AREION FOUNDATION ,MUMBAI vs. DCIT EXEMPTION -1, MUMBAI

PDF · subscribers
ITA 1445/MUM/2026Status: DisposedITAT Mumbai30 April 20267 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the assessee had rectified the issue regarding the application of funds outside India by amending its Memorandum of Association. It also noted a recent amendment empowering authorities to condone delays in filing. Therefore, the matter was remitted back to the CIT(E) for de-novo consideration of both the Section 12AB regularization and the Section 80G approval.

What were the facts?

The assessee, Areion Foundation, applied for registration under Section 12AB and approval under Section 80G. The CIT(E) rejected the application for regularization of provisional registration under Section 12AB due to a delay in filing and an object clause allowing application of funds outside India. The Section 80G approval was also rejected as a consequence of the Section 12AB rejection.

What were the issues?

Whether the delay in filing the regularization application for Section 12AB registration can be condoned, and whether the object clause regarding application of funds outside India disqualifies the assessee for registration and approval.

Which sections of the Income-tax Act were involved?

Section 80G,Section 12AA,Section 12AB,Section 11,Section 12A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI PAWAN SINGH & SHRI GIRISH AGRAWAL

For Appellant: Shri Sunjoy Chatterjee, CA
For Respondent: Shri Surendra Mohan, Sr. DR
Hearing: 27.04.2026Pronounced: 30.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA Nos. 1445 and 1446/MUM/2026 Assessment Years: N.A Areion Foundation DCIT, EXEMPTION - 1, D/511, Kanakia Zillion Mumbai Junction Of LBS Road and CST Road, vs BKC Annexe, Kurla(W), Mumbai - 400070 PAN: AAUCA2439A Appellant Respondent Present for: Appellant by : Shri Sunjoy Chatterjee, CA Respondent by : Shri Surendra Mohan, Sr. DR. Date of Hearing : 27.04.2026 Date of Pronouncement : 30.04.2026 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: These two appeals filed by the assessee are against the orders of CIT(E), Mumbai vide appeal Nos. ITBA/EXM/F/EXM43/2025- 26/1084080269(1) and ITBA/EXM/F/EXM43/2025-26/1084080242(1), both dated 25.12.2025, u/s 80G and 12AA of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. Grounds taken by the assessee are reproduced as under: ITA No. 1445/MUM/2026 GROUND NO. 1 On the facts and in the circumstances of the cases, the learned Commissioner of Income Tax (Exemption), Mumbai erred in refusing to grant registration u/s 80G of the Income Tax Act, 1961 to the Appellant on the basis of irrelevant considerations that there had not been any compliance to statutory provision by filing forms in time and also that the object clause in the Memorandum of Association contained a clause in relation to the application of funds of the Appellant purportedly in violation of section 11 of the Income Tax when no such application of fund outside India had ever taken place since the inception of the company. GROUND NO. 2 On the facs and in the circumstances of the cases, the learned Commissioner of Income Tax (Exemption), Mumbai was not justified in cancelling the request for registration u/s 80G of the Income Tax Act, 1961 when on the basis of self-same documents the provisional registration was granted but the final registration was denied alleging some infirmity without giving any opportunity to remove that defect which tantamount to violation of the principles of natural justice rending the action bad in law. GROUND NO.3 The order rejecting application for registration u/s 80G of the Act is otherwise illegal, perverse bad in law and has been passed in violation of the principles of natural justice. ITA No. 1446/MUM/2026 GROUND NO. 1 On the facts and in the circumstances of the cases, the learned Commissioner of Income Tax (Exemption), Mumbai erred in refusing to grant registration u/s 12AB of the Income Tax Act, 1961 to the Appellant on the basis of irrelevant considerations that there had not been any compliance to statutory provision by filing forms in time and also that the object clause in the Memorandum of Association contained a clause in relation to the application of funds of the Appellant purportedly in violation of section 11 of the Income Tax when no such application of fund outside India had ever taken place since the inception of the company. GROUND NO.2 On the facts and in the circumstances of the cases, the learned Commissioner of Income Tax (Exemption), Mumbai was not justified in cancelling the request for registration u/s 12AB of the Income Tax Act, 1961 when on the basis of self-same documents the provisional registration was granted but the final registration was denied alleging some infirmity without giving any opportunity to remove that defect which tantamount to violation of the principles of natural justice rending the action bad in law. GROUND NO. 3 The order rejecting application for registration u/s 12AB of the Act is otherwise illegal, perverse bad in law and has been passed in violation of the principles of natural justice.

3.

Brief facts as culled out from records are that assessee is a non-profit making company formed and registered on 20.10.2020 u/s. 8 of the 2 Companies Act, 2013 for carrying out various charitable activities. Assessee obtained provisional registration u/s. 12AB of the Act vide order dated 27.05.2021 in Form 10AC, having validity from Assessment Year 2021-22 to 2023-24. Assessee filed application in Form 10AB on 22.09.2025 u/s. 12A(1)(ac)(iii) seeking regularization of the said provisional registration granted u/s. 12AB. Ld. CIT(E) noted that since assessee has been carrying out its activities subsequent to obtaining provisional registration, it was incumbent upon it to apply for regularization of the provisional registration on or before the end of November, 2021, being six months from the commencement of its activities, i.e., the date of granting of provisional registration on 27.05.2021. According to him, since the regularization application has been filed after a delay of 45 months, such an application is invalid and not maintainable. He thus, held that Form 10AB filed by the assessee is in violation of the provisions of time limitation and thus, rejected it. He also noted that objects in its Memorandum of Association mentions about its intention to apply funds outside India for charitable cause which is in violation of section 11 of the Act. In this respect, a show cause notice was issued dated 13.12.2025 which was duly complied with by the assessee. Ld. CIT(E), after considering the submissions made by the assessee, denied the regularization of the provisional registration on this ground also, by observing violation of section 11. However, he granted liberty to the assessee to pursue remedies available in the statute without any prejudice.

4.

Contention of the assessee is that delay noted by the ld. CIT(E) is incorrect, since renewal should have been considered due from 01.11.2024 onwards and not 01.11.2021, since the provisional 3 registration itself was granted from Assessment Year 2021-22 to Assessment Year 2023-24. Observations of ld. CIT(E) are based on erroneous appreciation of facts. According to the assessee, provisions for exemption are meant for benevolent purpose and therefore, a liberal approach is called for in respect of such procedures. Ld. Counsel for the assessee without prejudice also explained the reasons for delay for which it was submitted that a search and seizure was conducted by the Income- tax authorities on the business entity ACAIPL Investment and Financial Services Pvt. Ltd. and other companies of Areion Group. Directors of the assessee were also covered under the said search and seizure operations, for which assessments were completed in July 2023 and first appellate proceedings got completed by March, 2026. Also, during the period of 2021, it was a situation of Covid 2019 pandemic. It was thus, explained that these reasons led to alleged delay in filing Form 10AB.

4.1. In respect of object including application of income outside India, it is contended that merely having an object of this kind does not amount to specified violation under Explanation to section 12AB(4). It was submitted that assessee has not applied any fund for charitable activities outside India. Mere mention of such criteria does not act as a disqualification towards the claim of exemption u/s.12AB. It was further, highlighted that in spite of these submission, assessee has carried out amendment in its object clause on 03.01.2026 by removing the criteria of outside India application of funds. Corrected copy of Memorandum of Association (MoA) is placed on record.

5.

We have heard both the parties and perused the material available on record. Before us, ld. Counsel for the assessee admitted that there is a 4 delay in filing Form-10AB. For the purpose of explaining this delay, reference was made to circular No.7 of 2024 issued by Central Board of Direct Taxes (CBDT), which extended the time period to 30.06.2024. Attention was drawn to the newly inserted proviso to sub-clause (ac) to sub-section (1) of section 12A, inserted by Finance (2) Act, 2024 w.e.f. 01.10.2024, wherein ld. PCIT/CIT(A) have been empowered to condone the delay, if they find that there was reasonable cause, in not filing the application within the prescribed time limit.

5.1. In respect of the second ground which formed the basis of rejection, ld. Counsel for the assessee appraised the Bench about the compliance made by the assessee of amending its MoA to drop the clause relating to application of funds outside India for which copy of the amended MoA is placed on record. Ld. Counsel thus, submitted that the second ground considered by ld. CIT(E) for rejection has been made good by undertaking necessary compliances and therefore, submitted that the matter may be remitted back to the file of ld. CIT(E) for denovo meritorious consideration.

6.

In the given set of facts and the submissions made before us, along with documentary evidences on record, we find that assessee has mitigated the second ground which formed the basis for rejection relating to violation of provisions to section 11 wherein MoA had the clause for application of funds outside India, by making necessary amendments to the same. Since these documents have been furnished before us for the first time which needs to be verified and considered by the ld. CIT(E), the same are remitted back to the office of ld. CIT(E).

6.1. In respect of the first ground relating to late filing of Form -10AB, we take note of the amendment brought in by the Finance (2) Act, 2024 by way of insertion of the proviso to section 12A(1)(ac) which empowers ld. PCIT/CIT(A) to condone the delay, more particularly when the assessee has explained its case for the delay caused in filing the regularization of the application. Considering this proviso brought on statute, we find it appropriate to set aside the order of ld. CIT(E) and remit the matter back to the file of ld. CIT(E), to consider the application for condonation of delay by the assessee, denovo.

6.2. Needless to say, assessee be given reasonable opportunity of being heard and be allowed to make any further submission, if so required. Assessee is also directed to be diligent in attending the hearing as and when fixed and make all the required submission without seeking adjournments unless warranted by compelling reasons. Accordingly, grounds raised by the assessee in this regard are allowed for statistical purposes.

7.

In the result, appeal of the assessee in ITA No.1446/Mum/2026 is allowed for statistical purposes.

8.

Appeal filed by the assessee in ITA No. 1445/Mum/2026 is in respect of granting of approval for registration u/s. 80G. In this regard, order of ld. CIT(E) mentions that since the application filed for registration u/s. 12AB has been rejected and that section 80G(5)(i) stipulates the condition that provision of the said section is available only to those institutions or funds for which section 11 or 12 or clause (23AA) or clause (23C) of section 10 of the Act applies. Thus, on account of rejection of application for 6 registration u/s. 12AB, the application for approval u/s. 80G was held to be untenable by ld. CIT(E) and was therefore, rejected.

8.1. Since we have remitted the matter back to the file of the ld. CIT(E) for de-novo meritorious adjudication in respect of registration u/s. 12AB, it has consequential bearing on the appeal relating to registration u/s. 80G. Thus, this matter is also remitted back to the file of ld. CIT(E) in terms of our observations and finding in the above paragraphs while dealing with the registration u/s. 12AB. Accordingly, grounds raised by the assessee in this appeal are allowed for statistical purposes.

9.

In the result, both the appeals of the assessee are allowed for statistical purposes.

Order pronounced in the open court on 30 April, 2026.

Sd/- Sd/- [Pawan Singh] [Girish Agrawal] Judicial Member Accountant Member

Dated: 30 April, 2026 MP, Sr. PS Copy to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai

More judgments on Section 80G

All 6,482 judgments and leading authorities on Section 80G →

Recent GST High Court judgments

Search GST case law →