SUNWORLD SOCIETY FOR SOCIAL SERVICE,PUNE V. CIT EXEMPTION, PUNE, PUNE

ITA 796/PUN/2025

AI Insights

The case involves two appeals by Sunworld Society For Social Service against the orders of the CIT, Exemption, Pune, which rejected the applications for registration under section 12A(1)(ac) and for approval under section 80G of the IT Act. The primary contention was the rejection based on the technical ground of belated filing. The assessee argued that the application was filed within an extended deadline provided by a CBDT circular. The Tribunal considered a similar case, Mitcon Forum for Social Development, and decided in favor of the assessee, leading to the current decision to remand the matter for re-evaluation.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396609 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Other Referred Cases: Mitcon Forum for Social Development vs. CIT, Exemption, Pune
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B.Y.CHAVAN
• Assessee Lawyers: DEEPA KHARE
• Keywords: Reasonable cause; Capital Gains
• Section: 12A; 80G

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER AND SHRI VINAY BHAMORE, JUDICIAL MEMBER आयकर अपील सं. / ITA Nos.795 & 796/PUN/2025 Sunworld Society For Social Service, 127/1/A1, Paud Road, Pune- 411038. PAN : AAMTS9629P Vs. CIT, Exemption, Pune. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: Both the above captioned appeals filed by the assessee are directed against the separate orders dated 12.02.2025 passed by Ld. CIT, Exemption, Pune rejecting the application for registration in Form No.10AB under clause (iii) of section 12A(1)(ac) of the IT Act filed on 24.09.2024 and denying the application for approval in Form No.10AB under clause (iii) of first proviso to sub-section (5) of section 80G of the IT Act filed on 24.09.2024. Assessee by : Smt. Deepa Khare Revenue by : Shri B. Y. Chavan Date of hearing : 13.05.2025 Date of pronouncement : 26.05.2025 ITA Nos.795 & 796/PUN/2025 2 ITA No.795/PUN/2025 : 2. Facts of the case, in brief, are, that the assessee is a trust filed its application for registration in Form No.10AB under clause (iii) of section 12A(1)(ac) of the IT Act on 24.09.2024. With a view to verify the genuineness of activities of the assessee and compliance to requirements of any other law for the time being in force by the trust/institution as are material for the purpose of achieving its objects, a notice was issued by Ld, CIT, Exemption, Pune through ITBA portal on 06.11.2024 requesting the assessee to upload certain information/clarification. In reply to the said notice, the desired information was furnished by the assessee. On verification of the information furnished by the assessee, Ld. CIT, Exemption, Pune found certain discrepancies, therefore, issued another notice on 27.01.2025 and asked the assessee to furnish various other details. It was also observed by Ld. CIT, Exemption, Pune that the expiry date of provisional registration u/s 12AB of the IT Act was 31.03.2024 and therefore the assessee was required to apply for regular registration at least six months prior to expiry of period of provisional registration or within six months from the date of ITA Nos.795 & 796/PUN/2025 3 commencement of its activities, whichever is earlier. Since the period of provisional registration was due to expire on 31.03.2024, the assessee was required to file the application on or before 30.09.2023. However, the present application is filed on 24.09.2024 accordingly, Ld. CIT, Exemption, Pune was of the view that it is beyond the prescribed time limit allowed u/s 12A(1)(ac)(iii) of the IT Act and therefore in the absence of any reply on this issue Ld. CIT, Exemption, Pune rejected the application filed by the assessee. It is this order against which the assessee is in appeal before this Tribunal. 3. Ld. AR appearing from the side of the assessee trust submitted before us that the application for registration u/s 12A(1)(ac)(iii) was rejected merely on a technical ground of filing the application belatedly since the assessee could not reply to the notice. It was submitted by Ld. Counsel of the assessee that according to the circular issued by CBDT the time limit to furnish the application was extended up to 30th June 2024. Apart from above it was also submitted that as per the proviso to sub-clause (vi) of clause (ac) of sub-section (1) of section 12A of the IT Act, the PCIT or CIT have ITA Nos.795 & 796/PUN/2025 4 been empowered to condone the delay if they consider that there is a reasonable cause for delay in filing the application. The proviso inserted w.e.f. 01-10-2024 is reproduced herewith :- “[Provided that where the application is filed beyond the time allowed in sub-clauses (i) to (vi), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable cause for delay in filing the application, condone such delay and such application shall be deemed to have been filed within time;]” 4. Apart from above Ld. AR also submitted that under similar circumstances & identical facts the Tribunal has already allowed appeal of other assessee passed in the case of Mitcon Forum for Social Development vs. CIT, Exemption, Pune in ITA No.613/PUN/2025 order dated 24.04.2025 wherein the application for approval u/s 80 G 5 of the IT act was directed to be treated in time . Accordingly, Ld. AR requested before the Bench to set-aside the order passed by Ld. CIT, Exemption, Pune and further requested to direct him to treat the application as filed within time. 5. Ld. DR appearing from the side of the Revenue supported the order passed by Ld. CIT, Exemption, Pune & requested to confirm the same. ITA Nos.795 & 796/PUN/2025 5 6. We have heard Ld. Counsels from both the sides and perused the material available on record. We find that the assessee is an old trust and has already commenced its activities prior to 2021 and has obtained provisional registration on 28.05.2021 which was valid upto assessment year 2024-25. According to Ld. CIT, Exemption, Pune, the assessee was required to file present application within six months from the date of commencement of its activities or at least six months prior to expiry of provisional registration i.e. on or before 30.09.2023. However, we also find that the CBDT has extended the due date of filing of such application upto 30.06.2024. We further find that it was the contention of Ld. AR of the assessee that the provisional registration u/s 12A(1)(ac)(vi) of the IT Act was granted upto assessment year 2024-25 and the assessee therefore was required to file the present application at least six months prior to expiry of provisional registration i.e. on or before 30.09.2024. On the other hand, according to Ld. CIT, Exemption, Pune, the provisional registration was granted upto 31.03.2024 and therefore the assessee was required to file above application prior to six months from the expiry of provisional registration i.e. on or before ITA Nos.795 & 796/PUN/2025 6 30.09.2023. In this regard, Ld. AR of the assessee relied on the order passed by the Co-ordinate Bench of this Tribunal in the case of Mitcon Forum for Social Development (supra) wherein under identical facts and similar circumstances, however for approval u/s 80 G of the IT Act, the Tribunal allowed the appeal of the assessee by treating the application as filed within time by observing as under :- “11. In this context, we will like to refer to observations of the Hon’ble Supreme Court in the case of K P Varghase(supra), where in the Hon’ble Supreme Court observed as under : Quote, “It is a well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the Legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement - the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price at which the property is sold by more than 15 per cent of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would find in a large number of cases where the sale is completed more than a year or two after the date of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement. Can it be contended with any degree of fairness and justice that in such cases, where there is clearly no understatement of consideration in respect of the transfer and the transaction is perfectly honest and bona fide and, in fact, in fulfilment of a contractual obligation, the asses-see who has sold the property should be ITA Nos.795 & 796/PUN/2025 7 liable to pay tax on capital gains which have not accrued or arisen to him. It would indeed be most harsh and inequitable to tax the assessee on income which has neither arisen to him nor is received by him, merely because he has carried out the contractual obligation undertaken by him. It is difficult to conceive of any rational reason why the Legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carries out such contractual obligation. It would indeed be strange if obedience to the law should attract the levy of tax on income which has neither arisen to the assessee nor has been received by him. If we may take another illustration, let us consider a case where A sells his property to B with a stipulation that after sometime, which may be a couple of years or more, he shall resell the property to A for the same price. Could it be contended in such a case that when B transfers the property to A for the same price at which he originally purchased it, he should be liable to pay tax on the basis as if he has received the market value of the property as on the date of resale, if, in the mean-while, the market price has shot up and exceeds the agreed price by more than 15 per cent. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply section 52(2) according to its strict literal construction. We must, therefore, eschew literalness in the interpretation of section 52(2) and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature, the Court may modify the language used by the Legislature or even 'do some violence\" to it, so as to achieve the obvious intention of the Legislature and produce a rational construction -” Unquote. 11.1 Thus, as observed by the Hon’ble Supreme Court, that the statutory provision shall be interpreted in such a way to avoid absurdity. In this case to avoid the absurdity as discussed by us in earlier paragraph, we are of the opinion that the words, “within six months of commencement of its activities” has to be interpreted that it applies for those trusts/institutions which have not started charitable activities at the time of obtaining Provisional registration, and not for ITA Nos.795 & 796/PUN/2025 8 those trust/institutions which have already started charitable activities before obtaining Provisional Registration. We derive the strength from the Speech of the Hon’ble Finance Minister and the Memorandum of Finance Bill. 2020. 11.2 Therefore, in these facts and circumstances of the case, we hold that the Assessee Trust had applied for registration within the time allowed under the Act. Hence, the application of the assessee is valid and maintainable. 12. Even otherwise, assessee had received provisional approval under section 80G(5) on 02.10.2021 and it was valid upto A.Y.2024-25. The assessee had applied for registration under section 80G on 13.09.2024 which was before A.Y.2024-25. Thus, assessee had applied for permanent registration under section 80G before the expiry of provisional approval. Therefore, the application of the assessee was not time barred. 13. In these facts and circumstances, we set-aside the order under 80G to ld.CIT(E) for denovo adjudication. The ld.CIT(E) shall give opportunity to the assessee of being heard. Accordingly, grounds of appeal are allowed for statistical purpose. 14. In the result, appeal of the assessee is allowed for statistical purpose.” 7. Respectfully following the above decision of the Tribunal (supra), and in the light of newly inserted proviso to sub clause vi of clause (ac) of sub-section (1) of section 12A wherein the PCIT or CIT have been empowered to condone the delay if they find that there was reasonable cause in not filing the application within the prescribed time limit, we deem it appropriate to set-aside the order passed by Ld. CIT, Exemption, Pune and remand the matter back to his file with a direction to treat the application as filed within time and decide the issue afresh as per fact and law after providing ITA Nos.795 & 796/PUN/2025 9 reasonable opportunity of hearing to the assessee. The assessee is also hereby directed to respond to the notices issued by Ld. CIT, Exemption, Pune in this regard and produce relevant documents/evidences, if any, in support of application for registration u/s 12A(1)(ac)(iii) of the IT Act without taking any adjournment under any pretext, otherwise Ld. CIT, Exemption, Pune shall be at liberty to pass appropriate order as per law. Thus, the grounds raised by the assessee are partly allowed. 8. In the result, the appeal filed by the assessee in ITA No.795/PUN/2025 is allowed for statistical purposes. ITA No.796/PUN/2025 : 9. The instant appeal is against the order passed by Ld. CIT, Exemption, Pune denying grant of approval u/s 80G(5) of the IT Act. Since we have remanded the issue of grant of registration u/s 12A(1)(ac)(iii) of the IT Act to the file of Ld. CIT, Exemption, Pune for de novo adjudication, therefore, in the interest of justice, it would be appropriate to remit the issue of grant of approval u/s 80G(5) as well to the file of Ld. CIT, Exemption, Pune being ITA Nos.795 & 796/PUN/2025 10 consequential, for de novo adjudication after treating the application as filed within time. 10. In the result, the appeal filed by the assessee in ITA No.796/PUN/2025 is allowed for statistical purposes. 11. To sum up, both the above captioned appeals filed by the assessee are allowed for statistical purpose. Order pronounced on 26th day of May, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 26th May, 2025. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT, Exemption, Pune. 4. The Pr. CIT/CIT concerned. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune. "