MOULANA AZAD EDUCATIONAL TRUST,VELLORE vs. CIT, EXMEPTIONS,, CHENNAI

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ITA 1461/CHNY/2026Status: DisposedITAT Chennai03 July 20267 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal condoned the delay, noting that a bona fide misunderstanding of new procedural timelines can be a reasonable cause. The matter was restored to the CIT(E) to consider the condonation petition.

What were the facts?

The assessee, a charitable trust established in 2008, was granted provisional registration under section 12AB. They filed for regular registration late, which the CIT(E) rejected solely on grounds of limitation without examining the trust's genuineness.

What were the issues?

Whether the CIT(E) erred in rejecting the application for regular registration solely on the ground of delay without considering the reasons provided by the assessee and the trust's genuineness.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI GAGAN GOYAL

Hearing: 01.07.2026Pronounced: 03.07.2026

आदेश/ O R D E R PER GEORGE GEORGE K, VICE PRESIDENT: This appeal filed by the assessee arises out of the order of the Commissioner of Income Tax (Exemption), Chennai dated 24.12.2025 rejecting the assessee’s application seeking registration u/s.12AB of the Income Tax Act, 1961 (hereinafter called ‘the Act’).

ITA No.1461/CHNY/2026 - 2 - Moulana Azad Educational Trust 2. There is a delay of 16 days in filing this appeal. The Managing Trustee of the assessee-trust has filed an affidavit along with a petition seeking condonation of the delay, explaining the reasons for the belated filing of the appeal. It has been stated that the assessee is a small community-based educational trust situated in Ambur and that the delay occurred due to a bona fide misunderstanding of the procedural timelines under the newly introduced registration regime under section 12AB of the Act. It was further explained that the delay was compounded by administrative difficulties in coordinating with trustees located at different places for obtaining physical signatures on the appeal papers, coupled with the challenges arising from the transition to the new digital compliance framework. On perusal of the reasons stated, we are of the view that no latches can be attributed to the assessee as there is sufficient cause for belated filing of this appeal. Hence, we condone the delay and proceed to dispose off the appeal on merits.

3.

The grounds raised by the assessee reads as under:- The Appellant trust, being aggrieved by the Order of the Ld. CIT (Exemption), Chennai, dated 24/12/2025, submits the following grounds, which are independent and without prejudice to one another:

1.

The order of the Ld. CIT(E) is bad in law, arbitrary, and violates the principles of natural justice as it rejects a bona fide application for

ITA No.1461/CHNY/2026 - 3 - Moulana Azad Educational Trust regular registration solely on a technical ground of limitation without examining the objects and genuineness of the trust's activities.

2.

The Ld. CIT(E) erred in law by applying the "commencement of activities" timeline under Section 12A(1)(ac) (iii) to the Appellant, failing to appreciate that the Trust was established in 2008 and its activities had commenced decades before the provisional registration was granted.

3.

The Ld. CIT(E) failed to appreciate the ratio of the Hon'ble ITAT Hyderabad in Sree Ramakrishna High School Committee vs. CIT(E), which holds that for pre-existing trusts, the only relevant deadline is based on the expiry of the provisional registration, and not the commencement of activities.

4.

The Ld. CIT(E) erred in concluding that the application was non- maintainable due to a delay beyond the CBDT Circular 7/2024 deadline, ignoring that the Circular is a beneficial tool to mitigate hardship and does not curtail the Commissioner's inherent power to condone delays for reasonable cause.

5.

The Ld. CIT(E) failed to act as a quasi-judicial authority by not addressing the substantive evidence of charitable application provided in the Appellant's three years of audited accounts and activity notes, which remain un-contradicted on record.

6.

The Ld. CIT(E) failed to follow the jurisdictional trend of the Chennal Bench, which mandates that procedural lapses in Form 10AB should not lead to the denial of substantive tax benefits where the trust is otherwise genuine and operational.

7.

The Appellant craves leave to add, alter, or amend these grounds during the course of the hearing.

4.

Brief facts of the case are as follows: The assessee is a charitable trust established in the year 2008. It is stated that assessee trust is running a nursery and primary school catering to the educational needs of the under privileged community in the

ITA No.1461/CHNY/2026 - 4 - Moulana Azad Educational Trust locality. The assessee’s trust was granted provisional registration u/s.12AB of the Act on 08.02.2022 for a period of assessment year 2022-23 to 2024-25. The assessee filed Form 10AB for regular / permanent registration on 07.04.2025. The CIT(A) issued show- cause notices stating that assessee’s application is time barred. It was stated that it is an existing trust and the delay resulted on account of complex transition to the new digital regime. However, the CIT(E) rejected the application vide impugned order dated 24.12.2025 solely on the basis of limitation. The relevant finding of the CIT(E) reads as follows:- 4.2.2. As per the above provisions, the applicant trust ought to have filed the application at least on or before 30.09.2023 or on or before the extended time i.e. 30.06.2024. However, the applicant has filed application in form 10AB only on 07.04.2025. Therefore, a show cause notice was issued to the applicant in this regard. In response, the applicant has requested that its application be treated under clause (iv)-B of the first proviso to section 12A, which is not permissible under the provisions. Further, the applicant has not submitted any reasons for the delay.

4.2.3. The onus is on the Trust to prove the genuine hardship faced by it. However, the applicant has failed to establish that the default was caused due to reasonable cause and reasons beyond the control of it. Therefore, the application of the applicant cannot be considered.

4.3.3 In the absence of the above details, the application of the applicant trust cannot be processed.

5.

Aggrieved by the order of CIT(E) rejecting the assessee’s application for registration u/s.12AB of the Act, assessee has filed the present appeal before the Tribunal. Before us, none appeared

ITA No.1461/CHNY/2026 - 5 - Moulana Azad Educational Trust on behalf of the assessee. However, it is stated in the statement of facts and in grounds of appeal, that the CIT(E) had rejected the application filed by the assessee merely on the basis of limitation without considering the explanation offered by the assessee trust that the delay had resulted from the complex transition to the new digital regime.

6.

The Ld.DR on the other hand strongly relied on the finding/conclusion of the CIT(E).

7.

We have heard the Ld. DR and perused the material available on record. It is an undisputed fact that the assessee- trust was established in the year 2008 and was granted provisional registration under section 12AB of the Act on 08.02.2022, valid from assessment years 2022-23 to 2024-25. Thereafter, the assessee filed an application u/s.12A(1)(ac)(iii) of the Act on 07.04.2025 seeking regular registration. The CIT(E) rejected the application primarily on the ground that the assessee had neither filed a petition seeking condonation of delay nor explained the reasons for the belated filing of Form 10AB. Before us, the assessee in statement of facts has explained that the delay occurred due to the complexities involved in the transition to the

ITA No.1461/CHNY/2026 - 6 - Moulana Azad Educational Trust new digital registration regime u/s.12AB and the bona fide misunderstanding of the revised procedural requirements. We find that the Chennai Bench of the Tribunal, in the case of Vathsalyam Trust v. CIT(E) in ITA No.3196/CHNY/2026 (order dated 04.03.2026), has held that the proviso to section 12A(1)(ac) expressly empowers the PCIT/CIT to condone delay upon being satisfied that sufficient and reasonable cause exists. The Tribunal further observed that a bona fide misunderstanding of the newly introduced registration regime and procedural requirements constitutes a reasonable cause warranting a liberal approach, particularly where there is no adverse finding regarding the charitable objects or the genuineness of the trust's activities.

8.

In the present case, since the CIT(E) has specifically recorded that no explanation for the delay was furnished, we are of the considered view that the ends of justice would be met by restoring the matter to the file of the CIT(E). Accordingly, we set aside the impugned order and remit the matter to the CIT(E) with a direction to permit the assessee to file an appropriate petition seeking condonation of delay along with supporting reasons and evidence. The CIT(E) shall consider the condonation petition in accordance with law, keeping in view the principles laid down by

ITA No.1461/CHNY/2026 - 7 - Moulana Azad Educational Trust the Coordinate Bench the case of Vathsalyam Trust (supra) after affording the assessee a reasonable opportunity of being heard. It is ordered accordingly.

9.

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

Order pronounced in the open court on 3rd July,2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (गगन गोयल) (GAGAN GOYAL) (GEORGE GEORGE K) लेखा सद�य/ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�नई/Chennai, �दनांक/Dated, the 3rd July, 2026 RSR, Sr.PS आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु�त /CIT, Chennai 4. �वभागीय ��त�न�ध/DR 5. गाड� फाईल/GF. By Order Digitally signed by REKHA REKHA SENTHIL RAJ SENTHIL RAJ Date: 2026.07.07 11:33:16 +05'30'

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