2025 (10) TMI 1144 - AT - Income Tax

Delayed 80G registration condoned; section 80G(5) timelines held directory and CIT(E) to decide application merits

ITAT allowed the appeal of the applicant whose 80G registration was rejected for delay, holding that delays can be condoned. The tribunal noted CBDT ... Rejection of application for grant of exemption u/s 80G - application of the assessee was rejected for having been filed late i.e beyond the timeline, including extended timeline, prescribed by the Revenue authorities - case of the appellant that the delay cannot come in the way of its eligibility for grant of exemption u/s 80G - whether the delay caused by the assessee in filing of its application u/s 80G for grant of registration can be condoned and registration be granted ? - HELD THAT:- As noted that CBDT through its instructions has accorded powers to the CIT(E) for condoning the delay in matters concerning 12A registrations. We have noted that while doing so, CBDT had primarily examined the issue of “continuing hardship” to the taxpayers in filing timely applications and thus being deprived of registration on such technical deficiencies. Registrations under section 12A and 80G are closely inter-linked and or rather supplementing their independent objectives. The present issue is also one of genuine hardships and therefore there cannot be a distinction within the same provision without bringing any exception. The provisions of 80G are for the benefit of donors who are donating amounts of money to Charitable Trusts, engaged in selfless public service, for claiming exemption in the Returns of Income. The uniform view taken by this tribunal on the issue is that, considering the amendment by the Finance Bill 2024, the applications u/s 80G(5) after the due date can be considered within the meanings of the section 80G(5)(iv). As noted that the decision of the Coordinate bench of this tribunal in the case of CIT-1982 Charitable Trust [2024 (3) TMI 1201 - ITAT CHENNAI] which has gone to conclude that the timelines u/s 80G(5) are directory in nature and that therefore any rejection of delayed applications by CIT(E) would be merely a case of reliance on pure technicalities. We direct the CIT(E ) to treat the delayed application filed by the assessee as having been filed under clause-(iv) of the first proviso to section 80G and decide in accordance with law. Appeal of the assessee is allowed for statistical purposes. ISSUES PRESENTED AND CONSIDERED 1. Whether an application for registration/recognition under section 80G filed after the prescribed timeline (including extended timeline) can be condoned by the Commissioner of Income Tax (Exemptions) or by the Tribunal and the registration granted. 2. Whether timelines prescribed under the first proviso to section 80G(5) (including clauses (iii) and the newly inserted clause (iv) by Finance Act, 2024) are directory or mandatory in nature, and the effect of CBDT circulars extending timelines for related forms (notably Form No.10AB for section 12A and Form No.10A/10AB for section 80G matters). 3. Whether the Tribunal should follow coordinate-bench decisions treating delayed applications under section 80G as entertainable and remand to CIT(E) for decision on merits, and the precedential value of such decisions for consistency. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Power to condone delay in filing application under section 80G: Legal framework: Section 80G(5) prescribes the procedure for recognition/registration under section 80G; the first proviso contains timelines in its clauses (including clause (iii) and, as amended by Finance Act 2024, clause (iv)). CBDT has issued circulars conferring/clarifying administrative extensions for filing forms related to registration under section 12A and 80G. Precedent Treatment: Coordinate benches of the Tribunal have considered condonation of delay in 12A and 80G matters and have remanded cases to CIT(E) with directions to condone delay or treat delayed applications under the appropriate proviso clause-examples cited include decisions treating timelines as directory and remanding for merits. Interpretation and reasoning: The Tribunal noted CBDT's instructions granting CIT(E) power to condone delays in 12A matters arising from recognized 'continuing hardship' faced by taxpayers in meeting timelines. Registrations under section 12A and 80G are closely inter-linked and serve complementary objectives; therefore the rationale for condonation in 12A cases applies equally to 80G cases. The Tribunal found that refusal to condone a delay of 53 days would be a denial based on pure technicality and cause grave injustice to beneficiaries (donors) who rely on 80G recognition for tax claims. Ratio vs. Obiter: Ratio - The Tribunal holds that CIT(E) has the power to treat timelines for 80G applications as directory in appropriate hardship cases and to condone delay, particularly where CBDT circulars recognize similar hardship in related registration schemes (12A and 80G). Obiter - observations on the equivalence of powers between Tribunal and CIT(E) to condone delay, and broader policy considerations favouring donors, are persuasive but ancillary. Conclusion: Delay in filing an application under section 80G can be condoned and the CIT(E) is to treat delayed applications appropriately (including considering them under the applicable proviso clause) and decide on merits after affording opportunity of hearing. Issue 2 - Directory v. mandatory nature of timelines under the proviso to section 80G(5) and effect of Finance Act, 2024 amendment (clause (iv)) and CBDT circulars: Legal framework: The proviso to section 80G(5) contains clauses governing timelines for filing applications. Finance Act, 2024 inserted clause (iv) to enable trusts to apply for approval under section 80G(5) at any time after commencement of activities. CBDT circulars (cited) extended timelines for filing related forms (Form No.10AB/10A) to mitigate continuing hardship. Precedent Treatment: Coordinate-bench decisions of the Tribunal have held timelines under section 80G(5) to be directory and have interpreted CBDT circulars as extending relief to related forms, including renewals/recognitions under clause (iii) and matters falling within the new clause (iv). Interpretation and reasoning: The Tribunal reasons that the CBDT's recognition of 'continuing hardship' in issuing timeline extensions for registration forms should not result in artificial distinctions within the same statutory regime. The transitional nature of the amendment regime and the policy objective of section 80G (benefit to donors) support a directory construction of the timelines. The insertion of clause (iv) by Finance Act, 2024 provides a statutory basis to treat certain delayed applications as maintainable where they fall within the post-commencement/any-time filing permitted by clause (iv). Ratio vs. Obiter: Ratio - Timelines under clause (iii) (and related filing requirements) may be treated as directory rather than mandatory in appropriate hardship/transitional cases; applications after the due date can be considered under clause (iv) where applicable, and CBDT circulars extending timelines for related forms inform this approach. Obiter - detailed policy remarks on donors' interests and the exact ambit of CBDT circulars beyond the facts before the Tribunal. Conclusion: Timelines under the proviso to section 80G(5) are to be treated as directory in cases reflecting genuine hardship and transitional anomalies; the Finance Act, 2024 insertion of clause (iv) reinforces the view that certain delayed applications can be entertained and adjudicated on merits. Issue 3 - Stare decisis and application of coordinate-bench decisions remanding delayed 80G applications to CIT(E): Legal framework: Tribunal practice and principle of consistency require respect for coordinate-bench decisions, absent distinguishing facts or contrary law. Precedent Treatment: Multiple coordinate-bench decisions were relied upon where delayed applications were held entertainable, remitted to CIT(E) to be treated under clause (iv) or condoned in light of CBDT circulars; no distinguishing features were pointed out by Revenue in the present matter. Interpretation and reasoning: The Tribunal observed factual identity with earlier coordinate-bench decisions and, in respectful compliance for consistency, applied the same approach-directing CIT(E) to treat the delayed application as filed under clause (iv) and to decide on merits after affording due opportunity and compliance with statutory notices. Ratio vs. Obiter: Ratio - Where facts are indistinguishable from prior coordinate-bench decisions that entertained delayed 80G applications, the Tribunal will follow and direct remand to CIT(E) for merits adjudication. Obiter - broader remarks on the interplay of various circulars and amendments beyond current factual matrix. Conclusion: In the absence of any distinguishing feature, the Tribunal follows coordinate-bench precedents and directs that the delayed application be treated under clause (iv) of the first proviso to section 80G(5) and be adjudicated on merits by CIT(E) after affording opportunity of hearing and compliance with statutory notices. Overall Disposition The Tribunal allowed the appeal for statistical purposes, setting aside the CIT(E)'s rejection based solely on delay, and remitted the matter to CIT(E) with directions to treat the delayed application under clause (iv) of the first proviso to section 80G(5) (as appropriate), condone delay where justified by hardship/transitional considerations, afford the assessee opportunity of hearing, and decide on merits in accordance with law and statutory notices.