Case Law Details
Sauhard Vs CIT (ITAT Ahmedabad)
In the case of Sauhard Vs. CIT (Exemption), the Income Tax Appellate Tribunal (ITAT) Ahmedabad directed the Commissioner of Income Tax (Exemption) to reconsider the Trust’s application for permanent registration under Section 80G of the Income Tax Act, 1961. The Trust, which operates as a charitable organization, had been granted provisional registration but faced rejection for permanent registration due to clerical errors in the application. These errors mistakenly categorized some of the Trust’s activities as religious, despite them being charitable in nature. The rejection, made in March 2023, was issued without giving the Trust an opportunity to clarify the discrepancies identified by the CIT.
The appeal was filed by the Trust after a delay of 193 days, which was explained by the Trust as being due to a misunderstanding about the reapplication process. The ITAT found the reasons for the delay to be reasonable and condoned the delay, allowing the appeal to proceed. In its ruling, the ITAT referred to similar cases and emphasized that a clerical error should not hinder the charitable activities of the Trust. It also noted that the CIT’s rejection was based on a technicality, and as the Trust’s activities were genuinely charitable, the matter should be evaluated on its merits. The appeal was set aside with instructions for the CIT to pass an order on the merits after allowing the Trust to correct the application.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
Present appeal has been filed by the assessee against order passed by the ld. Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “Ld.CIT(“E”] dated 17.03.2023 passed under section 80G of the Income Tax Act, 1961 [hereinafter referred to as “the Act” for short].
2. Adjournment sought by the ld.DR vide letter dated 4.11.2024 is hereby rejected.
3. At the outset, it is noticed that the Registry has noted that the appeal of the assessee is time barred by 193 days. To explain the delay, the assessee has filed an application for condonation of delay in the form of an affidavit duly sworn in by Shri Gaurang Jagdishprasad Raval, the Trust of the assessee-trust. In the affidavit it is deposed that the assessee-trust was under the impression that once rejection of the application for registration under section 80G is rejected, it can again re-apply for the same, and therefore, due to lack of awareness the present appeal could not be filed and impugned delay of 193 days has occurred. It is accordingly prayed that as the delay not being intentional and deliberate, and the assessee is being a charitable institution, the delay of 193 in filing appeal before the Tribunal may be condoned.
4. We have gone through the contents of the affidavit. The assessee-trust has reasonably explained the reason for the delay in filing present appeal before the Tribunal. We are of the view that no prejudice will be caused to the Revenue if the delay is condoned and the matter is taken up for adjudication on merit.
5. In the appeal, the assessee has taken the following grounds:
“1. Your appellant is a Charitable Trust in the name of SAUHARD, having its registered office at 10, SRINAGAR FLATS, ANANDNAGAR ROAD, SATELLITE-380015.
2. Your Appellant is a Public Charitable Trust incorporated under Bombay Public Trust Act, 1950 on 16.07.2011.(ANNEXURE-1 – PAGE 12 ).
3. The said trust is incorporated with the main object to carry on all type of educational activities without any discrimination on the basis of caste, creed or religion (ANNEXURE -2 – PAGE 13-28).
4. The Appellant trust was granted provisional registration under Section 80G(5)(iv) of the Act with effect from 24.09.2021 for Assessment Years 202122 to 2024-25 by the Learned dy. Principal Commissioner of Income Tax/ Commissioner of Income Tax. (Exemption)- (ANNEXURE-3 -PAGE 29-30 ). The Appellant Trust, thereafter filed Form No. lOAB on 30.09.2022 for seeking final registration u/s 80G(5) of the Act. (ANNEXURE-4 – PAGE 31-37)
5. With respect to grant of registration under Section 80G (5) of the Act, the Appellant-Trust was issued a questionnaire by the Ld. CIT(Exemptions) on 12.12.2022 which was duly responded by the Appellant-Trust on 20.12.2022 and 11-01-2023 (ANNEXURE 5 – PAGE 38-39). The Ld. CIT (Exemptions), Ahmedabad observed certain inconsistencies in the details filed in Form No. lOAB and on the basis of the same, passed an order of rejection dated 17.03.2023 in Form No.10AD without giving the AppellaM-Trustan opportunity to give any clarifications regarding the said discrepancies. (ANNEXURE 6 -PAGE 41-41). The said rejection was primarily made due to erroneously entered data in religious expenses column of application form. The error was purely clerical omission. The appellant trust, in the reply to the questionnaire raised, submitted that it is a Public Charitable Trust and its activities are entirely related to charitable purposes only for the benefits of the general public at large and they are not religious in nature. The appellant trust has also submitted an undertaking in respect of the compliance under Section 2(15) of the Act, that the objects and activities of the trust are solely and exclusively for charitable purposes only as stipulated in the Deed of Trust. The Appellant does not carry on any activities in the nature of trade, commerce, business etc. (ANNEXURE-7- PAGE 51 ) The learned AO without considering our reply and without giving any further opportunity, rejected the final registration u/s 80G.
6. After getting the rejection order dated 17-03-2023, we enquired with the Income Tax Department regarding resolution of the said rejection. They replied that you can re-apply the application u/s 80G(5)(ii). Without wasting any time, we again submitted the application on 29-03-2023 (ANNEXURE- 8 – PAGE 52-58). After that, we received the rejection order dated 8-8-2023, stating that “the assesses was required to file the application u/s. 80G(5)(iii) in lieu of 80G(5)(ii). Therefore, the application has to be treated as non-maintainable and liable to be rejected as such, without going into the merits. Therefore, the present application is rejected.” (ANNEXURE 9 – PAGE 59-61)
7. Your appellant respectfully submits that the observation made by learned CIT in clause 2 of the Annexure mentioned in Row 9 of his order, the assessee required to file the application under section 80G(5)(iii) in lieu of section 80G(5)(ii). However, when we tried to file the application under section 80G5(iii) of the Ac, it did not allow us to do so stating that the registration was already in existence. Screen shot of the same is attached for your honours kind perusal and reference. (ANNEXURE 10 – PAGE 62)
8. Your appellant respectfully takes the shelter of the judgement of ITAT Ahmedabad given in the case of ITAT Uttar Guiarat Shikshan Seva Trust, vs The Cit (Exemption). Ahmedabad on 5 April. 2024 (ANNEXURE -11 -PAGE 6366) which is as follows:
“5. Considering the overall facts and circumstances, the delay in filing the fresh application is, hereby, condoned. It is directed that the application of the assessee for final registration may be treated as filed within the time limit ^prescribed and the time consumed by the assesses in filing the revised application will not be taken into consideration. The matter is accordingly restored to the file of Id. CIT (Exemption) with a direction that Id. CIT (Exemption) will pass an order on merits irrespective of the delay occurred in filing the fresh application for final approval u/s 80G (5) of the Act.”
6. We have given our thoughtful consideration and perused the materials available on record. It is undisputed fact that the assessee was granted Provisional Registration u/s. 80G (5) of the Act bvLd. CIT(E) on 24.09.2021 for a period of three years up to the Asst. Year 2024-25. The only reason for rejecting Permanent Registration u/s. 80G (5) of the Act, the assessee wrongly filed the application under 80G(5)(ii) instead of u/s. 80G(5)(iii) of the Act. It is undisputed fact that the assessee Trust is carrying out the charitable activities and granted registration u/s. 12AB of the Act I. T.A No, 1090/Ahd/2023 Page No 5 Uttar Guiarat Shikshan Seva Trust vs. CIT(E) on 27.05.2021 and also Provisional Registration u/s. 80G of the Act on 24.09.2021. Thus, the genuineness of the activities carried out by the Trust is not doubted by the Ld. CIT(E). denial of Permanent Registration only the count of wrong mentioning of sub clause 80G (5) will certainly affects the charitable activities carried out by the Trust. In similar circumstances, the Co-ordinate Bench of the Kolkata Tribunal has set aside the matter to the file of Ld. CIT(E) and to pass order on merits, irrespective of the delay occurred in filing the fresh application for final approval u/s. BOG (5) of the Act.
6.1. Respectfully following the same, the present impugned order passed by Ld. CIT(E) is hereby set aside with a direction to Ld. CIT(E) to pass order on merits on the rectified application to be filed by the assessee. Needless to sav. the assessee should file the application for Permanent Registration under clause (Hi) of first proviso to Section 80G of the Act before Ld. CIT(E).
7. In the result, the appeal filed by the Assessee is allowed for statistical purpose.”
9. It is important to note that the appellant was not given an opportunity to clarify the discrepancies identified by the Id. CIT (Exemptions) and an order was passed on 08.08.2023 in Form No. lOAD of the Act, rejecting the application filed in Form No.10AB for the grant of registration under Section 80G (5) of the Act.
10. Your appellant respectfully submits that the essence of the provisions for the registration of trusts under sections 12A/12AB and the granting of recognition under section 80G of the Act is derived from the Directive Principles of State Policy, as enshrined in the Constitution of India. The Government of India strives to provide welfare to all members of society. In this context, the registration of public charitable trusts ensures that benefits flow to the entire society, thereby fulfilling the Directive Principles of State Policy. The provisions of registration under sections 12A/12AB and the granting of recognition under section 80G of the Act contribute significantly to the socio-economic welfare of society.”
7. After going through the facts of the case, the application for registration under section 80G was rejected by the ld.CIT(E) owing to data entry mistake, wherein the same has been treated as religious purpose instead of charitable purpose. On going through the order of the ld.CIT(E) and the grounds taken by the assessee, we feel that the interest of justice will be well served by giving an opportunity to the assessee to represent the case before the ld.CIT(E) with all relevant details. The ld.CIT(E) shall, after giving reasonable opportunity of hearing to the assessee, examine the details afresh in accordance with law.
8. In the result, the appeal of the assessee is allowed for statistical purpose.
Copy of this order be given to the assessee. The Registry is directed to dispatch as per procedure.
Order pronounced in the Court on 4th November, 2024 at Ahmedabad.
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