Society wins appeal after registration denial for late Form 10AB filing under Section 80G(5)

The ITAT Raipur allowed the assessee society's appeal against denial of registration under Section 80G(5) for late filing of Form 10AB. While the tribunal acknowledged that the CIT(Exemption) Bhopal's rejection was justified based on the Sri Nrisimha Priya Charitable Trust HC judgment, it noted that CBDT Circular No.7/2024 dated 25.04.2024 provided relief. The circular permitted entities whose applications were rejected for late filing to submit fresh applications by 30.06.2024. The tribunal directed that the assessee society could approach the CIT(Exemption) with a fresh Form 10AB application within the extended timeline, which would be treated as valid under the circular provisions.

---

---

Issues Involved:
1. Validity of the order dated 15.02.2024 by the CIT(Exemption), Bhopal.
2. Rejection of the application for approval under Section 80G(5) of the Income-tax Act, 1961.
3. Cancellation of provisional approval granted under Section 80G(5) on 27.05.2021.

Issue-wise Detailed Analysis:

1. Validity of the Order Dated 15.02.2024 by the CIT(Exemption), Bhopal:
The assessee society challenged the order dated 15.02.2024 passed by the CIT(Exemption), Bhopal, claiming it was "bad in law and void ab initio." The CIT(Exemption) had rejected the application for approval under Section 80G(5) due to the application being filed beyond the stipulated time limit. The CIT(Exemption) relied on CBDT Circular No.06/2023, which did not extend the time for applications under Clause (iii) of the "1st proviso" to Section 80G(5). However, the Hon'ble High Court of Madras in the case of Sri Nrisimha Priya Charitable Trust vs. CBDT declared Clause (ii) of the CBDT Circular No.06/2023 as arbitrary and ultra vires the Constitution of India. Consequently, the CIT(Exemption)'s reliance on this circular was invalidated.

2. Rejection of the Application for Approval under Section 80G(5) of the Income-tax Act, 1961:
The CIT(Exemption) rejected the application on the grounds that it was filed beyond the time limit specified by the Act and not covered by the extensions provided in the CBDT Circulars. The assessee society argued that it was provisionally approved under Section 80G(5) and required to apply within six months of commencement of its activities or six months before the expiry of the provisional approval. Despite the extension of deadlines for other sections, the CIT(Exemption) maintained that no such extension was granted for Section 80G(5). The tribunal noted that the Hon'ble High Court's decision invalidated the differential treatment in the circular, thus impacting the rejection basis.

3. Cancellation of Provisional Approval Granted under Section 80G(5) on 27.05.2021:
The CIT(Exemption) also canceled the provisional approval granted on 27.05.2021, citing the second proviso to Section 80G(5). The tribunal observed that the CBDT Circular No.07/2024 dated 25.04.2024 extended the due date for filing Form 10AB until 30.06.2024, which applied to pending applications and those rejected solely for being late. Therefore, the assessee society was allowed to file a fresh application within the extended period.

Conclusion:
The tribunal concluded that the CIT(Exemption)'s rejection of the application based on the expired due date was no longer valid due to the Hon'ble High Court's ruling and the subsequent CBDT Circular No.07/2024. The assessee society was permitted to file a fresh application in Form 10AB by 30.06.2024. The appeal was allowed for statistical purposes, and the general ground of appeal was dismissed as not pressed. The order was pronounced on 27th June 2024.

---