AARNA FOUNDATION, RAIPUR,RAIPUR vs. ITO, EXEMPTION WARD-1, RAIPUR, RAIPUR

PDF · subscribers
ITA 282/RPR/2026Status: DisposedITAT Raipur08 May 20269 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(Exemption) failed to properly examine the assessee's explanation for the delay and did not exercise its discretionary power judiciously. The delay was condoned, and the matter was remanded for fresh adjudication on merits.

What were the facts?

The assessee, Aarna Foundation, applied for registration under Section 12A(1)(ac)(iii) of the Income Tax Act after the due date. The CIT(Exemption) rejected the application, stating the delay was not condoned as the reasons provided were not genuine.

What were the issues?

Whether the CIT(Exemption) erred in rejecting the application for registration due to delay without properly considering the assessee's reasons and exercising discretionary power.

Which sections of the Income-tax Act were involved?

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

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RAIPUR BENCH, RAIPUR

Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI AVDHESH KUMAR MISHRA

For Appellant: Shri Ravi Agrawal, CA
For Respondent: Shri Raghunath, CIT-DR
Hearing: 08.05.2026Pronounced: 08.05.2026

आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM: The present appeal preferred by the assessee emanates from the order of the Ld. CIT(Exemption), Bhopal dated 27.03.2026 as per the grounds of appeal on record.

2.

The facts in this case are that the assessee has filed an application for registration u/s.12A(1)(ac)(iii) of the Income Tax Act, 1961 (for short ‘the Act’) in Form 10AB. The assessee is incorporated as a society on 15.02.2017. In this case, the assessee has obtained provisional registration on 23.02.2022 for A.Y.2022-23 to A.Y.2024-25. With a view to verify the genuineness of the activities of the assessee and compliance to requirements of any other law for the time being in force by the Trust/Institution which are material for the purpose of achieving its objects, notices were issued through ITBA portal requesting the assessee to upload relevant information/documents. The assessee furnished reply in response to the above notices issued by the Ld. CIT(Exemption), Bhopal. It was observed by the Ld. CIT(Exemption) that the said application of the assessee was filed after due date and at Para 4, he simply writes that reasons that have been stated in the said application was not genuine. That since the assessee had failed to explain hardship in filing the instant

3 Aarna Foundation Vs. ITO (Exemption), Ward-1, Raipur (C.G.) ITA No.282/RPR/2026

application on time, the delay was not condoned and the application of the assessee for registration u/s.12AB was rejected.

3.

At the time of hearing, the Ld. Counsel for the assessee submitted that there was genuine hardship faced by the assessee trust since they were not able to get proper professional personnel for preparing necessary documents and application which resulted in delay. The Ld. Counsel further submitted that as per “proviso” to Section 12A(1) sub-clause (ac) expressly empowers the Pr. CIT or CIT to condone delay if satisfied that there exists reasonable cause. The language of the “proviso” is enabling and confers discretionary jurisdiction that has to be exercised judiciously. In the present case, the Ld.CIT(Exemption) merely noted the delay and rejected the application without examining whether reasonable cause was existing and without recording any findings on the explanation of the assessee. The Ld.CIT(Exemption) without observing whether the assessee which had filed application belatedly, was acting in a bonafide manner or not, simply rejected the application which is not in conformity with the power of a quasi-judicial authority. The Ld. Counsel for the assessee has placed reliance on the following decisions (i) Shri Swaminarayan Gadi Trust vs. CIT(E) [2024] 162 taxmann.com 772 (Surat Trib.) (ii) Advaya Charitable Foundation (now BTG Advaya Charitable Foundation) Rajbalhat Cultural Circle. v. CIT (2024) 207 ITD 633 (Kol) (Trib.) in

4 Aarna Foundation Vs. ITO (Exemption), Ward-1, Raipur (C.G.) ITA No.282/RPR/2026

support of his contention that liberal view in these matters required to be taken by the authorities concerned for condonation of delay.

4.

The registration and exemption provisions enshrined in the Act are an extension of the Directives Principles of State Policy as per Constitution of India and since the State does not have enough infrastructure and resources to comply with the guiding force of the Directive Principles enshrined in our Constitution, hence, charitable trusts being public charitable trusts plays a very important role in furtherance of the objectives of the State in creating an ideal society. The power for granting registration and exemption always remains with the Department, however, that has to be adjudicated on merits and should not be summarily dismissed on technical grounds. We find that legislature in its wisdom vide Finance Act, 2024 w.e.f 01.10.2024 made available in the statutes as the “Proviso” to Section 12A(1)(ac) of the Act which allows the Pr. CIT or CIT to condone the delay if reasonable cause is shown. The relevant provisions are extracted as follows: “12A. (1) The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:— (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Principal Commissioner or Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of

5 Aarna Foundation Vs. ITO (Exemption), Ward-1, Raipur (C.G.) ITA No.282/RPR/2026

the institution, whichever is later and such trust or institution is registered under section 12AA : Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,— (i) from the date of the creation of the trust or the establishment of the institution if the Principal Commissioner or Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the Principal Commissioner or Commissioner is not so satisfied: Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007; (aa) the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form and manner to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; (ab) the person in receipt of the income has made an application for registration of the trust or institution, in a case where a trust or an institution has been granted registration under section 12AA or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)], and, subsequently, it has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, in the prescribed form and manner, within a period of thirty days from the date of said adoption or modification, to the Principal Commissioner or Commissioner and such trust or institution is registered under section 12AA; (ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal

6 Aarna Foundation Vs. ITO (Exemption), Ward-1, Raipur (C.G.) ITA No.282/RPR/2026

Commissioner or Commissioner, for registration of the trust or institution,— (i) where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first day of April, 2021; (ii) where the trust or institution is registered under section 12AB [or approved under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10] and the period of the said registration [or approval, as the case may be,] is due to expire, at least six months prior to expiry of the said period; (iii) where the trust or institution has been provisionally registered under section 12AB [or provisionally approved under sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub- clause (via) of clause (23C) of section 10], at least six months prior to expiry of period of the provisional registration [or provisional approval, as the case may be,] or within six months of commencement of its activities, whichever is earlier; (iv) where registration of the trust or institution has become inoperative due to the first proviso to sub-section (7) of section 11, at least six months prior to the commencement of the assessment year from which the said registration is sought to be made operative; (v) where the trust or institution has adopted or undertaken modifications of the objects which do not conform to the conditions of registration, within a period of thirty days from the date of the said adoption or modification; [(vi) in any other case, where activities of the trust or institution have— (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought; (B) commenced and no income or part thereof of the said trust or institution has been excluded from the total income

7 Aarna Foundation Vs. ITO (Exemption), Ward-1, Raipur (C.G.) ITA No.282/RPR/2026

on account of applicability of sub-clause (iv) or sub-clause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, or section 11 or section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities,] and such trust or institution is registered under section 12AB: [Provided that where the application is filed beyond the time allowed in sub-clauses (i) to (vi), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable cause for delay in filing the application, condone such delay and such application shall be deemed to have been filed within time;]”

5.

The Courts have held that bonafide mis-understanding of the new registration regime and procedural requirement, the same also constitutes reasonable cause and deserves to be considered liberally particularly in the matters relating to the registration of charitable trust where no adverse finding regarding objectives or genuineness of the activities is recorded. Same view has also been upheld by the Co-ordinate Bench of the Tribunal, Chennai in the case of Vathsalyam Trust Vs. CIT (Exemption), A.Y.2025-26, ITA No. 3196/Chny/2025, dated 04.03.2026 and Advaya Charitable Foundation (now BTG Advaya Charitable Foundation) Rajbalhat Cultural Circle. v. CIT (2024) 207 ITD 633 (Kol) (Trib.)

6.

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 to it. Justice Krishna Iyer emphasised that procedural laws should be tools to

8 Aarna Foundation Vs. ITO (Exemption), Ward-1, Raipur (C.G.) ITA No.282/RPR/2026

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. Further, the Hon’ble Supreme Court in the plethora of cases has always emphasized while considering delay, one must first ascertain bonafide explanation offered by the party seeking condonation. In the present case, the Ld.CIT(Exemption) had not adjudicated upon the submissions of the assessee and had not dealt with whether reasonableness emanates from therein and had just summarily dismissed the application of the assessee.

7.

We, accordingly, set aside the order of the Ld. CIT(Exemption) and condone the said delay and remand the matter to him with a direction to deal with the application filed by the assessee in Form 10AB u/s. 12A(1)(ac)(iii) of the Act afresh on merits in accordance with law after providing reasonable opportunity of being heard to the assessee.

8.

That as per above terms, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 08th May, 2026.

Sd/- Sd/- AVDHESH KUMAR MISHRA PARTHA SARATHI CHAUDHURY (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) रायपुर/ RAIPUR ; �दनांक / Dated : 08th May, 2026.

9 Aarna Foundation Vs. ITO (Exemption), Ward-1, Raipur (C.G.) ITA No.282/RPR/2026

SB, Sr. PS आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to : 1. अपीलाथ� /The Appellant. 2. ��यथ� /The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, रायपुर ब�च, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड� फ़ाइल / Guard File. Samiran आदेशानुसार / BY ORDER, Bera, Sr. PS, // True Copy // ITAT, Raipur Senior Private Secretary आयकर अपील�य अ�धकरण, रायपुर / ITAT, Raipur. Digitally signed by Samiran Bera, Sr. PS, ITAT, Raipur Date: 2026.05.08 17:10:48 +05'30'

More judgments on Section 12A(1)(ac)(iii)

All 1,616 judgments and leading authorities on Section 12A(1)(ac)(iii) →

Recent GST High Court judgments

Search GST case law →