ITAT Rajkot Rules Delay in Filing Form 10AB for Section 80G(5) Approval Can Be Condoned in Interest of Justice

ITAT Rajkot: Technical Delays Should Not Prevent Charitable Trusts from 80G Approval

In a significant decision for the charitable sector, the Income Tax Appellate Tribunal (ITAT), Rajkot Bench, has set aside a rejection order issued by the Commissioner of Income-tax (Exemption) [CIT(E)], Ahmedabad. The tribunal ruled that the delay in filing Form 10AB for approval under Section 80G(5) of the Income-tax Act, 1961, should be condoned in the interest of justice, emphasizing that procedural hurdles should not override the legitimate charitable objectives of a trust.

Background of the Dispute

The assessee, Shri Shardagram Alumni Education and Charitable Trust, had been granted provisional approval under Section 80G(5) in March 2022. Under the statutory framework, the trust was required to file an application for regular registration in Form 10AB. However, the application was filed with a delay. The Ld. CIT(E) rejected the application as "non-maintainable" due to the late submission, asserting that the trust had failed to meet the prescribed time limits, and subsequently cancelled the existing provisional approval.

Aggrieved by this, the trust appealed to the ITAT, arguing that the delay was neither intentional nor deliberate and that its status as an existing, active trust made strict adherence to the timelines impossible under the current legal ambiguity.

Legal Arguments

The Counsel for the assessee contended that the tribunal possesses the inherent power to condone such delays to prevent genuine hardship. They urged the bench to remit the matter back to the CIT(E) for a fresh decision on merit, rather than dismissing it on technical grounds.

Representing the Revenue, the CIT-DR relied strictly on the findings of the CIT(E), maintaining that the failure to file within the statutory window rendered the application invalid under the current rules.

Court’s Analysis: Avoiding Absurdity

The ITAT bench, comprising Dr. Arjun Lal Saini and Shri Dinesh Mohan Sinha, carefully examined the language of the Act and relevant CBDT circulars. The tribunal observed that applying a rigid interpretation to the “six months from commencement of activities” clause would lead to an absurd outcome for long-standing trusts, effectively barring them from ever obtaining registration.

The tribunal drew heavily on the precedent established by the Delhi High Court in Vishwa Jagriti Mission , which affirmed that tribunals have the judicial discretion to condone delays when "sufficient cause" is established. The bench also referenced Bhamashah Sundarlal Daga Charitable Trust , which clarified that certain statutory provisions regarding timelines were contextually aimed at newly formed entities rather than existing ones.

Key Observations

The tribunal articulated its reasoning with several critical observations:

> "We note that there was delay in filing Form-10AB, u/s 80G(5) of the Act and such delay was not intentional nor deliberated on the part of assessee-trust. Therefore, the delay should be condoned in the interest of justice."

> "The statutory provision shall be interpreted in such a way to avoid absurdity... 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."

> "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."

Final Decision

Concluding that the interests of natural justice prevailed over procedural rigidity, the ITAT allowed the appeal for statistical purposes. The order of the CIT(E) was set aside, and the matter was remitted back to the Commissioner. The trust has been directed to provide all necessary details and documentation, paving the way for a decision on the merits of their Section 80G(5) status.

This ruling provides a major relief to charitable organizations, signaling that tax authorities should prioritize the substantive compliance and bona fide intentions of trusts over minor, non-malicious procedural lapses.