Facts of the Case

  • Status of the Assessee: The Assessee, M/s Loksakha Welfare Society, is an established charitable society incorporated on January 19, 2004. The society operates with noble objects including relief of the poor, education, medical relief, yoga, preservation of the environment, and the advancement of other general public utility charitable purposes.
  • Historical Tax Compliance: The society was previously granted statutory registration under Section 12AA on November 21, 2007, and had consistently enjoyed valid approvals under Section 80G starting from the Assessment Year 2007-08 onwards.
  • The Legislative Amendment Impact: Following the sweeping amendments introduced by the Finance Act, 2021, which mandated re-registration and re-approval for existing trusts, the assessee attempted compliance by filing Form No. 10A on September 2, 2021, seeking a renewal of its Section 80G approval.
  • The Technical Mistake: Due to an inadvertent clerical error, the initial application under Form 10A was erroneously uploaded under an incorrect clause that applied to provisional registration rather than permanent renewal.
  • Subsequent Refiling: Recognizing the technical glitch, the assessee subsequently filed Form No. 10AB on August 23, 2024, seeking approval under the correct provision of Section 80G(5)(iii).
  • The Impugned Rejection Order: The CIT (Exemption), Kolkata, by an order dated February 22, 2025, summarily rejected the application. The rejection was purely grounded on the fact that Form 10AB was filed beyond the extended deadline of June 30, 2024, prescribed under CBDT Circular No. 07/2024. Concurrently, the authority also cancelled the provisional approval granted to the society.
  • Appellate Delay: Aggrieved by this rejection, the society filed an appeal before the Income Tax Appellate Tribunal (ITAT) with a delay of 112 days.

Issues Involved

  • Whether the delay of 112 days in filing the appellate petition before the ITAT deserved to be condoned under the facts and circumstances of the case?
  • Whether the absolute rejection of approval under Section 80G solely on account of a delay in filing Form 10AB and associated procedural lapses was legally tenable?
  • Whether the administrative tax authorities are required to look past technical glitches to examine the core charitable nature and genuineness of an existing society before striking down its exemptions?

Petitioner’s Arguments

  • Bona Fide Cause for Delay: The learned counsel for the assessee submitted that the 112-day delay in filing the appeal was caused strictly due to bona fide reasons, anchored heavily upon incorrect professional advice received at the time. The delay was neither deliberate nor a product of gross negligence.
  • Established Track Record: It was strongly contended that the assessee is a long-standing, active charitable organization since 2004 that has seamlessly enjoyed Section 80G benefits for over a decade.
  • Hyper-Technical Rejection: The petitioner argued that the CIT (Exemption) passed the order on purely technical grounds without looking into the actual charitable activities or evaluating the genuineness of the trust. They prayed for one clear opportunity to place all relevant material on record to substantiate their claims.

Respondent’s Arguments

  • Strict Timelines: The Revenue placed strong reliance on the order passed by the CIT (Exemption), asserting that the timeline rules laid out in the Income Tax Act and extended via CBDT Circular No. 07/2024 are binding.
  • Statutory Non-Compliance: The respondent contended that since the society failed to file Form 10AB within the final extended timeline (June 30, 2024), the rejection of the Section 80G approval was fully justified under the prevailing law.

Court Order / Findings

  • Condonation of Appellate Delay: The ITAT Kolkata Bench officially condoned the 112-day filing delay, satisfying itself that the society had demonstrated sufficient, reasonable, and genuine cause for the delay.
  • Substantive Justice Over Technicality: Reviewing the merits, the Tribunal held that the CIT (Exemption) erred by rejecting the application merely because of the delayed submission of Form 10AB. The Bench noted that the authority failed to properly examine the actual charitable nature and ongoing genuineness of the society's operations.
  • Protection of Substantive Rights: The ITAT explicitly observed that mere procedural lapses or data entry issues should not be allowed to defeat the substantive statutory rights of a taxpayer.
  • Remand for De Novo Review: In the interest of justice, the Tribunal set aside the impugned rejection order of the CIT (Exemption) and remanded the case back to their file for fresh adjudication, directing that the assessee be granted adequate opportunity to present their documents and explanations.

Important Clarification

  • Core Legal Precedent: The Tribunal clarified that when dealing with tax exemptions under Section 80G, the primary duty of the tax administration is to examine the core objects and the genuineness of the charitable works. Procedural delays or mechanical mistakes in uploading statutory forms must not serve as a lone, automatic ground for rejection without granting a fair, reasonable hearing.

Section Involved

  • Primary Section: Section 80G and Section 80G(5)(iii) of the Income Tax Act, 1961.
  • Procedural Forms: Form No. 10A and Form No. 10AB.
  • Related Provisions & Circulars: Section 12AA of the Income Tax Act, 1961, read with CBDT Circular No. 07/2024.

Link to download the order - https://mytaxexpert.co.in/uploads/1783069229_465compressed.pdf

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