Trust's Section 80G registration application not time-barred for existing charitable organizations already conducting activities

The ITAT Pune held that a trust's application for registration under Section 80G(5)(iii) was not time-barred. The tribunal distinguished between newly formed trusts and existing trusts already conducting charitable activities, ruling that the six-month timeline from "commencement of activities" applies only to new trusts, not those already operational before obtaining provisional registration. For existing trusts, the deadline is six months before provisional registration expires. The CIT(E)'s rejection was overturned as it would create an absurd situation preventing long-established charitable trusts from ever obtaining registration. The matter was remanded for eligibility verification.

---

---

Issues Involved:

1. Whether the application u/s 80G was time-barred.
2. Whether the cancellation of provisional registration was valid without following due process and opportunity of hearing.
3. Whether the cancellation was justified in the absence of any dissatisfaction about the genuineness of activities or violation of conditions prescribed in Section 80G(5).

Summary:

1. Whether the application u/s 80G was time-barred:

The ld. Commissioner of Income Tax (Exemption) rejected the application filed in Form 10AB for approval u/s 80G of the Act on the ground that it was filed beyond six months of commencement of activities, thus holding it as time-barred. The Tribunal noted that the application was filed beyond the statutory period specified in clause (iii) of the first proviso to section 80G(5) of the Income Tax Act, 1961. However, it interpreted that the words "within six months of commencement of its activities" apply to newly formed trusts/institutions and not to those already performing charitable activities before obtaining provisional registration.

2. Whether the cancellation of provisional registration was valid without following due process and opportunity of hearing:

The Tribunal observed that the provisional approval granted on 09/07/2021 was canceled without following the due process of law and without affording an opportunity of hearing to the appellant. The Tribunal emphasized that the provisional approval is valid up to A.Y. 2025-26 and can only be canceled on specific violations, which were not mentioned by the ld. CIT (E) in this case.

3. Whether the cancellation was justified in the absence of any dissatisfaction about the genuineness of activities or violation of conditions prescribed in Section 80G(5):

The Tribunal noted that the ld. CIT (E) did not discuss the merits of the case or whether the assessee fulfilled all other conditions mentioned in the section. It held that the application made by the assessee in Form 10AB was within the prescribed time limit and thus valid. The Tribunal directed the ld. CIT (E) 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 file all necessary documents.

Conclusion:

The appeal of the assessee was allowed for statistical purposes, and the case was set aside to the ld. CIT (E) for reconsideration. The Tribunal did not adjudicate each ground separately as the matter was remanded back for verification of the assessee's eligibility. The order was pronounced in the open Court on 5th Jan, 2024.

---