AGGARWAL SABHA,REWARI V. CIT(E), CHANDIGARH

ITA 2259/DEL/2024

AI Insights

The case involves M/s Aggarwal Sabha, a charitable trust, appealing against the decisions of the Commissioner of Income Tax (Exemptions), Chandigarh, which rejected their applications for registration under Sections 80G(5) and 12A(1)(ac)(iii) of the Income Tax Act, 1961. The primary contention was the rejection based on the timing of the application submission, which the Tribunal found to be an improper basis for rejection. The Tribunal noted that the trust had been granted provisional registration previously and that the application for permanent registration was filed within the extended deadlines provided by various CBDT circulars. The Tribunal also referenced a similar case where the Chennai ITAT had set aside a similar rejection, reinforcing the view that the procedural timelines should be considered as directory.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473130 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: misc
• Other Referred Cases: CIT-1982 Charitable Trust v/s ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR; AMIT KATOCH
• Assessee Lawyers: LALIT MOHAN; PARTH
• Keywords: Set aside; Period of limitation; Principle of natural justice; Charitable institution
• Section: 119; 12A; 13; 80G

Judgement Text

" ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 1 of 15 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘A’: NEW DELHI) BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 2259 and 2260/Del/2024 M/s Aggarwal Sabha, Aggarwal Dharamshala Pathan Ghati Aggarwal, Dharamshala Rewari-124301, Haryana Vs. Commissioner of Income Tax (Exemptions), Chandigarh. PAN No: AABAAA6670N APPELLANT RESPONDENT Assessee by : Shri Lalit Mohan, CA & Shri Parth, Adv. Revenue by : Shri Javed Akhtar, CIT(DR) & Shri Amit Katoch, Sr. DR Date of Hearing : 27.12.2024 Date of Pronouncement : 31.01.2025 ORDER PER SUDHIR PAREEK, JM These two appeals by the assessee are preferred against the different order of learned Commissioner of Income Tax (Exemption), [hereinafter referred to as the ‘Ld. CIT (Exemption)’],Chandigarh, vide order dated 13.03.2024 and 15.03.2024 respectively. Since the issues involved in both appeals are interconnected, they are being ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 2 of 15 disposed of by this consolidated order for the sake of convenience and brevity. The assessee has raised the following grounds of appeal: ITA No.-2259-2024 “1. That the learned Commissioner of Income Tax (Exemptions) has gross erred both in law and on facts in not granting approval under section 80G(5) of the Act read with Rule 11AA of the Income Tax Rules, 1962. 2. That finding of the learned Commissioner of Income Tax (Exemptions) that \"activities of the applicant has commenced on 11.11.2008 and the present application filed in Form No. 10AB under clause (iii) of first proviso to sub- section (5) of section 80G of the Act has not been filed within the time limit prescribed therein and also the assessee has not filed its application within the extended time limit provided by CBDT vide its circular no. 12 of 2021 dated 25.6.2021, circular no. 16 of 2021 dated 29.8.2021 and circular no. 8 of 2002 dated 31.3.2022 which are discussed in para 8 above. Therefore the above application is liable to be rejected as non maintainable without going into the merits\" is based on incorrect interpretation of provision of the Act and the Rules and therefore unsustainable. 3. That conclusion that \"the present application filed in Form No. 10AB under clause (iii) of first proviso to sub-section (5) of section 80G of the Act is rejected as non maintainable\" is also based on incorrect interpretation of provision of the Act and the Rules and therefore unsustainable 4. That even otherwise the learned Commissioner of Income Tax (Appeals) passed the order without granting sufficient proper opportunity to the appellant and therefore the same is contrary to principle of natural justice and hence vitiated. It is, therefore, prayed that it be held that the appellant is a charitable trust and, is therefore entitled to registration u/s 80G(5) of the Act. It be further held that, the impugned order is not based on correct appreciation of the statutory provisions of law and thus, the order is totally untenable both on facts and in law.” ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 3 of 15 ITA No.- 2260/Del/2024 “1. That the learned Commissioner of Income Tax (Exemptions) has gross erred both in law and on facts in rejecting the application for registration of the appellant trust u/s 12A(1)(ac)(iii) of the Act. 2. That finding of the learned Commissioner of Income Tax (Exemptions) that \"the reply of the applicant filed on 11.12.2023 that it has not informed the exact activities being carried out, with substantive proof of same. There are no details of any activity being conducted by the applicant, how it is being conducted, how regularly it is being done, since when it has been carried out, and whether it is for general public utility. Therefore, the genuineness of activities of the society cannot be verified.\" is not based on correct appreciation of facts on record and therefore unsustainable. 3. That further finding of the learned Commissioner of Income Tax (Exemptions) that \"there is no written submission, neither any photographs etc. submitted by the applicant to prove that it is actually carrying out charitable activities. By going through the memorandum of association alone, one cannot be sure about the actual activities being performed. Therefore, the genuineness of charitable nature of activities of the society cannon be verified\" is also not based on correct appreciation of facts on record and therefore unsustainable. 4. That the learned Commissioner of Income Tax (Exemptions) has erred both in law and on facts in concluding that \"from para '1' of aims and objectives of memorandum of association it is observed that the society is specifically for the benefit of the Aggarwal community. As the society was created for a particular community and not for public at large, therefore the applicator is also liable to be rejected\" is also factually incorrect, legally misconceived and unsustainable. 5. That finding of the learned Commissioner of Income Tax (Exemptions) that \"no reply was received from, the applicant. No. details regarding the activities being done by the applicant were furnished In the absence of submissions regarding the activities, it is difficult to verify both the nature of objects and genuineness of activities of the applicant. It can safely be concluded that the queries raised could not be answered satisfactorily by the applicant\" is factually incorrect, legally misconceived and therefore unsustainable. 6. That conclusion of the learned Commissioner of Income Tax (Exemptions) that \"the application filed by the application for registration u/s 12AB of the Act is hereby rejected, which rejection and consequent lack of registration will apply from the F.Y. 2022-23 onwards and also supersede any registration granted u/s 12AB or ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 4 of 15 12AA of the Act by any authority at any earlier time\" is also not based on correct appreciation of facts on record and therefore unsustainable. 7. That even otherwise the learned Commissioner of Income Tax (Appeals) passed the order without granting sufficient proper opportunity to the appellant and therefore the same is contrary to principle of natural justice and hence vitiated. Prayer It is therefore, prayed that, the order of the learned Commissioner of Income Tax be quashed and, he be further directed to grant registration to the appellant trust u/s 12A(1)(ac)(iii) of the Act” 2. At the outset, the appellant has challenged the rejection of its application under Section 80G(5) of the Income Tax Act, 1961 (‘the Act’) and also application for registration under Section 12A(1)(ac)(iii) of the Act. 3. The Brief facts of these two appeals are that the application for registration of the Trust u/s 80G(5) of the I.T. Act, 1961 was filed electronically and as per data available in ITBA, the same is filed on 28.09.2023 by the applicant in Form No. 10AB under Rule 11AA of the I.T. Rules, 1962, and also the applicant has filed application in Form No. 10AB on 28.09.2023 seeking registration under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A of the Income Tax Act, 1961. The application reveals that the applicant is an association which was created on 11.11.2008. The applicant has ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 5 of 15 been provided provisional registration in form No. 10AC from A.Y. 2022-23 to A.Y. 2024-25 vide order dated 01.01.2022. 4. Solitary issue exists in this appeal for adjudication that the Ld. CIT(E) rejected Form 10AB dated 28.09.2023 in which approval under clause (iii) of first proviso to section 80G of the Act was sought by assessee, by stated that filed belatedly or not..? For this purpose, assessee / appellant raised multiple grounds which are factual and argumentative, so it is not required to be produced. 5. In the impugned order, the Ld. CIT(E) observed that activities of the applicant has commenced on 11.11.2008 and the present application has not filed within time prescribed. Para no. 13 of impugned order is reproduced as below: “13. From the above, it is evident that the activities of the applicant has commenced on 11.11.2008 and the present application filed in Form No.10AB under Clause (i) of first proviso to sub-section (5) of section 80G of the Act has not been filed within the time limit prescribed therein and also the assessee has not filed its application within the extended time limit provided by CBDT vide its circular No. 12 of 2021 dated 25.06.2021, circular No. 16 of 2021 dated 29.08.2021 and circular No. 8 of 2022 dated 31.03.2022 which are discussed in Para 8 above. Therefore the above application is liable to be rejected as non maintainable, without going into the merits.” ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 6 of 15 6. Heard rival submissions and carefully scanned the material available on record before us. 7. In the course of hearing, the Ld. AR submitted that in the present case the period for which provisional approval had been granted was expired on 31.03.2024 and not before and the application presented for the purpose of grant of an approval in Form 10AB under the relevant provision within prescribed time limit i.e. prior to 31.03.2024. He further submitted that the second limb of the aforesaid clause is inapplicable in the present case, as much as the time of six months from the commencement of its activities could not be invoked, since it had been carrying on its activities since the dynasty rule of Aurangzeb in India, which is an admitted fact i.e. prior to enactment of the Act. 8. The Ld. AR further vehemently submitted that it is not known on what basis the Ld. CIT(E) has referred to in his order the period from F.Y., despite the fact, the activities of the appellant had commenced even much prior to year 1961 and as such no application could have been filed within six months from the commencement of activities. He further submitted that an ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 7 of 15 application for the grant of approval u/s 80G of the Act in Form 10G had filed on which no order had been passed and since no order regarding approval or rejection was passed and Form 10G was replaced by Form 10A, he then filed another application for aforesaid purpose, and on said application provisional approval u/s 80G of the Act had been granted on 01.01.2022 and thereafter he filed form 10AB on 28.09.2023 for the grant of approval u/s 80G of the Act. So having granted the provisional approval on 01.01.2022, the approval sought as aforesaid could not been rejected only on the ground that application had not been filed within six months from the commencement of its activities, which was an impossibility. 9. The Ld. AR further argued that the solitary dispute involved in this appeal to be decided that whether the application filed by the assessee in Form 10AB on 28.09.2023 under rule 17A/11AA, had been filed within the prescribed time under clause (iii) of the first provision to section 80(G) of the Act or not ? In this regards he submitted that the said application had been filed within prescribed time limit and the second limb of clause could not been acted which ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 8 of 15 was an impossibility and since the provisional approval had been granted till 31.03.2024. The application filed on Form 10AB on 28.09.2023 could not been treated as time barred. 10. The Ld. DR relied upon the order passed by CIT(E). 11. It is submitted by the Ld. AR that previously vide clarification circular no. 06/2023 dated 24.05.2023 CBDT had in exercise of its power u/s 119 of the Act, extended the period of limitation till 30.09.2023 by which limit had been since extended till 30.09.2023 for grant of approval. In this context, he also relied upon order of the ITAT Chennai Bench, dated 08.03.2024, CIT-1982 Charitable Trust v/s ITO (supra) in which held that since time limit had been extended till 30.09.2023, rejection for grant of approval termed an improper and unsustainable in law. The relevant para no. 7.8 is being reproduced as below: “7.8 After hearing the arguments of ld. counsel for the assessee and Id. CIT-DR as noted above, we find from the facts that the timeline prescribed for filing Form No.10AB for registration u/s.12A of the Act in the case of assessee trust has been extended up-to 30.09.2023 after considering the genuine hardship faced by charitable institutions vide various CBDT circulars and finally, vide Circular No.6/2023 dated 24.05.2023. Similarly, the timeline prescribed for filing Form No.10A for recognition u/s.80G of the Act was also extended up-to 30.09.2023 by the same circular for trusts filing registration under clause (i) to first proviso to section 80G(5) of the Act. But the above extension was not extended beyond 30.09.2022, unlike other forms ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 9 of 15 which were extended up to 30.09.2023 to the disputed forms namely Form No.10AB for renewal of recognition u/s.80G(5) of the Act under clause (iii) of the first proviso to section 80G(5) of the Act. Once, the CBDT has extended the timeline for filing Form No.10AB for recognition u/s.12A of the Act and also for filing Form No.10A for recognition u/s.80G of the Act extended up to 30.09.2023 for trusts filing registration under clause (i) of first proviso to section 80G(5) of the Act, we find no difference in continuing hardship as recognized by CBDT even in filing Form No.10AB for renewal of recognition u/s.80G of the Act under clause (iii) of first proviso to section 80G(5) of the Act. In our view, this being a genuine hardship case, which is recognized by Revenue or CBDT by issuing a general circular, we are of the view that this specific provision of clause (iii) to first proviso to section 80G(5) cannot be excluded and or it has not been the intention of the CBDT while issuing the circular. There cannot be a distinction within the same provision without bringing out any exception and even this is for the benefit of provision the donors who are donating money to the charitable trusts for claiming exemption in their returns of income. In our view, we agree with the argument of Id. counsel for the assessee that the timeline prescribed under clause (ii) of first. proviso to section 80G(5) of the Act should be treated as directory and not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) act 2020 for bringing new regime. Hence, in our view, the CIT(Exemptions) should not have rejected the assessee's application in Form No.10AB only for this technical reason. We are of the view that the intention of CBDT in its circular clearly reflects their mind that once the timeline prescribed for filing Form No.10AB for recognition u/s.12A of the Act has been extended up to 30.09.2023, the same may be treated as extended for forms namely Form No.10AB for renewal of approval/recognition/registration under clause (iii) of first proviso to section 80G of the Act also. Hence, we accept the plea of assessee and agree with the arguments of Id. counsel for the assessee and remand the matter back to the file of the CIT(Exemption) to decide the issue on merits. Hence, the order of CIT(Exemption) on this issue is set aside and matter is remanded back to the file of the CIT(Exemption) for re-deciding the issue on merits as per law. The appeal of the assessee is allowed for statistical purposes. “ ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 10 of 15 12. In abovecited order of the Co-ordinate Bench, clearly held that the timeline prescribed under clause (iii) of first proviso to Section 80G(5) of the Act should be treated as directory not mandatory especially considering the transitional nature of the amendment as brought out by the taxation of other laws (relaxation and amendment of certain provisions) Act, 2020 for bringing new regime and application for above purpose in Form 10AB should not reject on merely technical reasons. 13. In the course of hearing it was brought into our notice that further CBDT issued Circular No. 07/2024 dated 25.04.2024 by which above time limit extended till 30.06.2024. The relevant portion of the aforementioned circular is reproduced as under: “ On consideration of difficulties reported by the taxpayers and other stakeholders in the electronic filing of Form No. 10A/10AB, the Central Board of Direct Taxes (the Board) in exercise of its powers under section 119 of the Income-tax Act, 1961 (the Act) extended the due date for filing Form No. 10A to 31.08.2021 by Circular No. 12/2021 dated 25.06.2021, to 31.03.2022 by Circular No. 16/2021 dated 29.08.2021, to 25.11.2022 by Circular No. 22/2022 dated 01.11.2022 and further to 30.09.2023 by Circular No. 6/2023 dated 24.05.2023, and extended the due date for filing Form No. 10AB to 30.09.2022 by Circular No. 8/2022 dated 31.03.2022 and further to 30.09.2023 by Circular No. 6/2023 dated 24.05.2023. 2. Representations have been received in the Board with a request to condone the delay in filing Form No. 10A/10AB, as the same could not be filed in such cases within the last extended date, i.e. 30.09.2023. ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 11 of 15 3. On consideration of the matter, with a view to avoid and mitigate genuine hardship in such cases, the Board, in exercise of the powers conferred under section 119 of the Act, hereby extends the due date of making an application/intimation electronically in – i) Form No. 10A, in case of an application under clause (1) of the first proviso to clause (230) of section 10 or under sub-clause (1) of clause (ac) of sub-section (1) of section 12A or under clause (1) of the first proviso to sub-section (5) of section 80G or in case of an intimation under fifth proviso of sub- section (1) of section 35 of the Act, till 30.06.2024; ii) Form No. 10AB, in case of an application under clause (iii) of the first proviso to clause (23C) of section 10 or under sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, till 30.06.2024. 4. It may also be noted that extension of due date as mentioned in paragraph 3(ii) shall also apply in case of all pending application under clause (iii) for the first proviso to clause (23C) of section 10 or sub-clause (iii) of clause (ac) of sub-section (1) of section 12A or under clause (iii) of the first proviso to sub-section (5) of section 80G of the Act, as the case may be. Hence, in cases where any trust, institution or fund has already made an application in Form No.10AB under the said provisions on or before the issuance of this Circular, and where the Principal Commissioner or Commissioner has not passed an order before the issuance of this Circular, the pending application in Form No. 10AB may be treated as a valid application. 4.1 Further, in cases where any trust, institution or fund has already made an application in Form No. 10AB, and where the Principal Commissioner or Commissioner has passed an order rejecting such application, on or before the issuance of this Circular, solely on account of the fact that the application was furnished after the due date or that the application has been furnished under the wrong section code, it may furnish a fresh application in Form No. 10AB within the extended time provided in paragraph 3(ii) i.e. 30.06.2024. 5. It is also clarified that if any existing trust, institution or fund who had failed to file Form No. 10A for AY 2022-23 within the due date as extended by the CBDT circular no. 6/2023 dated 24.05.2023 and subsequently, applied for provisional registration as a new trust, institution or fund and has received Form No. 10AC, it can avail the option to surrender the said Form No. 10AC and apply for registration for AY 2022-23 as an existing trust, institution or fund in Form No. 10A within the extended time provided in paragraph 3(1) i.e. 30.06.2024.” ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 12 of 15 14. Upon hearing arguments by both sides at length, there is substance in the submission of the Ld. AR that in the instant case provisional approval u/s 80G of the Act had been granted to the appellant from 01.01.2022 to AY 2024-25, so period for which provisional approval had been granted was expired on 31.03.2024 and not before and further that the second limb of the aforesaid clause was inapplicable in appellant case. 15. We are of the considered opinion that rule of procedure are just to handmaid to administration of justice and not to penalise anybody and object of procedure only for interest of justice and the time limit prescribed in aforementioned provisions and clauses in question is quite directory in nature, not mandatory and such a provision / clause should be dealt which in above manner in order to fulfil the End’s of justice. And also regarding observations given as above in impugned order dated 15.03.2024, providing effective and sufficient opportunity would cause justice to same extent. So looking into abovecited circulars, judicial precedents cited as above, we are inclined to accept the plea of assessee / appellant and ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 13 of 15 remitting the matter back to the file of the CIT(E) to decide the issue afresh on merit, in accordance with law. 15. In impugned order, dated 15.03.2024, the Ld. CIT(E) observed that it is difficult to verify both the nature of objects & genuineness of activities of the applicant and by going through the memorandum of association alone, are cannot be sure about the actual activities being performed. 16. Consequently, the impugned order of the Ld. CIT(E) is hereby set aside and quashed on this point and matter be remitted back to file of the Ld. CIT(E) with the direction to decide expeditiously afresh in accordance with law within a period of three months from receiving this order as far as possible. The present appeal is allowed as indicated above for statistical purpose. Order pronounced in the Open Court on 31st January, 2025. Sd/- Sd/- (S. RIFAUR RAHMAN) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 31/01/2025 Pooja, Sr. PS ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 14 of 15 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA Nos.-2259 and 2260/Del/2024 Aggarwal Sabha Page 15 of 15 1. Date of dictation of Tribunal order 17.01.25 2. Date on which the typed draft Tribunal Order is placed before the Dictating Member 17.01.25 3. Date on which the typed draft Tribunal order is placed before the other Member 4. Date on which the approved draft Tribunal order comes to the Sr. PS/PS 5. Date on which the fair Tribunal order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr.PS/PS 7. Date on which the final Tribunal order is uploaded by the Sr.PS/PS on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal order 9 Date of killing off the disposed of files on the judisis Portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Dispatch of the order "