LANCER FOUNDATION ,MUMBAI vs. COMMISSIONER OF INCOME TAX (EXEMPTION), MUMBAI

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ITA 5028/MUM/2025Status: DisposedITAT Mumbai30 September 20256 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal noted that the assessee had admittedly filed its application beyond the period of extension provided by the CBDT. However, it referred to the proviso introduced to Section 12A(1)(ac)(B) by the Finance (No.2) Act, 2024, effective from 01.10.2024, which empowers the Principal Commissioner or Commissioner to condone delay if there is a reasonable cause. Since the assessee expressed willingness to move an application for condonation before the CIT(E), the Tribunal held that the ends of substantial justice would be met by restoring the matter to the CIT(E). The CIT(E) was directed to examine the petition for condonation of delay. If the delay is condoned, the CIT(E) is to adjudicate the application afresh on merits, including the issue of amendment of the Memorandum of Association, strictly in accordance with law. The impugned order of the CIT(E) was set aside, and the matter was remanded for fresh adjudication. The grounds of appeal were allowed for statistical purposes.

What were the facts?

The assessee, Lancer Foundation, filed an appeal against the order dated 25.06.2025 passed by the Commissioner of Income-tax (Exemption), Mumbai (CIT(E)). The CIT(E) rejected the assessee's application for regularization of registration under Section 12AB of the Income-tax Act, 1961. The rejection was based on two grounds: a delay of 19 months in filing the application for regularization and a violation of Section 11 of the Act due to a clause in the assessee's Memorandum of Association (MOA). The assessee had obtained provisional registration and was required to apply for regularization by March 2023, but filed the application on 19.11.2024. The assessee contended that the delay was due to a consultant leaving midway and that they intended to amend the MOA.

What were the issues?

1. Whether the learned CIT(E) erred in contending that there was a delay of 19 months in filing the application for regularization under Section 12AB, as opposed to the assessee's claim of a 5-month delay, and whether this delay warrants condonation? 2. Whether the learned CIT(E) erred in not accepting the assessee's explanation for the delay, attributing it to the consultant's departure and the time taken to find a new one? 3. Whether the learned CIT(E) erred in objecting to clause 3(6) of the assessee's Memorandum of Association as a violation of Section 11 of the Income-tax Act, without considering the assessee's intention to amend it? Assessee's Contentions: - The delay was bona fide and beyond the assessee's control, deserving condonation. - The assessee is prepared to file a proper petition for condonation before the CIT(E). - The matter should be remitted to the CIT(E) for fresh adjudication after condonation. Revenue's Contentions: - The CBDT extended the time for filing applications up to 30.06.2024, and since the assessee filed after this date, the CIT(E) was justified in rejecting the application. - Unless condonation is granted, the application cannot be entertained.

Which sections of the Income-tax Act were involved?

Section 12AB,Section 11,Section 12A(1)(ac)(iii),Section 12A(1)(ac)(B)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI

Before: SHRI OM PRAKASH KANT

For Appellant: Mr. Bharat Gandhi
For Respondent: Mr. Rajesh Kumar Yadav, CIT-DR
Hearing: 25/09/2025Pronounced: 30/09/2025

ORDER PER OM PRAKASH KANT, AM

This appeal has been preferred by the assessee against the order dated 25.06.2025 passed by the learned Commissioner of Income-tax (Exemption), Mumbai [hereinafter referred to as “the ld. CIT(E)”], whereby the ld. CIT(E) rejected the application of the assessee seeking regularization of registration under section 12AB of the Income-tax Act, 1961 (hereinafter “the Act”).

Lancer Foundation 2 ITA No. 5028/MUM/2025

2.

The grounds raised by the assessee are reproduced as under: The grounds raised by the assessee are reproduced as under: The grounds raised by the assessee are reproduced as under:

1.

The learned Commissioner of Income Tax (Exemptions) The learned Commissioner of Income Tax (Exemptions) The learned Commissioner of Income Tax (Exemptions) Mumbai erred in contending that there is a delay of 19 Mumbai erred in contending that there is a delay of 19 Mumbai erred in contending that there is a delay of 19 months as against the factual delay of 5 months (1st months as against the factual delay of 5 months (1 months as against the factual delay of 5 months (1 July 2024 to 19th November 2024) by virtu of Circular July 2024 to 19th November 2024) by virtu of Circular July 2024 to 19th November 2024) by virtu of Circular No. _ provided by the Central Board of Direct Taxes. No. _ provided by the Central Board of Direct Taxes. No. _ provided by the Central Board of Direct Taxes.

2. The learned Commissioner of Income Tax (Exemptions) The learned Commissioner of Income Tax (Exemptions) The learned Commissioner of Income Tax (Exemptions) Mumbai erred in not accepting the fact that the delay Mumbai erred in not accepting the fact that the delay Mumbai erred in not accepting the fact that the delay in submission was on account of the cons in submission was on account of the consultant who ultant who was looking after the compliance left the assignment was looking after the compliance left the assignment was looking after the compliance left the assignment half way through and it took time for the appellant to half way through and it took time for the appellant to half way through and it took time for the appellant to find a new consultant to compile with the provisions. find a new consultant to compile with the provisions. find a new consultant to compile with the provisions.

3.

The learned Commissioner of Income Tax (Exemptions) The learned Commissioner of Income Tax (Exemptions) The learned Commissioner of Income Tax (Exemptions) Mumbai erred by objecting to a Mumbai erred by objecting to a clause 3(6) in the clause 3(6) in the Memorandum of Association violating section 11 of the Memorandum of Association violating section 11 of the Memorandum of Association violating section 11 of the Income Tax Act without Income Tax Act without considering the fact that in the fact that in clause 4 of the Memorandum of Association the objects clause 4 of the Memorandum of Association the objects clause 4 of the Memorandum of Association the objects of the company extended to the whole of India. of the company extended to the whole of India. 4. Without prejudice to ground no Without prejudice to ground no 3, the learned 3, the learned Commissioner of Income Tax (Exemptions) Mumbai Commissioner of Income Tax (Exemptions) Mumbai Commissioner of Income Tax (Exemptions) Mumbai erred erred erred in in in not not not appreciating appreciating appreciating the the the fact fact fact that that that the the the intention/desire of the appellant to delete clause no intention/desire of the appellant to delete clause no intention/desire of the appellant to delete clause no 3(6) by amending the Memorandum of Association for 3(6) by amending the Memorandum of Association for 3(6) by amending the Memorandum of Association for which time is required which time is required for uploading. 3. Briefly stated, facts of the case are that the assessee filed an efly stated, facts of the case are that the assessee filed an efly stated, facts of the case are that the assessee filed an application in Form No. 10AB u/s 12A(1)(ac)(iii) seeking registration application in Form No. 10AB u/s 12A(1)(ac)(iii) seeking registration application in Form No. 10AB u/s 12A(1)(ac)(iii) seeking registration u/s 12AB of the Act u/s 12AB of the Act. According to the ld. CIT(E), the assessee . According to the ld. CIT(E), the assessee having obtained provisional registration, was under obligation to having obtained provisional registration, was under obligatio having obtained provisional registration, was under obligatio apply for regularisation in Form 10AB latest by March, 2023. The apply for regularisation in Form 10AB latest by March, 2023. The apply for regularisation in Form 10AB latest by March, 2023. The assessee, however, filed the application only on 19.11.2024. Thus, assessee, however, filed the application only on 19.11.2024. assessee, however, filed the application only on 19.11.2024. there was a delay in filing the relevant application there was a delay in filing the relevant application.

3.1 The ld. CIT(E) rejected the application on two grounds The ld. CIT(E) rejected the application on two grounds The ld. CIT(E) rejected the application on two grounds—first, on the ground of delay which, according to him, was 19 months and on the ground of delay which, according to him, was 19 months and on the ground of delay which, according to him, was 19 months and not explained by sufficient cause; and second, on the ground that not explained by sufficient cause; and second, on the ground that not explained by sufficient cause; and second, on the ground that Lancer Foundation 3 clause 3(6) of the assessee’s Memorandum of Association was in clause 3(6) of the assessee’s Memorandum of Association was in clause 3(6) of the assessee’s Memorandum of Association was in violation of section 11 of the Act and no resolution or proof of violation of section 11 of the Act and no resolution or proof of violation of section 11 of the Act and no resolution or proof of amendment was furnished despite the assessee conceding its amendment was furnished despite the assessee conceding its amendment was furnished despite the assessee conceding its willingness to amend. willingness to amend. The relevant finding of ld CIT(E) is relevant finding of ld CIT(E) is reproduced as under: as under:

“4.1 The contention of the applicant is not accept 4.1 The contention of the applicant is not acceptable as there is able as there is delay of 19 months and the applicant trust had ample time to file delay of 19 months and the applicant trust had ample time to file delay of 19 months and the applicant trust had ample time to file the application within the permissible timelimit. The applicant trust the application within the permissible timelimit. The applicant trust the application within the permissible timelimit. The applicant trust are supposed to comply with the compliances of law. It is well are supposed to comply with the compliances of law. It is well are supposed to comply with the compliances of law. It is well settled in principle that ignorance of l settled in principle that ignorance of law cannot be pleaded as aw cannot be pleaded as defence or valid excuse. defence or valid excuse. It is appropriate to mention that the due date of filing application It is appropriate to mention that the due date of filing application It is appropriate to mention that the due date of filing application on or before 30.06.2024 as per the said circular was an extension on or before 30.06.2024 as per the said circular was an extension on or before 30.06.2024 as per the said circular was an extension provided by the board to all the Trust/Institution to file/re provided by the board to all the Trust/Institution to file/re provided by the board to all the Trust/Institution to file/re-file their applications under certain conditions. However, the applicant applications under certain conditions. However, the applicant applications under certain conditions. However, the applicant failed to avail the benefit of the same. As the applicant has not failed to avail the benefit of the same. As the applicant has not failed to avail the benefit of the same. As the applicant has not been able to show any reasonable cause for delay or to establish been able to show any reasonable cause for delay or to establish been able to show any reasonable cause for delay or to establish that the applicant trust had genuine hardship in filing of the that the applicant trust had genuine hardship in filing of the that the applicant trust had genuine hardship in filing of the application within the due date the request of the applicant for application within the due date the request of the applicant for application within the due date the request of the applicant for condonation is not tenable. condonation is not tenable. 4.2 Regarding the issue of violation of section 11 of the Income tax 4.2 Regarding the issue of violation of section 11 of the Income tax 4.2 Regarding the issue of violation of section 11 of the Income tax Act applicant has itself accepted that the said clause is in violation Act applicant has itself accepted that the said clause is in violation Act applicant has itself accepted that the said clause is in violation of provisions of secti of provisions of section 11 and also stated it will amend the on 11 and also stated it will amend the memorandum by deleting the said clause. However, the applicant memorandum by deleting the said clause. However, the applicant memorandum by deleting the said clause. However, the applicant has neither submitted/presented resolution passed by trust for the has neither submitted/presented resolution passed by trust for the has neither submitted/presented resolution passed by trust for the amendment of memorandum nor submitted any proof that it has amendment of memorandum nor submitted any proof that it has amendment of memorandum nor submitted any proof that it has applied for amendment in M applied for amendment in MOA before the MCA.

5. Since Registration/approval under section 12AB is to be 5. Since Registration/approval under section 12AB is to be 5. Since Registration/approval under section 12AB is to be granted in terms of the provisions of section 12AB (1)(b) of the Act granted in terms of the provisions of section 12AB (1)(b) of the Act 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 after being satisfied about the objects of the trust or institution, the after being satisfied about the objects of the trust or institution, the genuineness of activities, and the c genuineness of activities, and the compliance of any other law for ompliance of any other law for the time being in force as are material for the purposes of the time being in force as are material for the purposes of the time being in force as are material for the purposes of achieving its objects. In the view of above mentioned violations, the achieving its objects. In the view of above mentioned violations, the achieving its objects. In the view of above mentioned violations, the undersigned is left with no other option but to reject the application undersigned is left with no other option but to reject the application undersigned is left with no other option but to reject the application seeking registration und seeking registration under section 12AB of the Act.

6. Thus, the application for regularization of provisional approval 6. Thus, the application for regularization of provisional approval 6. Thus, the application for regularization of provisional approval in Form 10AB filed by the assessee is not allowable on the ground in Form 10AB filed by the assessee is not allowable on the ground in Form 10AB filed by the assessee is not allowable on the ground of late filing of application and violation of provisions of section 11 of late filing of application and violation of provisions of section 11 of late filing of application and violation of provisions of section 11

Lancer Foundation 4 of the Act. In conclus of the Act. In conclusion, this application for grant of approval ion, this application for grant of approval stands rejected. rejected.”

4.

The learned counsel for the assessee submitted before us that The learned counsel for the assessee submitted before us that The learned counsel for the assessee submitted before us that the delay was bona fide and occasioned by circumstances beyond the delay was bona fide and occasioned by circumstances beyond the delay was bona fide and occasioned by circumstances beyond the control of the assessee, and therefore deserved condonation. It the control of the assessee, and therefore deserved condonation. I the control of the assessee, and therefore deserved condonation. I was further submitted that the assessee is prepared to avail its was further submitted that the assessee is prepared to avail its was further submitted that the assessee is prepared to avail its remedy by filing a proper proper petition before the ld CIT(E) ld CIT(E) and prayed that the matter be remitted to the ld. CIT(E) to be decided afresh on that the matter be remitted to the ld. CIT(E) to be decided afresh on that the matter be remitted to the ld. CIT(E) to be decided afresh on merits once such condonation is granted. merits once such condonation is granted.

4.1 The learned Departmental Representative, on the other hand, arned Departmental Representative, on the other hand, arned Departmental Representative, on the other hand, submitted that the CBDT had specifically extended the time up to submitted that the CBDT had specifically extended the time up to submitted that the CBDT had specifically extended the time up to 30.06.2024, and since the assessee filed the application thereafter, 30.06.2024, and since the assessee filed the application thereafter, 30.06.2024, and since the assessee filed the application thereafter, the ld. CIT(E) was justified in rejecting the same. It was contended the ld. CIT(E) was justified in rejecting the same. It was contended the ld. CIT(E) was justified in rejecting the same. It was contended that unless condonation is granted, the application could not be that unless condonation is granted, the application could not be that unless condonation is granted, the application could not be entertained.

5.

We have considered rival submissions and carefully perused We have considered rival submissions and carefully perused We have considered rival submissions and carefully perused the material on record. The fact remains that the assessee has the material on record. The fact remains that the assessee has the material on record. The fact remains that the assessee has admittedly filed its application beyond the period of extension admittedly filed its application beyond the period of extension admittedly filed its application beyond the period of extension provided by the CBDT. provided by the CBDT. But the Hon’ble parliament has provided the he Hon’ble parliament has provided the authority for condonation for delay in filing application beyond time y for condonation for delay in filing application beyond time y for condonation for delay in filing application beyond time to the Principal Commissioner or Commissioner. The relevant to the Principal Commissioner or Commissioner. The relevant to the Principal Commissioner or Commissioner. The relevant proviso introduced into Act below section 12A(1)(ac)(B) below section 12A(1)(ac)(B) by way of Finance(No.2) Act, 2024 w.e.f. 1/10/2024 is reproduced as under: Finance(No.2) Act, 2024 w.e.f. 1/10/2024 is reproduced as under: Finance(No.2) Act, 2024 w.e.f. 1/10/2024 is reproduced as under:

Lancer Foundation 5 ITA No. 5028/MUM/2025

“ Provided that where the application is filed beyond the time Provided that where the application is filed beyond the time Provided that where the application is filed beyond the time allowed in sub-clause (i) to (vi), the Principal Commissioner or clause (i) to (vi), the Principal Commissioner or clause (i) to (vi), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable Commissioner may, if he considers that there is a reasonable Commissioner may, if he considers that there is a reasonable cause for delay in filing the application, condone such delay and cause for delay in filing the application, condone such delay and cause for delay in filing the application, condone such delay and such application shall be deemed to have been filed within time. ch application shall be deemed to have been filed within time. ch application shall be deemed to have been filed within time.”

5.1 Since the assessee has expressed its willingness to move such he assessee has expressed its willingness to move such he assessee has expressed its willingness to move such an application before the an application before the ld CIT(E) , in our considered view, the n our considered view, the ends of substantial justice would be met if the matter is restored to ends of substantial justice would be met if the matter is re ends of substantial justice would be met if the matter is re the file of the ld. CIT(E), with a direction the file of the ld. CIT(E), with a direction to examine the petition of to examine the petition of condonation of delay and if delay is condoned, then, the ld. CIT(E) condonation of delay and if delay is condoned, then condonation of delay and if delay is condoned, then shall adjudicate the application afresh on merits, including the shall adjudicate the application afresh on merits, including the shall adjudicate the application afresh on merits, including the issue of amendment of the Memorandum of issue of amendment of the Memorandum of Association, strictly in Association, strictly in accordance with law. accordance with law.

5.2 In view of the foregoing discussion, the impugned order of the In view of the foregoing discussion, the impugned order of the In view of the foregoing discussion, the impugned order of the ld. CIT(E) is set aside and the matter is remanded to his file for ld. CIT(E) is set aside and the matter is remanded to his file for ld. CIT(E) is set aside and the matter is remanded to his file for fresh adjudication in accordance with law. ication in accordance with law. The grounds of appeal of The grounds of appeal of the assessee are accordingly allowed for statistical purposes. essee are accordingly allowed for statistical purposes. essee are accordingly allowed for statistical purposes.

6.

In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.

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