YOG VIDYA GURUKUL,PUNE V. CIT EXEMPTION, PUNE, PUNE

ITA 797/PUN/2025

AI Insights

The case involves Yog Vidya Gurukul, a trust, which appealed against the decision of the CIT, Exemption, Pune, rejecting its application for registration under section 80G of the Income Tax Act. The rejection was primarily based on the technical ground that the application was filed beyond the statutory period. The Tribunal considered a similar case, Mitcon Forum for Social Development vs. CIT, Exemption, Pune, where it was decided that the application should be treated as filed within the time limit under similar circumstances. The Tribunal directed the CIT, Exemption, Pune, to re-evaluate the application, treating it as timely filed and to provide a fair hearing.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361046 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• 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: Capital Gains
• Section: 2; 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 No.797/PUN/2025 Yog Vidya Gurukul, 3 Ksitij Sanjwat Hsg. Society, Near Suvarnayog Sah. Bank Bibwewadi, Pune- 411037. PAN : AAATY3279P Vs. CIT, Exemption, Pune. Appellant Respondent आदेश / ORDER PER VINAY BHAMORE, JM: This appeal filed by the assessee is directed against the order dated 28.02.2025 passed by Ld. CIT, Exemption, Pune rejecting the application for registration u/s 80G of the IT Act. 2. The appellant has raised the following grounds of appeal :- “1. The ld CIT Exemption erred in law and on facts in treating the application under Clause (iii) of first proviso to sub-section (5) Assessee by : Smt. Deepa Khare Revenue by : Shri B. Y. Chavan Date of hearing : 14.05.2025 Date of pronouncement : 23.05.2025 ITA No.797/PUN/2025 2 of Section 80G as non- maintainable on the ground of being filed beyond the statutory period as provided in Clause (iii) of first proviso to Section 80G(5) and thereby rejecting the same without going into the merits. 2. The ld CIT Exemption erred in law and on facts in cancelling the provisional registration granted on 31.05.2021 without following the due process of law and without affording opportunity of hearing to the appellant. 3. The ld CIT Exemption erred in law and on facts in cancelling the provisional registration granted on 31.05.2021 in absence of any dissatisfaction about genuineness of the activities of the appellant and in absence of any violation of conditions prescribed in clause (i) to (v) of Section 80G(5). 4. The appellant craves leave to add, alter, modify or substitute any ground of appeal at the time of hearing.” 3. 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 first proviso to sub-section (5) of section 80G of the IT Act on 24.09.2024. With a view to verify the genuineness of activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G(5) of the IT Act, a notice was issued through ITBA portal on 06.11.2024 requesting the assessee to upload certain information/clarification on or before 21.11.2024. The assessee in response to above notice furnished desired information as mentioned in the notice. After verifying these details, Ld. CIT, Exemption, Pune found certain discrepancies and asked for their ITA No.797/PUN/2025 3 clarification on or before 12.02.2025 by issuing notice dated 05.02.2025. Since the assessee did not comply to this notice and has not furnished any explanation in reply to the above notice, Ld. CIT, Exemption, Pune rejected the application for registration by observing as under :- “7. Also, it seen that the date of expiry of provisional approval under section 80G(5)(iv) of the Act in your case is 31/03/2024. As per the provisions of clause (iii) of first proviso to section 80G(5) of the Act. where a trust or institution has been provisionally approved under section 80G(5)(iv) of the Act, the application for regular approval under section 80G(5)(iv) is required to be filed, at least six months prior to expiry of period of the provisional approval or within six months from the date of commencement of activities. Since, the period of provisional approval was due to expire on 31/03/2024, the present application was required to be filed before 30/09/2023. The extended due date for filing of such application was 30/06/2024 as per CBDT, Circular No 7/2024 dated 25/04/2024. However, the present application is filed by assessee on 24/09/2024 i.e. after the expiry of period allowed under clause (iii) of first proviso to section 80G(5) of the Act. Thus, it is seen that the assessee has failed to file the present application within the time limit allowed under clause (iii) of first proviso to section 80G(5) of the Income Tax Act. 1961. 8. Considering the above facts discussed in the show notice and discrepancies noticed and also that the assessee has not complied with the provisions of sub-clause (a) of clasue (ii) of second proviso to section 80G(5) of the Income Tax Act, 1961 as well as the provisions of Rule 11AA(2) of Income Tax Rules, 1962 in spite giving sufficient opportunities, the undersigned is unable to draw any satisfactory conclusion about the genuineness of activities of the assessee and fulfilment of conditions laid down in clause (i) to (v) of section 80G(5) of the Act. 9. In view of the above, the application filed by the assessee is hereby rejected and the provisional approval granted on 31/05/2021 under clause (iv) for first proviso to section 80G(5) of the Income Tax Act, 1961 is hereby cancelled.” ITA No.797/PUN/2025 4 4. It is this order against which the assessee is in appeal before this Tribunal. 5. Ld. AR appearing from the side of the assessee trust submitted before us that the application for registration u/s 80G(5) was rejected merely on a technical ground of filing the application belatedly. It was submitted by Ld. Counsel of the assessee that under similar circumstances & identical facts, the Tribunal has already allowed appeals 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. 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 original application as filed within time. 6. Ld. DR appearing from the side of the Revenue supported the order passed by Ld. CIT, Exemption, Pune & requested to confirm the same. 7. 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 ITA No.797/PUN/2025 5 obtained provisional approval on 31.05.2021. According to Ld. CIT, Exemption, Pune, the assessee was required to file present application upto 30th June, 2024 which was the extended time limit as per the circular issued by CBDT & since the application was furnished on 24th September, 2024 it is apparently beyond the time limit accordingly Ld. CIT, Exemption, Pune rejected the same. We further find that it was the contention of Ld. AR of the assessee that the provisional approval u/s 80G(5)(vi) of the IT Act was granted upto assessment year 2024-25 and therefore the assessee was required to file the present application at least six months prior to expiry of provisional approval i.e. on or before 30.09.2024. On the other hand, according to Ld. CIT, Exemption, Pune, the provisional approval 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 approval i.e. on or before 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, the Tribunal allowed the appeal of the ITA No.797/PUN/2025 6 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 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 ITA No.797/PUN/2025 7 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 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. ITA No.797/PUN/2025 8 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 a linear 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.” 8. Respectfully following the above decision of the Tribunal (supra), we 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 as per fact and law after providing 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 approval u/s 80G(5) 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. ITA No.797/PUN/2025 9 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced on this 23rd day of May, 2025. Sd/- Sd/- (MANISH BORAD) (VINAY BHAMORE) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 23rd 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. "