2024 (6) TMI 931 - AT - Income Tax

Trust's belated Section 80G final registration application allowed reconsideration despite statutory deadline under CBDT Circular

Avani Thakkar Charitable Trust Versus The CIT (Exemption), Ahmedabad

ITAT Ahmedabad set aside CIT(E)'s rejection of Trust's belated application for final registration under Section 80G(5)(iii) filed on 23.11.2022. The ... Rejecting the application for final Registration u/s. 80G(5)(iii) in Form No.10AB belatedly on 23.11.2022 - HELD THAT:- It is undisputed fact that the Trust was created on 06-05-2011 and Final registration u/s. 12AB was granted to the assessee Trust. Similarly, Provisional registration u/s. 80G was granted on 11-02-2022. However, the assessee failed to File final registration under 80G(5) within six months period but filed on 23-11-2022 is barred by limitation and treated the Application as not maintainable. Circular No. 6 of 2023 dated 24-05-2023 was not considered by Ld CIT[E] while rejecting Final registration u/s.80G of the Act vide order dated 28-05-2023. This Circular clarified that even in case, where the application in Form No. 10AB was rejected by the CIT(E) on or before issuance of this circular dated 24-05-2023, the assessee trust can make fresh application in Form 10AB on or before 30-09-2023. Thus, the ld. CIT(E) has not considered the clause 7 of the Circular No.6 of 2023 thereby rejected the application, which is in our considered view is against the circular issued by the CBDT. We hereby set aside the impugned order passed by CIT(E) with a direction to reconsider the From No.10AB for Final Registration u/s. 80G of the Act by giving proper opportunity of being heard to the assessee trust. Needless to say the assessee trust should co- operate by furnishing all the required details as mandated under the law for granting final registration u/s. 80G of the Act. Appeal filed by the assessee is allowed for statistical purpose. 1. ISSUES PRESENTED AND CONSIDERED 1. Whether an application for final registration under section 80G(5) filed after the statutory time-limit but prior to or on account of administrative extensions issued by the CBDT can be treated as maintainable or required to be reconsidered. 2. Whether the Commissioner (Exemption) can reject an application in Form No.10AB as not maintainable solely on the ground of belated filing where CBDT circulars subsequently extend the time and/or permit fresh/reconsideration of previously rejected applications. 3. Whether a Tribunal is bound to follow a coordinate Bench decision interpreting the effect of CBDT Circular(s) on the timeliness and maintainability of Form No.10AB applications under section 80G(5). 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Timeliness and maintainability of Form No.10AB under section 80G(5) Legal framework: Section 80G(5) prescribes time-limits for filing applications for approval/registration (including proviso at clause (iii) for institutions provisionally approved), and the Act confers power on the CBDT under section 119 to issue directions/clarifications and extend time-limits by administrative circulars. Precedent Treatment: The Tribunal referred to a coordinate Bench decision addressing an identical factual matrix and interpreting CBDT Circular No.8/2022 and Circular No.6/2023 to extend filing deadlines and permit treatment of pending or previously rejected applications as valid or subject to fresh filing within the extended period. Interpretation and reasoning: The Court examined the statutory proviso which prima facie allows no condonation of delay, but held that CBDT, invoking powers under section 119, legitimately extended the due date up to 30-09-2023 and specifically provided in Circular No.6/2023 that pending applications furnished after 30-09-2022 may be treated as valid and that trusts whose applications had been rejected solely for late filing before issuance of that circular may furnish fresh applications within the extended time. The Tribunal found the Commissioner did not consider clause 7 of Circular No.6/2023 and thereby rejected the application on the sole ground of belated filing without regard to the CBDT direction. Ratio vs. Obiter: Ratio - Administrative extensions issued under section 119 can render belated applications maintainable or permit fresh/re-considered filings where circulars explicitly provide for such treatment. Obiter - Observations on the absence of statutory condonation power were contextual and secondary to the effect of the circulars. Conclusion: The rejection of Form No.10AB as non-maintainable solely for being filed after the original statutory deadline was inconsistent with the CBDT Circular No.6/2023; the application must be reconsidered in light of the circular and the extended timeline, with opportunity to be heard and to supply mandated information. Issue 2 - Effect of CBDT Circulars on prior rejection orders and duty of the Commissioner (Exemption) Legal framework: CBDT circulars issued under section 119 can clarify, extend, and direct administrative action on time-limited statutory processes; Circular No.6/2023 addressed pending and previously rejected applications under related provisions and provided remedial procedural relief. Precedent Treatment: The Tribunal followed a coordinate Bench decision that set aside a rejection order for failure to consider the CBDT circular and directed reconsideration of Form No.10AB applications, applying paragraph 7 of Circular No.6/2023 which allowed pending belated applications to be treated as valid and permitted fresh filing where an earlier rejection occurred. Interpretation and reasoning: The Tribunal concluded that where the Commissioner rejects an application solely on account of late filing without reference to the subsequent CBDT clarification that preserves or permits fresh filing/reconsideration, such rejection is contrary to the CBDT direction and must be set aside. The Tribunal emphasized the administrative obligation to follow the CBDT circular and to afford the applicant an opportunity to comply with statutory/formal requirements when reconsidering the application. Ratio vs. Obiter: Ratio - A rejection based solely on belated filing must be reconsidered if the CBDT circulars expressly extend time or permit reconsideration/fresh filing; the Commissioner is bound to apply the circular. Obiter - Remarks on the precise dates/forms of filing in other factual permutations are incidental. Conclusion: The Commissioner erred in not applying Circular No.6/2023; the correct course is to set aside the rejection and direct reconsideration of the Form No.10AB application with due opportunity to the applicant to furnish required details. Issue 3 - Binding nature of coordinate Bench decision and approach of the Tribunal Legal framework: The Tribunal may follow decisions of coordinate Benches when facts and legal questions are identical or analogous; respect for consistency in administrative-adjudicatory practice is a relevant consideration. Precedent Treatment: The present Bench respectfully followed the coordinate Bench decision that interpreted CBDT Circular No.6/2023 and directed reconsideration of belated Form No.10AB applications. Interpretation and reasoning: Given identity of legal issue and reliance on the same CBDT circular, the Tribunal applied the prior Bench's reasoning to the present facts, noting the Commissioner's omission to consider paragraph 7 of Circular No.6/2023 and the circular's express remedial machinery for pending/rejected cases. Ratio vs. Obiter: Ratio - Where a coordinate Bench has authoritatively interpreted an administrative circular in materially identical circumstances, subsequent Benches will follow that interpretation unless distinguishable. Obiter - Discussion on Tribunal hierarchy and precedential weight is ancillary. Conclusion: The Tribunal followed the coordinate Bench and set aside the rejection order for reconsideration, directing the Commissioner to re-adjudicate the Form No.10AB application in conformity with the CBDT circular and after affording the assessee an opportunity to be heard and to supply requisite information. Overall Disposition The rejection of the Form No.10AB application solely on the ground of belated filing was set aside; the matter is remitted to the Commissioner for reconsideration in light of CBDT Circular No.6/2023 (and related directions), with directions to give hearing and permit the assessee to furnish all mandated details for final registration under section 80G.