ITAT Directs CIT(E) to Reconsider Fresh Section 80G Application per CBDT Circular No. 7/2024

Virudhunagar Kshatriya Vidhyasala Managing Board Vs CIT(Exemption) (ITAT Chennai)

In the case of Virudhunagar Kshatriya Vidhyasala Managing Board vs. CIT(Exemption), the Income Tax Appellate Tribunal (ITAT) Chennai has directed the Commissioner of Income Tax (Exemption) [CIT(E)] to review the fresh application under Section 80G of the Income Tax Act. This decision follows the recent CBDT Circular No. 7/2024, which extends deadlines for applications.

Background:

The appeal emerged from an order dated May 31, 2023, by the CIT(E) that rejected the trust’s Form No. 10AB seeking registration under Section 12A(1)(ac)(iii) of the Income Tax Act. The appeal was delayed by 269 days beyond the statutory period. The assessee contended that the delay was due to a misunderstanding regarding the provisional registration’s impact and subsequent issues with filing for final registration.

Key Points of the Case:

1. Delay in Filing Appeal: The assessee sought condonation of the 269-day delay, attributing it to procedural confusion and transition issues related to the new electronic regime. The ITAT accepted these reasons as reasonable and admitted the appeal.
2. Issue of Provisional Recognition: The CIT(E) had denied provisional recognition due to a mistake in the application process. The ITAT noted that the appellant had already been granted provisional registration and the issue arose from a procedural error.
3. CBDT Circular No. 7/2024: The ITAT acknowledged that the assessee had applied afresh as per the extended deadline set by the CBDT Circular No. 7/2024, which allowed additional time until June 30, 2024, for compliance. Given this, the appeal was deemed academic.
4. ITAT’s Decision: The ITAT directed the CIT(E) to reconsider the fresh application without prejudice to the appeal. The appeal was dismissed as infructuous due to the resolution provided by the new application in compliance with the extended deadline.

Conclusion:

The ITAT’s decision underscores the procedural adjustments allowed under the new CBDT circular and ensures that applications for Section 80G registration are considered fairly. The CIT(E) is tasked with reassessing the application based on the updated guidelines, rendering the current appeal moot.

FULL TEXT OF THE ORDER OF ITAT CHENNAI

This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Exemption), Chennai dated 31.05.2023 rejecting Form No.10AB filed for seeking registration/approval/recognition u/s. 12A(1)(ac)(iii) of the Income Tax Act, 1961 (hereinafter the ‘Act’). At the outset, it is noticed that appeal is barred by limitation of 269 days. As per Form 36, the assessee received order of the CIT(E) passed u/s.80G(5)(iv) of the Act dated 31.05.2023 on 31.05.2023 itself. The appeal has to be filed before the Tribunal on or before 30^th July, 2023, but, actually it was filed only on 24.04.2024, thereby there was delay of 269 days. The assessee filed condonation petition stating following reasons:

“In this regard, it is submitted that the Appellant Trust filed Form 10A on 24.05.2023 under wrong clause 80G(5)(iv) instead of 80G(5) (iii) and therefore, the appellant was granted provisional registration for three years from 31.05.2023 instead of granting the same from 01.04.2023 thereby denying the benefit of 80G during the intervening period. The impact of grant of the provisional registration from 31.05.2023 was not properly understood and therefore no appeal was filed against the order granting provisional registration.

Subsequently, in order to make application for final registration, the Managing Trustee and the Chartered Accountant had approached the Counsel on Record for seeking advice. It was only at this juncture, the Managing Trustee was brought to the notice of the provisions of Section 80G for registration under new regime. The Managing Trustee immediately took steps and had filed the appeal with the help of Counsel on Record on 31.05.2023.

In such circumstances, the Appellant submits that the transition to electronic regime coupled with provisions pertaining to the new regime of registration (transition from old regime) would constitute the reasonable cause for the delay in filing the captioned appeal and pleads for condoning the small delay of 279 days in filing the appeal under consideration in the interest of justice for adjudicating the issues on merits.”

2. When these were confronted, the Sr. DR opposed for condonation of delay. On going by the reasons stated, we consider the cause as reasonable and hence, delay is condoned and appeal is admitted.

3. The only issue in this appeal of the assessee is as regards to order of CPC., Bengaluru in denying provisional recognition by overlooking the existence of registration in terms of section 80G(5) of the Act by virtue of which bonafide mistake committed by the assessee while uploading Form No.10AB for full recognition. For this, the assessee has raised various grounds which are argumentative, factual and exhaustive and hence these need not be reproduced.

4. We have heard rival contentions and gone through facts and circumstances of the case. It is an undisputed fact that the assessee has applied for registration and already granted provisional registration u/s.80G(5) of the Act on 09.07.2021, which was restricted in granting provisional recognition again in the impugned order dated 31.05.2023. The counsel for the assessee only stated that the assessee has already applied for registration within the time limit extended by CBDT vide circular No.7/2024 dated 25.04.2024 extending the time limit upto 30-06-2024 and hence, he requested that matter can be restored back to the file of the CIT(E).

5. On the other hand, the Sr.DR submitted that once the assessee has applied afresh in term of CBDT Circular No.7 of 2024 dated 25.04.2024 which is extended upto 30.06.2024, nothing survives in this appeal and this has become academic and infructuous.

6. After hearing rival submissions and going through facts and circumstances of the case, we are of the considered view that since the assessee has applied afresh, the CIT(E) is directed to consider this application, de-hors this appeal and will decide the issue on merits taking that as a fresh application complied in lieu of extended date of CBDT circular no.7 of 2024 dated 25.04.2024. Hence, this appeal is dismissed as infructuous.

7. In the result, the appeal filed by the assessee is dismissed as academic.

Order pronounced in the open court on 11th July, 2024 at Chennai.