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Before: JUSTICE (RETD.) C. V. BHADANG & SHRI PRABHASH SHANKAR
PER PRABHASH SHANKAR [A.M.] :- The above captioned appeals have been filed by the assessee Trust against the orders passed by the Learned Commissioner of Income- tax(Exemptions), Mumbai [hereinafter referred to as “CIT(E)"] pertaining to orders passed u/s. section 80G and 12AB of the Income-tax Act, 1961 [hereinafter referred to as “Act”]. Since the issues are inter-connected and also the fact that appeals were heard together, they are being taken up together for adjudication vide this composite order for the sake of brevity.
The grounds of both the appeals are as under:
The Ld. Commissioner of Income Tax (Exemption), Mumbai erred in rejecting the application seeking registration u/s.12AB of the Income Tax Act, 1951 alleging that there was delay in filing the application. That the rejection is bad in law.
The Ld. Commissioner of Income Tax (Exemption), Mumbai erred in rejecting the application made in Form 10AB u/s.12A of the Act by exceeding the juri iction conferred u/s.12AB of the Income Tax Act, 1961 while rejecting the application on ground of clauses in MOA of application outside India.
The Ld. Commissioner of Income Tax (Exemption), Mumbai erred in rejecting the appellants' application for registration in Form 10AB u/s.12A of the Income Tax Act, 1961, without appreciating that all the documents were submitted in the proceedings and that no amount was applied outside India in any of the previous years.
Ground no.1 pertains to the rejection of application seeking Registration u/s 12AB of the Act, on account of delay in filing the same before the ld.CIT(E).The applicant trust filed an application in Form 10AB u/s 12A(1)(ac)(ii) seeking registration under section 12AB of the Act. According to the ld.CIT(E), the relevant procedural mandate is governed by the provisions of Rule 17A of the IT Rules. The sub rule (2) mandates that the application in Form 10AB is to be accompanied by specific documents as detailed therein. On verification of the application in Form 10AB filed, it was found that it was not complete and all the documents required to be accompanying the application were not furnished. Hence, a notice was issued to the applicant requesting it to submit complete set of documents mentioned in Rule 17A(2). After perusal of the submissions made by the applicant, it was noticed from the Trust deed/MOA that as per point 3(B)(19), 3(B)(35), 3(B)(37) and 3(B)(41) of the objects, the applicant intended to apply fund outside India which was in violation of section 11 of the Act. Further, the Trust had filed application in Form 10AB for regularization of provisional registration order u/s 12A on 17.12.2024. The trust had obtained provisional approval in Form 10AC dated 03.08.2022 valid upto AY 2025-26. Section 12A(1)(ac)(iii) of the Act provides that the application for registration should be filed where the trust or institution has been provisionally registered under section 12AB of the Act, at least six months prior to expiry of period of the provisional registration or within six months of commencement of its activities, whichever is earlier. As per the submission, it was noticed that the applicant had started its activities during FY 2022-23. Thus, it should have filed application in Form 10AB within the six months of start of activities. However, the Trust had filed application in Form 10AB for regularization of provisional registration order u/s 12A on 17.12.2024 which was not valid as per the above provisions. Accordingly, a show cause notice was issued and explanation was called for regarding the above-mentioned violations. In response, so far as delay in filing Form 10AB, is concerned, the applicant admitted such delay but contended that the delay in filing was due to inadvertent oversight on the part of earlier tax consultant and the staff was unaware about the compliances of law. The applicant requested for condonation in delay in filing of Form 10AB. However, the ld.CIT(E) rejected the plea as oversight and unawareness about tax compliances could not be considered as reasonable cause for delay for filing of Form 10AB. It was further observed that the 'due date' of filing application on or before 30.06.2024 as per the CBDT circular was an extension provided by the Board to all the Trusts/Institutions to file/re- file their applications under certain conditions. However, the applicant failed to avail the benefit of the same. As it failed to show any reasonable cause for delay or to establish that it had genuine hardship in filing of the application within the due date, the request of the applicant for condonation not found tenable was, accordingly, rejected.
1 In the course of hearing before the Bench, the ld.AR reiterated the same contentions as made before the ld.CIT(E) stating that the delay was inadvertent mistake on part of the Counsel of the assessee in failing to do the needful within the prescribed time limit. However, once the new counsel was appointed, immediately the application was filed though with a delay of 78 days. It is pleaded that the delay was unintentional and due to bonafide reasons deserving a sympathetic view. The ld.AR has submitted that Sri Satyanarayan Vedula was appointed as the new Tax Consultant by the assessee in November 2024. In an affidavit dated 16.10.2025 filed before the Bench, he stated that upon appointment, he discovered that the application under Form 10AB had not been filed. Immediately, upon identifying this lapse, the assessee was informed and prompt steps were taken to file the application for registration. The delay occurred solely due to an inadvertent mistake due to dynamic and constant changes in the law related to Charitable Trusts and it was not intentional but circumstantial. It was pleaded to condone the delay. The ld.CIT(E) rejected the plea mechanically without appreciating the reasons cited. The ld.DR argued that the condonation application was rightly rejected.
We find that the assessee filed provisional registration application in time which is undisputed. Moreover, the delay in fling application for final approval was marginally delayed for which it is attributed to the erstwhile Consultant who failed to take timely action. We find that on identical issue of delay in the coordinate bench of ITAT, Mumbai in a recent order in the case of Narke Green Foundation Charitable Institution ITA no.1864/Mum/2025 gave following directions:- "5.9 At this juncture we refer to the pragmatic approach advocated by Justice V.R. Krishna Iyer, wherein he advocated a flexible approach to procedural law, that serve as “handmaid” to justice, and not a hinder it. The Principle of Justice Krishna Iyer emphasised that procedural laws should be tools to facilitate administration of justice various decisions of Hon'ble Supreme Court has emphasised to strike a balance between strict adherence to procedural rules and the need to ensure that justice is not denied due to technicalities.
10 We agree with the above preposition observed by Hon'ble Pune Tribunal. However genuine and bonafide reason stated by the assessee cannot be over looked. Further we also note that, flexible and pragmatic approach to such procedural laws is necessary as against recognising a strict adherence to do which could sometime lead to injustice. Hon'ble Supreme Court in plethora of cases always emphasised that while considering delay, one must first ascertain bonafides of the explanation offered by the party seeking condonation. Thereafter there must be sufficient cause which is substantianable based on the genuine reasonable explanation.
11 While condoning the delay it is crucial to ensure the party seeking condonation provide genuine explanation for the delay. In present facts of the case, we note that, the reason that caused delay is based on a bonafide belief on behalf of the assessee without there being any malafide intention.
In our considered opinion assessee must get an opportunity to present its case before the Ld.CIT(E) and to explain the reason that caused the delay. The Ld.CIT(E) shall consider the application of assessee seeking condonation of delay in accordance with law keeping in view to the above principles of natural justice."
1 We further find that the legislature in all its wi om has vide the Finance Act, 2024 from 01.10.2024 made available on the statute a "Proviso” to section 12A(1)(ac) of the Act that formally allows the CIT(E) to condone the delay if reasonable cause is shown. Currently, timely application for registration under section 12AB of the Act is crucial as failure may result in loss of exemption status. The amendment enables the Commissioner to condone delays in filing such applications, treating them as timely if reasonable cause is shown. This provision aims to alleviate situations where trusts or institutions miss deadlines due to unforeseen circumstances, ensuring they can continue under the exemption regime without incurring tax liabilities on accreted income.
2 We thus, in terms of our aforesaid deliberations and in the light of decision of the coordinate bench(supra), are of the considered view that the matter deserves to be restored to the file of the ld.CIT (E), for fresh consideration. The assessee society shall remain at liberty to file an application for the condonation of the delay involved in the filing of the present application in “Form 10AB” seeking regular registration under section 12AB of the Act. The ld.CIT(E), shall consider such application in accordance with the extant law and dispose of the same after granting a reasonable opportunity of being heard to the assessee society. Consequently, the ground is allowed for statistical purposes.
Ground no.2 and 3 pertain to the issue of violation of section 11 of the Act as noted by the ld.CIT(E). In this regard, the applicant trust submitted before him that no funds had ever been applied overseas and the trust did not intend to do so in future and the clauses were only structural arrangements and collaborations for furthering charitable objectives within India and not outside. The contention of the applicant was not found acceptable. The ld.CIT(E) observed that the Trust deed/MOA was in violation of statutory provisions, as reproduced below:- 4.2 5. 3(B)(19): To enter into collaboration with any foreign firms for the purpose of carrying on any business........ 3(B)(35): To enter into any arrangement with any Government or authority, Indian or Foreign, municipal, local body or other..... 3(B)(37): To enter into partnership or any agreement for sharing, union of interest, joint ventures, reciprocal concession or otherwise with any person, company or firm (Indian or Foreign)..... 3(B)(41): Το exercise all or any of its corporate powers, rights and privileges and to conduct its business in all or any of its branches in the Union of India and in any or all states, territories, possessions, colonies and dependencies thereof and in any for all foreign countries....
1 He further observed that the objects of the company extended to the territories comprised in the Union of India and all other countries of the world. The use of such words in above referred objects in the MOA/trust deed clearly conveys its intention to utilise fund outside India, thereby leaving open the possibility for future endeavours, which may involve expenditure outside the country. Also, the applicant had itself stated in its reply that it intended to collaborate with the foreign entities which will involve expenditure outside India. The applicant trust ought to have amended these clauses to align with the provisions of the Act. However, it failed to do so. Since Registration/approval under section 12AB was to be granted in terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the trust or institution, the genuineness of activities, and the compliance of any other law for the time being in force as were material for the purposes of achieving its objects. In the view of such violations, the application seeking registration under section 12AB of the Act was rejected.
In so far as the object clause relating to activities outside India are concerned, we notice that the ld.CIT( E) has mentioned that the assessee did not modify the said clause so as to be in line with existing law in this regard. It may be stated here that the coordinate Bench in the case of Sila for Change Foundation v/s CIT(E), in ITA No. 4274/Mum/2024, dated 20.12.2024 on identical facts after detailed
analysis of the provisions of the Act and various judicial precedent, granted liberty to the assessee to specify the memorandum of the objects and file the application seeking final registration before the competent authority which may be considered in accordance with law.
1 In this regard, it may be stated here that the ld.AR has intimated the Bench that the Trust has made necessary application for amending the said clause to the authorities concerned which was pending. In an affidavit filed by the Consultant Sri Satyanarayan Vedula, CA has affirmed that the assessee Trust has made an application to the