trust, the ITAT held that there cannot be different timelines within the same provision for Section 12A registration and Section 80G(5) approval. Since the trust filed Form 10AB on 04.02.2023, within the extended timeline of 30.09.2023 provided by CBDT Circular, the CIT(Exemptions) order was set aside and the matter remanded for deciding the application on merits.

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Issues Involved:
1. Rejection of application u/s 80G(5) due to late filing.
2. Consideration of genuine hardship in filing Form 10AB.
3. Interpretation of the timeline and conditions for filing applications under Section 80G(5).
4. Authority of CIT(E) to condone delay in filing applications.
5. Applicability of judicial precedents and CBDT circulars in extending deadlines.

Summary:

Issue 1: Rejection of Application u/s 80G(5) Due to Late Filing

The assessee filed an application u/s 80G(5) in Form No. 10AB, which was rejected by the CIT(E) on the grounds that it was filed beyond the prescribed timeline. The CIT(E) noted that the application should have been filed at least six months prior to the expiry of the provisional approval or within six months of commencement of activities, whichever is earlier. The application was filed on 04/02/2023, whereas the deadline was 30/09/2022.

Issue 2: Consideration of Genuine Hardship in Filing Form 10AB

The assessee argued that the delay was due to genuine hardship and changes in the law regarding provisional and regular registration. The Counsel for the assessee cited various judicial precedents and CBDT circulars that extended the deadlines for filing such applications, arguing that the timelines should be treated as directory rather than mandatory.

Issue 3: Interpretation of Timeline and Conditions for Filing Applications under Section 80G(5)

The ITAT referenced the case of CIT-1982, Charitable Trust, which held that the timeline for filing Form No. 10AB should be treated as directory and not mandatory. The ITAT observed that there should not be a distinction within the same provision for different timelines for final approval applications under Section 12A and Section 80G(5).

Issue 4: Authority of CIT(E) to Condon Delay in Filing Applications

The CIT(E) stated that they had no power to condone the delay in filing the application. However, the ITAT noted that the ITAT itself has the power to condone such delays, especially considering the transitional nature of the amendments and the genuine hardship faced by the assessee.

Issue 5: Applicability of Judicial Precedents and CBDT Circulars in Extending Deadlines

The ITAT relied on various judicial precedents and CBDT circulars that extended deadlines for filing applications under Section 12A and argued that the same extensions should apply to applications under Section 80G(5). The ITAT set aside the CIT(E)'s order and remanded the matter back for re-decision on merits, considering the extended timelines.

Conclusion:

The ITAT concluded that the timeline for filing Form No. 10AB should be treated as directory and not mandatory, and remanded the matter back to the CIT(E) for re-decision on merits, considering the extended deadlines and genuine hardship faced by the assessee. Both appeals were allowed for statistical purposes.

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