Vananchal Kelavani Trust Vs CIT (Exemption) (ITAT Surat)
Summary: The Income Tax Appellate Tribunal, Surat Bench, in Vananchal Kelavani Trust Vs Commissioner of Income Tax (Exemption), along with the connected appeal of Shree Krushna Sansthapan Charitable Trust, condoned the delay in filing Form No. 10AB under Section 80G(5) of the Income Tax Act, 1961. The Tribunal held that the ambiguity in the applicable CBDT circulars, together with the practical difficulty faced by old charitable trusts in complying with the statutory requirement of filing within six months of commencement of activities, warranted relief in the interest of justice. The Bench comprising Pawan Singh, Judicial Member, and Dr. A. L. Saini, Accountant Member, set aside the rejection of the applications and restored the matters to the Commissioner of Income Tax (Exemption) for fresh adjudication in accordance with law. Both appeals were allowed for statistical purposes by a consolidated order dated 9 January 2024.
The lead appellant, Vananchal Kelavani Trust, had been established on 29 November 2001 and had obtained provisional approval under Section 80G through Form No. 10AC dated 15 August 2022, valid up to Assessment Year 2025-26. It filed Form No. 10AB on 24 February 2023 seeking regular approval under clause (iii) of the first proviso to Section 80G(5). The Commissioner rejected the application as time-barred because CBDT Circular No. 8/2022 dated 31 March 2022 had extended the relevant deadline only until 30 September 2022, while Circular No. 6/2023 dated 24 May 2023 did not expressly extend the particular deadline applicable to Section 80G(5)(iii). The Commissioner considered the filing approximately 147 days late, rejected it as non-maintainable and cancelled the provisional approval. The assessee maintained that the application was rejected mechanically and that requiring a trust established in 2001 to apply within six months of commencement of activities was practically impossible under the later-introduced registration framework.
The assessee further contended that the extension announced under Circular No. 6/2023 had created a genuine misunderstanding regarding the deadline, and that the Tribunal could condone the procedural delay. It relied upon several Tribunal rulings, particularly Bhamashah Sundarlal Daga Charitable Trust Vs CIT (Exemption), which interpreted the words “within six months of commencement of its activities, whichever is earlier” in their legislative context and distinguished existing trusts from newly established institutions. The Revenue opposed the appeal, arguing that the time limit was mandatory and that the Commissioner lacked power to condone the delay.
The Tribunal acknowledged that Circular No. 6/2023 had not expressly extended the deadline for Form No. 10AB applications under Section 80G(5)(iii). Nevertheless, it considered that the statutory framework and successive extensions had created hardship for longstanding charitable institutions. It distinguished the Jodhpur Bench’s ruling on the interpretation of the statutory expression “whichever is earlier” from the separate issue of condonation of a delayed application. On the question of condonation, it relied principally upon DCIT (Exemption) Vs Vishwa Jagriti Mission, (2013) 30 taxmann.com 41 (Delhi), which emphasised that delay-related matters should be assessed judicially and with due regard to substantial justice. The Tribunal also reproduced the Delhi High Court’s discussion of decisions including Collector, Land Acquisition Vs Mst. Katiji, N. Balakrishnan Vs M. Krishnamurthy and Ram Nath Sao Vs Gobardhan Sao.
Considering the facts and the hardship caused to the assessees, the Tribunal condoned the delay in filing Form No. 10AB and remitted the applications to the Commissioner of Income Tax (Exemption) with directions to consider them in accordance with law. The assessees were directed to furnish the necessary documents and particulars whenever required. The decision did not itself grant final approval under Section 80G; it restored the applications for examination of substantive eligibility. The same findings were applied to the connected appeal of Shree Krushna Sansthapan Charitable Trust. The ruling illustrates the Tribunal’s approach in January 2024 to reconciling procedural filing requirements with the practical difficulties encountered by charitable institutions under the revised registration regime.
Cases Discussed
1. Sree Meenakshi Mills Ltd. Vs CIT (Supreme Court); (1957) 31 ITR 28 — Quoted within the Delhi High Court precedent on the limited circumstances in which a Tribunal’s factual findings may be interfered with.
2. CIT Vs Daulatram Rawatmull (Supreme Court); (1964) 53 ITR 574 — Quoted regarding the finality of factual findings supported by some evidence.
3. Esthuri Aswathiah Vs CIT (Supreme Court); (1967) 66 ITR 478 — Quoted for the judicial duty of the Tribunal to consider evidence and decide factual and legal issues impartially.
4. Udhavdas Kewalram Vs CIT (Supreme Court); (1967) 66 ITR 462 — Quoted regarding comprehensive evaluation of evidence by the Tribunal.
5. CIT Vs Baba Avtar Singh (Delhi High Court); (1972) 83 ITR 738 — Mentioned concerning judicial restraint in reconsidering Tribunal findings of fact.
6. K. P. Varghese Vs ITO (Supreme Court); (1981) 131 ITR 597 — Quoted through the Jodhpur Tribunal precedent on interpreting legislation to avoid absurd or unintended results.
7. Collector, Land Acquisition Vs Mst. Katiji (Supreme Court); (1987) 167 ITR 471 — Quoted for the principles favouring a pragmatic and justice-oriented approach to condonation of delay.
8. N. Balakrishnan Vs M. Krishnamurthy (Supreme Court); (1998) 7 SCC 123 — Discussed in the Delhi High Court extract on sufficient cause and delay condonation.
9. Ram Nath Sao Vs Gobardhan Sao (Supreme Court); (2002) 3 SCC 195 — Discussed regarding acceptance of bona fide explanations for delay.
10. CIT Vs Parma Nand (Delhi High Court); (2004) 266 ITR 255 — Cited within the Delhi High Court extract for treating sufficient cause as a question of fact.
11. CIT Vs ITOCHU Corporation (Delhi High Court); (2004) 268 ITR 172 — Cited on judicial evaluation of the factual explanation for delay.
12. DCIT (Exemption) Vs Vishwa Jagriti Mission (Delhi High Court); (2013) 30 taxmann.com 41; (2013) 213 Taxman 65 — Followed for condonation of delay after considering the relevant circumstances and substantial justice.
13. Bishnupur Public Education Institute (ITAT Kolkata); (2022) 139 taxmann.com 121 — Relied upon by the Commissioner for the proposition that delay cannot be condoned without statutory authority; the Tribunal ultimately granted relief.
14. Brdy Buds Pet Care Vs CIT (Exemption) (ITAT Ahmedabad); ITA No. 731/AHD/2023 — Cited by the assessee in support of its submissions concerning Section 80G approval.
15. Ahmednagar Cancer Society Vs CIT (Exemption) (ITAT Pune); ITA No. 1192/PUN/2023 — Cited by the assessee in relation to late Form No. 10AB applications.
16. West Bengal Welfare Society Vs CIT (Exemption) (ITAT Kolkata); ITA Nos. 730 & 731/Kol/2023 — Cited by the assessee concerning procedural requirements for charitable trust approval.
17. Bhamashah Sundarlal Daga Charitable Trust Vs CIT (Exemption) (ITAT Jodhpur); ITA No. 278/JODH/2023; 10/11/2023 — Discussed extensively for the contextual interpretation of the six-month filing requirement under the first proviso to Section 80G(5).
FULL TEXT OF THE ORDER OF ITAT SURAT
Captioned two appeals filed by different assessees are directed against the separate orders passed by the Ld. Commissioner of Income Tax (Exemption) Ahmedabad [for short “CIT(E)] both dated 24.08.2023, wherein ld CIT(E) has rejected application of assessee filed in Form No.10AB, u/s 80G(5)(iii) of the Income Tax Act, 1961 stating that assessee has not filed application within the time limit prescribed under the Act.
2. Since the issue involved in both the appeals are common and identical therefore, both these appeals, have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The ground as well as facts narrated in ITA No.728/SRT/2023 have been taken into consideration for deciding the above appeals en masse.
3. The grounds of appeal raised by the assessee-trust in “lead” case in ITA No.728/SRT/2023, are as follows:
“1. On the facts and in circumstances of the case as well as law, the ld. CIT(Exemption) has erred in rejecting assessee’s application u/s 80G(5) filed on 24.02.2023 on the ground that assessee didn’t file the application before 30.09.2022 when the assessee has filed the application in time as per the extension granted till 30.09.2023 as per Circular No.6/2023 dated 29.05.2023.
2. Even otherwise, the ld.CIT(Exemption) has erred in rejecting application u/s 80G(5) filed on 24.02.2023, when the assessee was under honest belief that extension was granted till 30.09.2023, as per Circular no.6/2023 dated 29.05.2023.
3. It is therefore prayed that the CIT(Exemption) should be directed passed u/s 80G(5) of the I.T. Act, 1961 may please be set aside to the file of CIT(Exemption) with appropriate direction.
4. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
4. The relevant material facts, as culled out from the material on record, are as follows. The assessee-trust filed an application, in Form No.10AB electronically, for approval under clause (iii) of first proviso to sub-section (5) of section 80G of the Act. Since the assessee has field the present application in Form No.10AB, u/s 80G(5)(iii) of the Act, so ld CIT(E) was of the view that it is essential to analyse the 3rd proviso of section 80G(5) of the Act, as it stands from 01.04.2021, which stipulates as under:
“(iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier.”
After referring clause(iii) of proviso to Section 80G(5) of the Act, the ld CIT(E) issued notice to the assessee-trust to file the relevant documents and explanation. The ld CIT(E) noted that the assessee has got provisional approval u/s 80G(5) of the Act and therefore the assessee was required to file application in Form No.10AB under clause (iii) of first proviso to sub-section (5) of Section 80G of the Act within the time period of at least six months prior to expiry of period of the provisional approval or within six months of commencements of its activities, whichever is earlier. The time limits prescribed therein is mandatory and the Commissioner of Income Tax has no power to condone the delay in filing application in Form No.10AB. For this, ld CIT(E) relied on the judgment of Kolkata Tribunal in the case of Bishnupur Public Education Institute, reported in 139 taxmann.com 121, wherein the Hon’ble Tribunal while adjudicating the issue of similar provisions of due date u/s 10(23C) of the Act, has held as follows:
“7.The adjudicating authorities under the Income-tax Act are quasi judicial authorities. They can grant approval with retrospective effect if such mechanism is provided in the Act. There is no such provision nor there is any power to condone the delay after considering the reasonable reasons. A reasonable cause can be taken into cognizance for condoning the delay, if such provision is provided in the Act while considering any issue for adjudication. Therefore, considering the above proposition, we are of the view that ld. CIT(Exemption) has rightly rejected the application of the assessee for grant of approval under section 10(23C)(vi) of the Income-tax Act. All these three appeals are rejected.”
Therefore, the ld CIT(E) was of the view that the same ratio apply for applications made under clause (iii) of first proviso to sub-section (5) of Section 80G of Income Tax Act, 1961 also.
5. The ld CIT(E) also stated that CBDT on multiple occasions had extended the time limit in filing the application in Form 10AB under clause (iii) of first proviso to sub-section (5) of Section 80G, which are as under:
| Sl.No. | Circular No. | Relaxation provided for filing application u/s 10AB under section 80G(5)(iii) |
|---|---|---|
| 1 | Circular No.12 of 2021 dated 25.06.2021 | Extended upto 31st August 2021 |
| 2 | Circular No.16/2021 dated 29.08.2021 | Extended upto 31st March, 2022 |
| 3 | Circular No.8/2022 dated 31.03.2022 | Extended upto 30.09.2022 |
| 4 | Circular No.6/2023 dated 24.05.2023 | *The date was not extended so far as filing of form 10AB under section 80G(5)(iii) of Income Tax Act, 1961 is concerned. |
*extract from circular no.6 of 2023 dated 24.05.2023
“5. In order to mitigate genuine hardship in such cases, the Board, in the exercise of the power under sectino119 of the Act, extends the due date of making an application in,-
(i) Form No.10A, in case of an application under clause (i) of the first proviso to clause (23C) of section 10 or under sub-clause (i) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5) of section 80G of the Act, till 30-9-2023 where the due date for making such application has expired prior to such date;
(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 (ii) of clause (ac) of sub-section (1) of section 12A of the Act, till 30-9-2023 where the due date for making such application has expired prior to such date.”
The ld CIT(E) noted that form the above circular, it is clear that last date for filing Form No.10AB for approval under clause (iii) of first proviso to sub-section (5) of section 80G of the Act was 30th September, 2022, where the due date for making such application has expired prior to such date.
6. The ld CIT(E) noted that assessee has not filed any response. The assessee has filed Form 10AB, u/s 80G(5) of the Act on 24/02/2023. The assessee had been granted order for provisional approval in Form No.10AC issued on 15-08-2022 under clause (iv) of first proviso to sub-section (5) of secretin 80G for the period commencing from 15-08-2022 to AY 2025-26. The assessee has not furnished date of commencement in spite of specific query raised by ld CIT(E), vide notice dated 12/07/2023. The date of registration/incorporation in assessees’s case is 29/11/2001 as per Form No.10AB. Accordingly, a show cause notice dated 31/07/2023 was issued to the assessee, as under:
“Please refer to your application field in Form 10AB for approval u/s 80G(5)(iii) of the Act. For further seeking required details for granting approval u/s 80G, letters/notices were issued on 12/07/2023. However, in response to the above, you have not submitted the requisite details. In view of above, you are once again granted one more opportunity to comply with the above referred notice/letter dated 12.07.2023 and submit the details/documents sought for, as detailed therein on or before 07/08/2023.
2. Further, your kind attention is invited to the provision of section 80G(5)(iii) of the Act which stipulates as under:
“where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier.”
3. In view of the above, you are also requested to state the date of commencement of activities along with corroborative evidences. In absence of same, you are hereby further requested to explain as to why the date of Incorporation/Creation/Registration should not be treated as the date of commencement of activities for the purposes of determining ‘due date’ prescribed under section 80G(5)(iii) of the Act….”
7. In response to the same, the assessee has not filed any response. Thereafter, a fresh show cause notice dated 09/08/2023 was issued to the assessee to submit details/documents as called. In response to the same, the assessee has furnished its response wherein the assessee has submitted date of commencement of activities as 29/11/2001. In view of the same, the assessee was required to file application in Form 10AB under clause (iii) of first proviso to sub-section (5) of Section 80G, on or before 30/09/2022, which he has failed to submit. Therefore, the present application in Form No.10AB, u/s 80G(5)(iii) of the Act has not been filed within the time limit prescribed therein and therefore, the same is liable to be rejected as such, as non-maintainable. Therefore, the assessee`s application in Form No.10AB, u/s 80G(5) (iii) of the Act was rejected by ld CIT(E), as non-maintainable and also provisional approval granted in Form No.10AC, under clause (iv) of first proviso to sub-section (5) of Section 80G vide URN: ADADTV1891RF2022 was also cancelled.
8. Aggrieved by the order of Ld.CIT(E) the assessee is in appeal before us.
9. Before us, Shri Rasesh Shah, Learned Counsel for the assessee, argued that assessee-trust filed an application, in Form No.10AB, for approval under clause (iii) of first proviso to sub-section (5) of section 80G of the Act. In order to get approval under section 80G of the Act, the assessee has to file application within time limit prescribed in clause (iii) of 3rd proviso of section 80G(5), wherein it is mentioned as follows:
“where the institution or fund has been provisional approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier.”
However, assessee is an old trust, which had registered on 29.11.2001 and commenced its activities from 2001, therefore, now, it is impossible to file the application u/s 80G(5) (iii) of the Act, “within six months of commencement of its activities’ as stated in above clause (iii) of 3rd proviso of section 80G(5) of the Act. Besides, as per circular No.8/2022 of CBDT dated 31.03.2022, the extended time is up to 30.09.2022, however, the assessee filed Form No.10AB, u/s 80G(5) (iii) on 24.02.2023, therefore, application filed by the assessee before the ld CIT(E) is delayed by 147 days (approx.), and hence ld CIT(E ) rejected application of assessee in Form No.10AB, u/s 80G(5) (iii) of the Act, as not maintainable and cancelled the provisional approval granted in Form No.10AC, under clause (iv) of first proviso to sub-section (5) of section 80 G of the Act.
10. The ld Counsel further stated that ld CIT(E) rejected the assessee`s Form No.10AB, u/s 80G(5 ) of the Act, in a mechanical way just by applying the time limit prescribed in clause (iii) of 3rd proviso of section 80G(5) of the Act, which is not acceptable. The reason being the said clause (iii) of 3rd proviso of section 80G(5) of the Act, contains drafting error of the law makers. Because the assessee is an old trust, which was registered on 29.11.2001 and commenced its activities from 2001, therefore the criteria of “within six months of commencement of its activities, whichever is earlier.” is not only difficult but impossible to achieve, especially in old trust. In this connection, various bodies, made representation before the Government and CBDT, however, no guidelines have come yet. Before cancelling the provisional approval, no show cause notice was given to the assessee. The ld Counsel also relied on the following decisions:
(i) Brdy Buds Pet Care vs. CIT(Exemption) ITA No.731/AHD/2023 (Ahmedabad-Trib.)
(ii) Ahmednagar Cancer Society vs. CIT(Exemption) ITA No.1192/PUN/2023 (Pune-Trib.)
(iii) West Bengal Welfare Society vs. CIT(Exemption) ITANo.730 & 731/Kol/2023 (Kolkata-Trib.)
11. In alternative to the above, the ld Counsel submitted that Tribunal has power to condone the delay. As the Ld.CIT(E) did not condone the delay in filing Form No.10AB u/s 80G(5) of the Act, therefore, Ld. Counsel contended that the delay in filing Form-10AB, u/s 80G(5)(iii) may be condoned and matter may be remitted back to the file of Ld.CIT(E) for granting approval, prayed for. To support such contentions, the Ld. Counsel relied on the judgment of Hon’ble Delhi High Court in the case of DCIT(Exemption) vs. Vishwa Jagriti Mission [2013] 30 taxmann.com 41 (Delhi)/[2013].
12. On the other hand, Ld.CIT-DR for the Revenue argued that Ld.CIT(E) has passed the order as per the provisions of the Act and where the proviso of section 80G(5)(iii) especially states that where the institution or fund has been provisional approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier. The ld CIT-DR also stated that under the provisions of the Act, ld CIT(E) does not have power to condone the delay in filing application in Form-10AB, u/s80G(5)(iii) of the Act. Therefore, Ld.CIT-DR contended that order passed by the Ld.CIT(E) should be upheld.
13. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We note that in the latest Circular No.6/2023 dated 24.05.2023, the date was not extended by the CBDT, so far as, filing of Form No. 10AB, u/s 80G(5)(iii) of the Income Tax Act, 1961, is concerned.
14. We note that the extended period, as per Circular No.8/2022, as extended period declared by the Central Board of Direct Taxes (CBDT) is, on or before 30.09.2022, which has also expired, in the assessee`s case under consideration. However, after this Circular No.8/2022, the CBDT has issued another Circular No.6/2023 dated 24.05.2023 wherein in para-5, the CBDT has instructed as follows:
“5. In order to mitigate genuine hardship in such cases, the Board, in the exercise of the power under section 119 of the Act, extends the due date of making an application in,-
(i) Form No.10A, in case of an application under clause (i) of the first proviso to clause (23C) of section 10 or under sub-clause (i) of clause (ac) of sub-section (1) of section 12A or under clause (i) of the first proviso to sub-section (5) of section 80G of the Act, till 30.09.2023 where the due date for making such application has expired prior to such date;
(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 122A of the Act, till 30.09.2023 where the due date for making such application has expired prior to such date.”
15. However, in earlier Circular 8/2022, which was issued on 31.03.2022 the CBDT has given instruction about approval 80G(5) of the Act, which is reproduced below:
“1. On consideration of difficulties in electronic filing of form No.10AB as stipulated in Rule 2C or 11AA or 17A of the Income-Tax Rules, 1962 w.e.f. 01.04.2021, the Central Board of Direct Taxes (CBDT), in exercise of its powers under Section 119(1) of the Act, extends the due date for electronic filing of such Form as under:
(i) The application for registration or approval under Section 10(23C), 12A or 80G of the Act in form No.10AB, for which the last date for filing falls on or before 29th September, 2022, may be filed on or before 30th September, 2022.”
16. Thus, in the Circular No.8/2022 dated 31.03.2022, cited above, there is mention about Section 80G of the Act (in form No. 10AB) for registration or approval and extended date is mentioned as 30.09.2022. However, in the latest Circular No.6/2023 dated 24.05.2023, the CBDT did not clarify or did not mention about the extension of the time limit for Section 80G (5) of the Act, (in form No. 10AB). Therefore in the situation, it is difficult to interpret clause (iii) the 3rd proviso of Section 80G(5) of the Act, which states as follows:
“where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier.”
Therefore, it is undue hardship to the assessee, as the CBDT, in the latest Circular No.6/2023 dated 24.05.2023, about application for registration or approval under Section 80G, in form No. 10AB, did not mention the extended period. Thus, we find merit in the submission of ld Counsel to the effect that assessee is an old trust, which had registered on 29.11.2001 and commenced its activities from 2001, therefore, it is impossible to file the application u/s 80G(5) (iii) of the Act, “within six months of commencement of its activities’ as stated in above clause (iii) of 3rd proviso of section 80G(5) of the Act. Besides, as per circular No.8/2022 of CBDT dated 31.03.2022, the extended time is up to 30.09.2022, however, the assessee filed Form No.10AB, u/s 80G(5) (iii) on 24.02.2023, therefore, application filed by the assessee before the ld CIT(E) is delayed by 147 days (approx.), and hence ld CIT(E) rejected application of assessee in Form No.10AB, u/s 80G(5) (iii) of the Act, as not maintainable and also cancelled the provisional approval granted in Form No.10AC, under clause (iv) of first proviso to sub-section (5) of section 80 G of the Act.
17. Therefore, in this ambiguity situation in circular No.8/2022 of CBDT dated 31.03.2022 and latest Circular No.6/2023 dated 24.05.2023, of the CBDT, we do not have any option but to condone the delay in filing application in Form No.10AB, u/s 80G(5) of the Act. We note that Co-ordinate Bench of Jodhpur in the case of Bhamashah Sundarlal Daga Charitable Trust vs. CIT(Exemption) in ITA No.278/JODH/2023 dated 10.11.2023 dealt with the issue of clause-(iii) 3rd proviso u/s 80G(5) of the Act stating that “whichever is earlier” is applicable only to the newly constructed trust. The findings of the Co-ordinate Bench in the case of Bhamashah Sundarlal Daga Charitable Trust (supra) is reproduced below:
10.1 In this background, we need to read the sub-clause (iii) of the Proviso to Section 80G(5) of the Act. For ready reference it is again reproduced here under :
“ (iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier”
10.2 The sub-clause says that the Institution which have provisional registration have to apply at-least six months prior to expiry of the provisional registration or within Six months of commencement of activities, whichever is earlier.
10.3 In continuation of this when we read the ‘sub clause iii of Proviso’ of section 80G(5), which we have already reproduced above, it is clear that the intention of parliament in putting the word “or within six months of commencement of its activities, whichever is earlier” is in the context of the newly formed Trust/institutions. For the existing Trust/Institution, the time limit for applying for Regular Registration is within six months of expiry of Provisional registration if they are applying under sub clause (iii) of the Proviso to Section 80G(5) of the Act. This will be the harmonious interpretation.
11. If we agree with the interpretation of the ld.CIT(E), then say a trust which was formed in the year 2000, performed charitable activities since 2000, but did not applied for registration u/s.80G, the said trust will never be able to apply for registration now. This in our opinion is not the intention of the legislation. This interpretation leads to absurd situation.
11.1 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 Hon’ble SC 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 assessee 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 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.
11.2 Thus, as observed by 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 Hon’ble Finance Minister and the Memorandum of Finance Bill 2020.
11.3 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, the Provisional Approval is uptoA.Y.2025-26, and it can be cancelled by the ld.CIT(E) only on the specific violations by the assessee. However, in this case the ld.CIT(E) has not mentioned about any violation by the Assessee. Therefore, even on this ground the rejection is not sustainable.
13. However, the ld.CIT(E) has not discussed whether the Assessee fulfils all other conditions mentioned in the section as he rejected it on technical ground. Therefore, in these facts and circumstances we hold that the Assessee had made the application in form 10AB within the prescribed time limit and hence it is valid application. Therefore, we direct the ld.CIT(E) to treat the application as filed within statutory time and verify assessee’s eligibility as per the Act. The ld.CIT(E) shall grant opportunity to the assessee. Assessee shall be at liberty to file all the necessary documents before the ld.CIT(E).
14. Accordingly, the appeal of the assessee is allowed for statistical purpose. Since we have set aside to Ld.CIT(E), we do not intend to adjudicate each ground separately.”
18. We note that the Co-ordinate Bench of ITAT Jodhpur in the case of Bhamashah Sundarlal Daga Charitable Trust (supra) dealt with only the issue/terminology of “whichever is earlier” which is applicable to new trust which have created recently, and it does not deal with condonation of delay in case of old trust who made the application before ld CIT(E ) very late, that is, the issue mention in clause (iii) of 3rd proviso of section 80(5), “where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval..” has not been adjudicated.
19. Now the next question before us is that whether Tribunal has power to condone the delay in filing the Form No.10AB, u/s 80G(5) of the Act. The Tribunal is a final fact finding authority, and based on the assessee`s facts and undue hardship created by the clause (iii) of 3rd proviso of section 80(5) of the Act, the Tribunal may condone the delay in filing the Form No.10AB, u/s 80G(5) of the Act. Therefore, we are of the view that delay in filing the Form No.10AB, u/s 80G(5) should be condoned in the interest of justice. For that we rely on the judgment of Hon’ble Delhi High Court in the case of DCIT(Exemption) vs. Vishwa Jagriti Mission [2013] 30 taxmann.com 41 (Delhi)/[2013] 213 Taxman 65 (Delhi), wherein the Hon’ble Delhi High Court held as follows:
“18. The main question that falls for our consideration is whether the Tribunal was justified in condoning the delay in the filing of the application for registration under section 12A of the Act and whether the view taken by the Tribunal is perverse. The question whether there was sufficient cause for the delay is always a question of fact as has been held by two Division Bench judgments of this Court: (i) CIT v. Parma Nand [2004] 266 ITR 255/135 Taxman 100 (Delhi) and (ii) CIT v. ITOCHU Corpn. [2004] 268 ITR 172/139 Taxman 348 (Delhi). The Tribunal has, in an elaborate order in which all the facts and the rival submissions have been taken into consideration, held that there was sufficient cause for the delay on the part of the assessee-society in making the applications for registration under section 12A and 80G of the Act. It is not necessary, nor is it proper, for us to decide the culpability or otherwise of A.K. Sikri who was the Treasurer of the assessee-society. All that we need to examine is whether the Tribunal had valid materials before it on the basis of which it could have reasonably come to the conclusion that the assessee-society was prevented by sufficient cause in applying for the registration in time. It is manifest from a fair reading of the order of the Tribunal that it had weighed the circumstances in which the assessee-society was placed and the action it took immediately on receipt of the complaint from M.P. Mansinghka Trust of Mumbai; it has referred to the confession of Sikri in the meeting of the governing body owning up responsibility for having misled the assessee-society by representing that the necessary application for registration were made in time; it has also referred to the action taken by the assessee-society against Sikri when it found that Sikri was not taking adequate steps to remedy the situation; it has also referred to the police complaints filed not only by the assessee-society against Sikri, but also to the complaint filed by the income tax authorities against Sikri which indicated that they also viewed Sikri to be responsible for the mis-representation, fake certificates of registration, etc. Moreover, the Tribunal has taken note of the fact that the Metropolitan Magistrate, acting on the police complaint, remanded Sikri to custody and also referred to the fact that in the bail application, Sikri had again owned up responsibility for the fake certificates of registration. Taking an overall view of the facts and going by the preponderance of probabilities, the Tribunal came to hold the view that it was because of the irregularities, illegalities and mis-representations of Sikri that the assessee-society was led to believe that appropriate applications under the Act were already filed with the income tax authorities for registration. The assessee-society was thus under the belief, though mistaken but honest, that there was no delay and once it came to know on 06.12.2005 about the irregularities on a complaint from M.P. Mansinghka Trust of Mumbai and on further enquiry conducted on 14.12.2005 by the governing body, it hastened to take remedial action by filing applications for registration both under section 12A and 80G of the Act, which were followed up by another set of applications filed directly with the DIT (Exemptions) on 21.12.2005; these applications were obviously delayed and the condonation application was filed on 14.03.2006 narrating the events that led to the delay.
19. In the above circumstances, it seems to us that the Tribunal has acted judicially, taking note of all the facts and circumstances including probabilities of the case. In Esthuri Aswathiah v. CIT [1967] 66 ITR 478 (SC), the Supreme Court outlined the duties of the Tribunal in the following words: –
“The function of the Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it: for that purpose it must consider whether on the materials relied upon by the assessee his plea is made out. Conclusive proof of the claim is not predicated: the Tribunal may act upon probabilities, and presumptions may supply gaps in the evidence which may not, on account of delay or the nature of the transactions or for other reasons, be supplied from independent sources. But the Tribunal cannot make arbitrary decisions: it cannot found its judgment on conjectures, surmises or speculation. Between the claims of the public revenue and of the taxpayers, the Tribunal must maintain a judicial balance.”
In Udhavdas Kewalram v. CIT [1967] 66 ITR 462 (SC) the very same Bench of three judges of the Supreme Court again observed as under: –
“The Income-tax Appellate Tribunal performs a judicial function under the Indian Income-tax Act: it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the evidence and the relevant law ………………………………..The Tribunal was undoubtedly competent to disagree with the view of the Appellate Assistant Commissioner. But in proceeding to do so, the Tribunal had to act judicially, i.e., to consider all the evidence in favour of and against the assessee. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence cannot be regarded as conclusively determining the questions of fact raised before the Tribunal.”
20. We are satisfied that the Tribunal has, in making its decision, kept in mind the aforesaid principles adumbrated by the Supreme Court. Its order cannot, therefore, be branded as perverse or unreasonable or irrational.
21. That takes us to the question as to whether in condoning the delay the Tribunal committed any error of law or illegality. There is a wealth of judicial literature on the subject of condonation of delay and most of the cases have arisen under section 5 of the Limitation Act, 1963. The principles that are to be applied are, however, no different whenever the question of condonation of delay comes up for consideration under other statutes. In the oft quoted judgment of the Supreme Court in Collector, Land Acquisition v. MST. Katiji [1987] 167 ITR 471 it was observed as follows: –
“The Legislature has conferred the power to condone delay by enacting section 5 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on the merits”. The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy.”
22. The following general principles were laid down and it is these principles which guide the Court in approaching the question of condonation of delay: –
“And such a liberal approach is adopted on principle as it is realized that:
1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
3. “Every day’s delay must be explained” does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational, common sense and pragmatic manner.
4. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
6. It must be grasped that the judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.”
23. In N. Balakrishnan v. M. Krishnamurthy [1998] 7 SCC 123 the Supreme Court again reiterated the approach. In Ram Nath Sao v. Gobardhan Sao [2002] 3 SCC 195 it was observed by the Supreme Court that acceptance of the explanation furnished should be the rule and refusal, an exception, more so when no negligence or inaction or want of bona fides can be imputed to the defaulting party. In the present case, the Tribunal has found that the assessee-society has taken prompt remedial action and put Sikri on the dock and he also admitted his fault, though he tried to shift the blame to his employee whose whereabouts were never known. Even in his bail application he had confessed to his role in the alleged irregularities and illegalities. There has been no want of bona fides on the part of the assessee, nor did it fail to take immediate action once it was apprised of the irregularities in its affairs by M. P. Mansinghka Trust of Mumbai. In these circumstances, we are unable to say that the Tribunal committed an error in condoning the delay.
24. On the question of perversity of the decision of the Tribunal we may also refer to the judgment of the Supreme Court in Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28. In that judgment, it was noted that only a question of law can be referred for decision of the Court and the decision of the Tribunal on a question of fact can be challenged only if it is not supported by any evidence, or is unreasonable or perverse. The following pithy observations of T.L. Venkatarama Aiyar, J. speaking for the Court are relevant: –
” ………………….. The point for decision is whether there arises out of the order of the Tribunal any question which can be the subject of reference under section 66 (1) of the Act Under that section, it is only a question of law that can be referred for decision of the Court, and it is impossible to argue that the conclusion of the Tribunal is anything but one of fact. It has been held on the corresponding provisions in the English Income-tax statutes that a finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, the decision of the Tribunal is final even though the Court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. In Great Western Railway Co. v. Bater (1), Lord Atkinson observed:
“Their (Commissioners’) determinations of questions of pure fact are not to be disturbed, any more than are the findings of a jury, unless it should appear that there was no evidence before them upon which they, as reasonable men, could come to the conclusion to which they have come: and this, even though the Court of Review would on the evidence have come to a conclusion entirely different from theirs.”
There is no need to further elaborate this position, because the law as laid down in these observations is well settled, and has been adopted in the construction of section 66 of the Act.”
25. This view was reiterated by the Supreme Court in CIT v. Daulatram Rawatmull [1964] 53 ITR 574 where it was held that “if there is some evidence to support the finding recorded by the Tribunal, even if it appears to the High Court that on re-appreciation of the evidence, it might arrive at a conclusion different from that of the Tribunal” the High Court has no power to interfere with the findings of the Tribunal. These decisions were applied by a Division Bench of this Court in CIT v. Baba Avtar Singh[1972] 83 ITR 738 where it was observed as under: –
“The submission made by Mr. Sharma does not appear to us to be correct. It is well-settled that the court cannot set aside the Tribunal’s finding of fact if there is some evidence to support that finding even though the court itself might have come to a different conclusion upon the evidence.”
26. The aforesaid principles govern the order of the Tribunal and the approach to be adopted by us in the present case. At best, what can be argued by the Revenue is only that another view was possible to be taken by the Tribunal and this Court should prefer the alternative view on the same facts and evidence and discard the Tribunal’s view. Obviously the argument cannot be upheld, having regard to the above judgments.
27. For the above reasons we answer the substantial questions of law framed in ITA Nos.754, 773 and 775 of 2010 in the negative, against the Revenue and in favour of the assessee. Consequently the sole substantial question of law framed by us in ITA Nos.1092, 1101, 1103, 1104, 1112 and 1124 of 2010 is answered in the affirmative, against the Revenue and in favour of the assessee. The C.M. Application is disposed of. The appeals of the Revenue are accordingly dismissed with no order as to costs.”
20. Respectfully following the judgement of the Hon’ble Delhi High Court in the case of Vishwa Jagriti Mission (supra), wherein the delay in filing application for registration u/s 12A, was allowable / condoned, hence, we condone the delay in filing Form10AB, u/s 80G(5), and remit the matter back to the file of Ld.CIT(E) with the direction to decide the application of assessee, in accordance with law. The assessee is also directed to file details and documents, before ld CIT(E), as and when, required by ld CIT(E). For statistical purposes, the appeal of the assessee is treated to be allowed.
21. Since, we have adjudicated the issue under consideration by taking the “lead” case in ITANo.728/SRT/2023 and since the facts in ITA No.732/SRT/2023 are similar and identical, therefore our instant adjudication in ITA No.728/SRT/2023 is mutatis mutandis applicable to ITA No.732/SRT/2023. We order accordingly.
22. In the combined result, both appeals (ITA No.728 & 732/SRT/2023) are allowed for statistical purposes in above terms.
A copy of the instant common order be placed in the respective case file(s).
Order is pronounced on 09/01/2024 by placing result on notice board.
