Final registration under Section 80G(5)(iii) cannot be rejected on limitation grounds when Form 10AB filed within prescribed timeframe

ITAT Chandigarh allowed the appeal regarding rejection of final registration under Section 80G(5)(iii). The assessee filed Form 10AB on 04/09/2023 within six months of provisional registration granted on 24/08/2023, meeting prescribed time limits. Though the application was initially rejected on 19/03/2024 before CBDT Circular 07/2024, the tribunal found merit in examining the application on merits rather than dismissing on limitation grounds. The matter was remitted to CIT(E) to admit the application as filed within stipulated period and examine on merits.

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Issues Involved:
1. Rejection of the application for final registration under Section 80G(5)(iii) due to filing beyond the prescribed time limits.
2. Interpretation and application of the provisions of Section 80G(5) of the Act regarding the timing of filing for final registration.
3. Consideration of the Central Board of Direct Taxes (CBDT) Circular No. 07/2024 and its implications on the case.

Issue-wise Detailed Analysis:

1. Rejection of the Application for Final Registration under Section 80G(5)(iii):
The assessee's application for final registration under Section 80G(5)(iii) was rejected by the CIT(E) on the grounds that it was filed beyond the prescribed time limits. The application was filed on 04/09/2023, following the provisional registration granted on 24/08/2023. The CIT(E) did not consider the merits of the application due to this perceived delay.

2. Interpretation and Application of Section 80G(5):
The assessee argued that the application for final registration was filed within the prescribed limitation period, as the relevant provisions state that the application must be made at least six months prior to the expiry of the provisional registration or within six months of the commencement of its activities, whichever is earlier. The assessee contended that it could not have applied for final registration before receiving provisional registration and thus complied with the requirement by applying soon after obtaining provisional registration. The Tribunal found merit in this argument, noting that the application was indeed filed within the prescribed period.

3. Consideration of CBDT Circular No. 07/2024:
The CIT/DR submitted that the CBDT Circular No. 07/2024, dated 25-Apr-2024, provided an extended time limit for charitable trusts and societies to file fresh applications in Form 10AB. The Circular allowed for fresh applications to be submitted by 30.06.2024 if previous applications were rejected solely due to late filing or wrong section code. The Tribunal noted that the assessee's application was rejected before the issuance of this Circular, and although the extended time had expired, the intent and spirit of the Circular should allow the application to be examined on its merits.

Tribunal's Decision:
The Tribunal held that the application for final registration was filed within the prescribed time period and was not barred by limitation. The Tribunal also referenced similar cases where the interpretation of Section 80G(5) supported the assessee's position. The Tribunal directed the CIT(E) to admit the application as filed within the stipulated period and to examine it on its merits as per the law, providing a reasonable opportunity to the assessee. The matter was remitted to the CIT(E) for a decision within two months of receiving the Tribunal's order.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the CIT(E) to reconsider the application for final registration under Section 80G(5)(iii) on its merits and in accordance with the law, considering the provisions and the CBDT Circular. The order was pronounced in open Court on 30/08/2024.

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