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Facts
The assessee, a trust, was granted provisional approval under Section 10(23C) and was required to file for regularization by September 2023. The due date was extended to June 30, 2024, by CBDT circular. However, the assessee filed the application on August 21, 2024, after the extended timeline.
Held
The Tribunal held that procedural delay should not defeat substantive rights in the absence of mala fide conduct or gross negligence. Following precedents, the Tribunal condoned the delay in filing the application.
Key Issues
Whether the delay in filing the application for regularization of provisional approval under Section 10(23C) of the Income Tax Act, 1961, can be condoned.
Sections Cited
10(23C), 12A, 12AB
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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
This appeal by the assessee is directed against order dated 24.02.2025 passed by the Ld. Commissioner of Income-tax (Exemptions), Mumbai [in short ‘the Ld. CIT(E)’] rejecting the application of the assessee for registration u/s 10(23C) of the Income-tax Act, 1961 (in short ‘the Act’).
Chetana 2 ITA No. 1812/MUM/2025
We have heard the rival submissions of the parties and perused We have heard the rival submissions of the parties and perused We have heard the rival submissions of the parties and perused the material available on record. The brief facts of the case are that the material available on record. The brief facts of the case are that the material available on record. The brief facts of the case are that the assessee, a trust, was granted provisional approval under the assessee, a trust, was granted provisional approval under the assessee, a trust, was granted provisional approval under Section 10(23C) of the Income Section 10(23C) of the Income-tax Act, 1961 (hereinafter ref tax Act, 1961 (hereinafter referred to as "the Act"), vide Form No. 10AC for a period covering Assessment as "the Act"), vide Form No. 10AC for a period covering Assessment as "the Act"), vide Form No. 10AC for a period covering Assessment Years 2022–23 to 2024 23 to 2024–25. In terms of clause (iii) of the first 25. In terms of clause (iii) of the first proviso to sub-section (5) of Section 10(23C) of the Act, the assessee section (5) of Section 10(23C) of the Act, the assessee section (5) of Section 10(23C) of the Act, the assessee was required to submit an application for reg was required to submit an application for regularisation of such ularisation of such provisional provisional provisional approval approval approval either either either within within within six six six months months months from from from the the the commencement of its activities or at least six months prior to the commencement of its activities or at least six months prior to the commencement of its activities or at least six months prior to the expiry of the provisional registration, whichever was earlier. expiry of the provisional registration, whichever was earlier. expiry of the provisional registration, whichever was earlier. According to the learned CIT(E)", the assessee was obligated to file According to the learned CIT(E)", the assessee was According to the learned CIT(E)", the assessee was the the the application application application for for for regularisation regularisation regularisation by by by September September September 2023. 2023. 2023. Subsequently, the Central Board of Direct Taxes (CBDT), by way of Subsequently, the Central Board of Direct Taxes (CBDT), by way of Subsequently, the Central Board of Direct Taxes (CBDT), by way of Circular No. 7/2024 dated 25.04.2024, extended the due date for Circular No. 7/2024 dated 25.04.2024, extended the due date for Circular No. 7/2024 dated 25.04.2024, extended the due date for filing such application to 30.06.2024, subject to certain conditions. filing such application to 30.06.2024, subject to cert filing such application to 30.06.2024, subject to cert However, the assessee filed the application for regularisation under However, the assessee filed the application for regularisation under However, the assessee filed the application for regularisation under Section 10(23C) on 21.08.2024 Section 10(23C) on 21.08.2024—i.e., after the extended timeline. i.e., after the extended timeline. While the CIT(E) noted that the assessee had not furnished While the CIT(E) noted that the assessee had not furnished While the CIT(E) noted that the assessee had not furnished adequate documentary proof regarding its activi adequate documentary proof regarding its activities, expenses, and ties, expenses, and objects, the application was ultimately rejected on the preliminary objects, the application was ultimately rejected on the preliminary objects, the application was ultimately rejected on the preliminary ground of being non ground of being non-maintainable due to delayed filing. maintainable due to delayed filing. The relevant observation of the Ld relevant observation of the Ld. CIT(E) is reproduced as under . CIT(E) is reproduced as under:
“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 in Form 10AB filed by the assessee is not allowable on the in Form 10AB filed by the assessee is not allowable on the Chetana 3 ground of late filing of application. For statistical purposes, this ground of late filing of application. For statistical purposes, this ground of late filing of application. For statistical purposes, this application is non application is non-maintainable and stands rejected.” ” 2.1 Before us, learned counsel for the assessee placed reliance on fore us, learned counsel for the assessee placed reliance on fore us, learned counsel for the assessee placed reliance on the order of the Coordinate Bench of the Tribunal in the case of the order of the Coordinate Bench of the Tribunal in the case of the order of the Coordinate Bench of the Tribunal in the case of in & 1863/Mum/2025, Amba Shanti Foundation Amba Shanti Foundation in ITA Nos. 1862 & 1863/Mum/2025, wherein under substantially similar circumstances, the delay in wherein under substantially similar circumstances, the delay in wherein under substantially similar circumstances, the delay in e application for regularisation was condoned by the filing the application for regularisation was condoned by the e application for regularisation was condoned by the Tribunal. The Tribunal in that case observed that the extended due Tribunal. The Tribunal in that case observed that the extended due Tribunal. The Tribunal in that case observed that the extended due date for filing Form 10AB, as per CBDT Circular No. 7/2024, was date for filing Form 10AB, as per CBDT Circular No. 7/2024, was date for filing Form 10AB, as per CBDT Circular No. 7/2024, was 30.06.2024, and though the assessee therein had filed the 30.06.2024, and though the assessee therein had filed the 30.06.2024, and though the assessee therein had filed the application on 24.07.2024 with a delay of 23 days, such delay was 24.07.2024 with a delay of 23 days, such delay was 24.07.2024 with a delay of 23 days, such delay was not fatal in nature. Placing reliance on the decision of the Hon’ble not fatal in nature. Placing reliance on the decision of the Hon’ble not fatal in nature. Placing reliance on the decision of the Hon’ble Delhi High Court in Delhi High Court in Director of Income-tax (Exemption) v. Vishwa tax (Exemption) v. Vishwa Jagriti Mission [(2013) 30 taxmann.com 41 (Delhi)], the Tribunal [(2013) 30 taxmann.com 41 (Delhi)], the Tribunal [(2013) 30 taxmann.com 41 (Delhi)], the Tribunal rated the settled principles governing condonation of delay— reiterated the settled principles governing condonation of delay rated the settled principles governing condonation of delay namely, that justice should not be defeated on account of a mere namely, that justice should not be defeated on account of a mere namely, that justice should not be defeated on account of a mere technical or procedural lapse, particularly where no mala fides or technical or procedural lapse, particularly where no mala fides or technical or procedural lapse, particularly where no mala fides or deliberate default is established. The Coordinate Bench in Amba deliberate default is established. The Coordinate Bench in deliberate default is established. The Coordinate Bench in Shanti Foundation (supra) further observed that the CBDT’s circular (supra) further observed that the CBDT’s circular (supra) further observed that the CBDT’s circular extending the due date reflects a legislative intent to offer a fair extending the due date reflects a legislative intent to offer a fair extending the due date reflects a legislative intent to offer a fair opportunity to applicants and is indicative of a liberal and opportunity to applicants and is indicative of a liberal and opportunity to applicants and is indicative of a liberal and Tribunal (supra) is facilitative approach.The relevant finding of the facilitative approach.The relevant finding of the Tribunal observed as under:
6. We have heard the rival submissions and perused the materials 6. We have heard the rival submissions and perused the materials 6. We have heard the rival submissions and perused the materials available on record. The only moot issue that requires adjudication is available on record. The only moot issue that requires adjudication is available on record. The only moot issue that requires adjudication is whether the assessee is entitled to registration u/s. 12A after the whether the assessee is entitled to registration u/s. 12A after the whether the assessee is entitled to registration u/s. 12A after the Chetana 4 specified due date a specified due date and also the extended due date, for filing an nd also the extended due date, for filing an application in form 10AB. It is observed that the extended due date application in form 10AB. It is observed that the extended due date application in form 10AB. It is observed that the extended due date for filing form 10AB as per CBDT circular no. 07/2024 dated for filing form 10AB as per CBDT circular no. 07/2024 dated for filing form 10AB as per CBDT circular no. 07/2024 dated 25.04.2024 was 30.06.2024, where the assessee contends that it 25.04.2024 was 30.06.2024, where the assessee contends that it 25.04.2024 was 30.06.2024, where the assessee contends that it had filed form 10AB had filed form 10AB on 24.07.2024 with a delay of 23 days in filing on 24.07.2024 with a delay of 23 days in filing the application for regularization of registration u/s. 12AB. It is the application for regularization of registration u/s. 12AB. It is the application for regularization of registration u/s. 12AB. It is observed that there is a catena of decision of the Tribunal as well as observed that there is a catena of decision of the Tribunal as well as observed that there is a catena of decision of the Tribunal as well as the Hon’ble High Courts where a liberal view has been taken in case the Hon’ble High Courts where a liberal view has been taken in case the Hon’ble High Courts where a liberal view has been taken in case of condoning the delay in filing application for registration in form f condoning the delay in filing application for registration in form f condoning the delay in filing application for registration in form 10AB. We would place our reliance on the decision of the Hon’ble 10AB. We would place our reliance on the decision of the Hon’ble 10AB. We would place our reliance on the decision of the Hon’ble Delhi High Court in the case of Director of Income Delhi High Court in the case of Director of Income-tax (Exemption) vs. tax (Exemption) vs. Vishwa Jagriti Vishwa Jagriti Mission [2013] 30 taxmann.com 41 (De Mission [2013] 30 taxmann.com 41 (Delhi)/[2013] 213 Taxman 65 (Delhi)/[2014] Taxman 65 (Delhi)/[2014] 268 CTR 444 (Delhi)[21-12 12-2012], where after considering various decisions had laid after considering various decisions had laid down the principles that down the principles that are to be taken into consideration for condoning such delay. are to be taken into consideration for condoning such delay. are to be taken into consideration for condoning such delay. We hereby extract the relevant portion of the hereby extract the relevant portion of the said order for ease of said order for ease of reference: “22. The following general principles were laid down and it is these “22. The following general principles were laid down and it is these “22. The following general principles were laid down and it is these principles which guide principles which guide the Court in approaching the question of the Court in approaching the question of condonation of delay: condonation of delay: - And such a liberal approach is adopted on principle as it is "And such a liberal approach is adopted on principle as it is "And such a liberal approach is adopted on principle as it is realized that:
1. 1. Ordinarily, a litigant does not stand to benefit by lodging an 1. Ordinarily, a litigant does not stand to benefit by lodging an 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. appeal late.
2. Refusing to condone delay can result in a meritorious matter 2. Refusing to condone delay can result in a meritorious matter 2. Refusing to condone delay can result in a meritorious matter being thrown out at being thrown out at the very threshold and cause of justice the very threshold and cause of justice being defeated. As against this, when being defeated. As against this, when delay is condoned, the is condoned, the highest that can happen is that a cause would be decided on highest that can happen is that a cause would be decided on highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a 3. "Every day's delay must be explained" does not mean that a 3. "Every day's delay must be explained" does not mean that a pedantic approach pedantic approach should be made. Why not every hour's should be made. Why not every hour's delay, every second's delay, every second's delay? The doctrine must be applied in a must be applied in a rational, common sense and pragmatic manner. rational, common sense and pragmatic manner. rational, common sense and pragmatic manner.
4. When substantial justice and technical considerations are 4. When substantial justice and technical considerations are 4. When substantial justice and technical considerations are pitted against each other, pitted against each other, the cause of substantial justice the cause of substantial justice deserves to be preferred, for the other side cannot claim to deserves to be preferred, for the other side cann deserves to be preferred, for the other side cann have vested right in injustice being done because of a non- have vested right in injustice being done because of a non have vested right in injustice being done because of a non deliberate delay. deliberate delay.
5. There is no presumption that delay is occasioned 5. There is no presumption that delay is occasioned 5. There is no presumption that delay is occasioned deliberately, or on account of deliberately, or on account of culpable negligence, or on culpable negligence, or on Chetana 5 account of mala fides. A litigant does not stand to benefit by account of mala fides. A litigant does not stand to benef account of mala fides. A litigant does not stand to benef resorting to delay. In fact, he runs a serious risk. resorting to delay. In fact, he runs a serious risk. resorting to delay. In fact, he runs a serious risk.
It must be grasped that the judiciary is respected not on 6. It must be grasped that the judiciary is respected not on 6. It must be grasped that the judiciary is respected not on account of its power to account of its power to legalize injustice on technical grounds legalize injustice on technical grounds but because it is capable of removing but because it is capable of removing injustice and is expected injustice and is expected to do so to do so."
From the above, it can be inferred that the Hon’ble High Court has 7. From the above, it can be inferred that the Hon’ble High Court has 7. From the above, it can be inferred that the Hon’ble High Court has held that a liberal held that a liberal view has to be taken in case of condoning the view has to be taken in case of condoning the delay which according to the said decision delay which according to the said decision is a mere technicality is a mere technicality which if found genuine has to be decided in favour which if found genuine has to be decided in favour of the assessee. of the assessee. Even otherwise, the extended due date by the board vide circular no. Even otherwise, the extended due date by the board vide circular no. Even otherwise, the extended due date by the board vide circular no. 07/2024 is also 07/2024 is also evident that the intention was to provide one more evident that the intention was to provide one more opportunity to the applicant trust for opportunity to the applicant trust for filing the application till iling the application till 30.06.2024, which rather has not ad 30.06.2024, which rather has not adhered strictly to the hered strictly to the stipulated time limit prescribed by the Act. time limit prescribed by the Act.
From the above observation, we deem it fit to extend the assessee 8. From the above observation, we deem it fit to extend the assessee 8. From the above observation, we deem it fit to extend the assessee with one more with one more opportunity to file the application in form 10AB for opportunity to file the application in form 10AB for regularisation of provisional regularisation of provisional approval granted to the assessee, before assessee, before the ld. CIT(E). The ld. CIT(E) is directed to the ld. CIT(E). The ld. CIT(E) is directed to treat the application as treat the application as being filed on time without any delay and to decide the being filed on time without any delay and to decide the being filed on time without any delay and to decide the assessee’s application on the merits and in accordance with law. application on the merits and in accordance with law.” ” 2.2 In the present case, the factual matrix is pari materia to that In the present case, the factual matrix is pari materia to that In the present case, the factual matrix is pari materia to that considered in Amba Shanti Foundation Amba Shanti Foundation (supra). Respectfully (supra). Respectfully following the ratio laid down therein, and applying the principle that following the ratio laid down therein, and applying the principle that following the ratio laid down therein, and applying the principle that procedural delay should not defeat substantive rights in the procedural delay should not defeat substantive rights in the procedural delay should not defeat substantive rights in the absence of mala fide conduct or gross negligence, we are inclined to bsence of mala fide conduct or gross negligence, we are inclined to bsence of mala fide conduct or gross negligence, we are inclined to take a liberal view in the matter. Accordingly, we deem it just and take a liberal view in the matter. Accordingly, we deem it just and take a liberal view in the matter. Accordingly, we deem it just and appropriate to condone the delay in the filing of the application for appropriate to condone the delay in the filing of the application for appropriate to condone the delay in the filing of the application for regularisation of provisional approval under Secti regularisation of provisional approval under Section 10(23C) of the on 10(23C) of the Act. The impugned order passed by the learned CIT(E) is, therefore, Act. The impugned order passed by the learned CIT(E) is, therefore, Act. The impugned order passed by the learned CIT(E) is, therefore, set aside. The matter is restored to the file of the learned CIT(E) set aside. The matter is restored to the file of the learned CIT(E) set aside. The matter is restored to the file of the learned CIT(E) with a direction to treat the assessee’s application as having been with a direction to treat the assessee’s application as having been with a direction to treat the assessee’s application as having been Chetana 6 filed within the prescribed time a filed within the prescribed time and to consider the same afresh on nd to consider the same afresh on merits and in accordance with law. merits and in accordance with law.
In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 10 nced in the open Court on 10/07 /07/2025.