Case Law Details
Peoples Progress Trust Vs CIT (Exemptions) (ITAT Hyderabad)
The appeal was filed by the assessee trust against the order dated 17.03.2025 passed by the Commissioner of Income Tax (Exemptions) [CIT(E)] rejecting its application in Form No. 10AB for regular registration under Section 80G(5) of the Income-tax Act, 1961. The trust challenged the rejection on several grounds, including that the order was contrary to law and facts, that the amendments introduced by the Finance Act, 2020 were intended to simplify the registration process for charitable trusts and should not be interpreted adversely, and that the CIT(E) rejected the application without issuing a show-cause notice or providing an opportunity of being heard, thereby violating the principles of natural justice. The trust further contended that it was an existing trust registered on 19.07.1995 and had commenced its charitable activities long before obtaining provisional registration. It argued that the timelines relating to commencement of activities applied only to newly formed trusts and that the due date for filing Form No. 10AB should be determined with reference to the expiry of its provisional registration rather than the commencement of its activities. It also submitted that it had complied with all other statutory conditions for obtaining registration under Section 80G(5)(iii).
The trust had been granted provisional registration under Section 80G through Form No. 10AC dated 22.06.2022, valid from Assessment Year 2023–24 to Assessment Year 2025–26. It subsequently filed Form No. 10AB on 30.09.2024 seeking regular registration and furnished all information sought by the CIT(E) through replies dated 29.12.2024, 28.02.2025, and 17.03.2025. However, the CIT(E) rejected the application on the ground that it was filed beyond the prescribed time limit. Referring to the amended provisions introduced by the Finance Act, 2020, the CIT(E) observed that Form No. 10AB was required to be filed at least six months before the expiry of provisional registration or within six months from the commencement of activities, whichever was earlier. The CIT(E) also noted that CBDT Circular No. 7/2024 dated 25.04.2024 had extended the due date for filing Form No. 10A/10AB up to 30.06.2024, whereas the trust had filed its application only on 30.09.2024. Accordingly, the application was treated as time-barred and rejected.
Before the Tribunal, the authorised representative of the trust submitted that the delay was inadvertent and procedural rather than deliberate. It was argued that the trust had already obtained provisional registration, complied with all statutory requirements, and furnished complete details before the CIT(E), thereby establishing the genuineness of its charitable activities. The representative contended that a procedural delay should not defeat the trust’s substantive claim for registration under Section 80G. On the other hand, the Departmental Representative supported the order of the CIT(E), contending that the statutory time limit was mandatory and that the CIT(E) had no authority to condone the delay in filing Form No. 10AB.
The Tribunal observed that the trust had admittedly filed Form No. 10AB on 30.09.2024, whereas the extended due date under CBDT Circular No. 7/2024 was 30.06.2024. Therefore, the application was clearly filed beyond the prescribed time limit. The Tribunal held that although the delay was procedural and the trust had demonstrated the genuineness of its charitable activities, the provisions of the Act read with the CBDT Circular clearly prescribed the filing deadline for Form No. 10AB. At the same time, the Tribunal expressed the view that procedural lapses should not defeat substantive rights, particularly in cases involving charitable trusts seeking exemption. It noted that while there was no explicit provision under the Act or the Rules permitting condonation of delay in filing Form No. 10AB, the trust was at liberty to approach the CBDT under Section 119(2)(b) of the Act seeking condonation of the delay. The Tribunal directed that, if such condonation is obtained, the CIT(E) shall consider and dispose of the application for regular registration under Section 80G on its merits, in accordance with law and after providing the trust with a due opportunity of being heard. Consequently, the appeal was allowed for statistical purposes.
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FULL TEXT OF THE ORDER OF ITAT HYDERABAD
The present appeal has been filed by the assessee trust against the order passed by the Commissioner of Income Tax (Exemptions) [hereinafter referred to as “CIT(Exemptions)”], dated 17.03.2025 rejecting the application filed in “Form No. 10AB” for regular registration under Section 80G(5) of the Income-tax Act, 1961 (for short, “the Act”).
The assessee trust has assailed the impugned order on the following grounds of appeal before us:
“Ground 1. The Rejection order dated 17-03-2025 in Form 10AD of the Income-tax Act, 1961 is erroneous and contrary to law and facts of the case and devoid of any merit.
Ground 2. The CIT(E), Hyderabad failed to note that the amendments in Finance Act 2020 were introduced to simplify the procedure of registration of charitable trusts/Institutions and the amendments cannot be interpreted in a way that is prejudicial to the Trust/Institutions.
Ground 3. The CIT(E), Hyderabad failed to issue show cause notice and provide opportunity of being heard regarding delay in filing the application before rejecting it and thereby violating principles of natural justice.
Ground 4. The CIT(E), Hyderabad failed to note that, the appellant is an existing trust that had already commenced its activities before obtaining provisional registration. The timelines for commencement of activities under the new regime do not apply to existing trusts that began operations prior to 1st April 2021. The timelines for filing Form 10AB should be based on the expiry of provisional registration i.e., 30th September 2024 and not the commencement of activities. In this regard reference can be drawn from case law: “Bhamashah Sundarlal Daga Charitable Trust Vs. The Commissioner of Income tax – Exemptions, Jaipur”.
Ground 5. The CIT(E), Hyderabad also failed to note that commencement of activities applies for those trusts/Institutions which are newly formed as per new regime and not yet started charitable activities at the time of obtaining provisional registration.
Ground 6. The CIT(E), Hyderabad failed to note that there is no specific violation by the appellant and complied with all other requirements/conditions for obtaining registration under section 80G(5)(iii) of the Act.
Ground 7. For the above and such other grounds that may be raised at the time of hearing, it is respectfully submitted that the appeal be allowed and suitable directions be given to the CIT(E), Hyderabad to allow the claim of the Appellant.”
2. Succinctly stated, the assessee is a trust registered with the Registrar of Trusts on 19.07.1995, with its primary objects as that of relief of the poor, education, and medical relief. The assessee trust was granted provisional registration under Section 80G of the Act by the Central Processing Centre (CPC) in “Form No. 10AC” dated 22.06.2022, valid for the period from AY 2023–24 to AY 2025–26.
3. The assessee trust in accordance with the provisions of the amended Section 80G and Rule 11AA, had filed its application for regular registration in “Form No. 10AB” on 09.2024. During the course of proceedings under Section 80G(5)(iii), the assessee trust vide its replies dated 29.12.2024, 28.02.2025, and 17.03.2025 submitted the requisite details/information in response to the queries raised by the CIT(Exemptions).
4. However, the CIT(Exemptions) rejected the said application vide order dated 17.03.2025 on the ground that the assessee trust had failed to apply for regular registration within the prescribed time limit. It was observed by him that as per the amended provisions introduced by the Finance Act, 2020, an application in “Form No. 10AB” should be filed at least six months prior to the expiry of the provisional registration or within six months from the commencement of its activities, whichever is earlier.
5. The CIT(Exemptions) further observed that the CBDT vide Circular No. 7/2024 dated 25.04.2024 had extended the “due date” for filing Form No. 10A/10AB till 30.06.2024. However, as the assessee trust had filed its application in “Form 10AB” on 30.09.2024, therefore, it was held to be time-barred. Accordingly, the CIT(Exemptions) rejected the application filed by the assessee trust for regular registration under Section 80G of the Act on the ground of the delay involved in filing of the same.
6. Aggrieved, the assessee trust has carried the matter in appeal before us.
7. We have heard the Ld. Authorised Representatives of both parties, perused the orders of the lower authorities and the material available on record.
8. Shri. P. Vinod, Advocate, the Ld. Authorised Representative (for short, “Ld.AR”) for the assessee trust, submitted that the delay in filing the application in “Form No. 10AB” was inadvertent and not deliberate. The Ld. AR submitted that the assessee trust had already been granted provisional registration and had thereafter complied with all statutory requirements. Elaborating further on his contention, the Ld. AR submitted that the delay in filing the application for regular registration was only procedural and should not defeat the substantive claim under Section 80G of the Act. The AR also contended that the assessee trust had filed complete details before the CIT(Exemptions), which demonstrated the genuineness of its activities.
9. Per Contra, the learned DR supported the order of the CIT(Exemptions) and submitted that the time limit prescribed under the law is mandatory in nature, and the CIT(Exemptions) has no discretion to condone the delay in filing of “Form 10AB”.
10. We have heard the Ld. Authorized Representatives for both parties and perused the material available on record. Admittedly, the assessee trust was granted provisional registration under Section 80G and had filed “Form 10AB” for regular registration on 30.09.2024. As observed by us hereinabove, the CBDT, vide Circular No. 7/2024 dated 25.04.2024, had extended the “due date” for filing such application till 30.06.2024, therefore, there can be no denying of the fact that the application filed by the assessee trust was beyond the prescribed time limit.
11. Although the delay in filing the application for regular registration under Section 80G in “Form 10AB” is procedural in nature, and the assessee trust had otherwise demonstrated the genuineness of its charitable activities, but we are afraid that the provisions of the Act read alongwith the CBDT Circular No. 7/2024 (supra) are clear on the prescribed time limit in so far the filing of an application for regular registration in “Form 10AB” under Section 80G of the Act is concerned. However, we are at the same time of a firm conviction that procedural lapses should not defeat the substantive rights, particularly in matters of charitable trusts seeking exemptions. Although there is no explicit provision under the Income-tax Act or rules for condonation of delay in filing of “Form 10AB” for regular registration under Section 80G of the Act, but the assessee trust remains at liberty to approach the CBDT for condonation under Section 119(2)(b) of the Act. Thereafter, the CIT(Exemptions) is directed to take up and dispose of the application filed by the assessee trust for regular registration under Section 80G of the Act, on merits, in accordance with law and after providing due opportunity of being heard to the assessee trust.
12. Resultantly, the appeal of the assessee trust is allowed for statistical purposes.
Order pronounced in the Open Court on 25th July, 2025.
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