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Facts
The assessee's appeals were filed with a delay of 280 days due to the resignation of the Chartered Accountant, the trustee's unfamiliarity with e-proceedings, and preoccupation with other litigations. The CIT(E) rejected the assessee's application for registration under Section 12AB and 80G for non-compliance with statutory notices.
Held
The Tribunal condoned the delay in filing the appeals, acknowledging the genuine reasons provided by the assessee and the importance of substantial justice. The orders of the CIT(E) were set aside, and the matter was remanded for a fresh opportunity to the assessee.
Key Issues
Whether the delay in filing the appeals is justifiable and whether the rejection of registration application by CIT(E) due to non-compliance with e-proceedings was appropriate.
Sections Cited
12AA, 80G, 5, 12AB, 17A(2)
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Income Tax Appellate Tribunal, MUMBAI BENCH “C” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
These two appeals by the assessee are directed against two separate orders, both dated 22.05.2024, passed by the Ld. Commissioner of Income-tax (Exemptions), Mumbai [in short ‘the Ld. CIT(E)’] rejecting application of the assessee u/s 12AA and 80G of the Income-tax Act, 1961 (in short ‘the Act’).
Shrijal Welfare Foundation Shrijal Welfare Foundation 2 & 2825/MUM/2025 ITA Nos. 2824
At the very threshold, the learned counsel for the appellant At the very threshold, the learned counsel for the appellant At the very threshold, the learned counsel for the appellant submitted that the present appeals have been instituted with a submitted that the present appeals have been instituted with a submitted that the present appeals have been instituted with a delay of 280 days. An application for condonation of delay has been delay of 280 days. An application for condonation of delay has been delay of 280 days. An application for condonation of delay has been filed, accompanied by an explanation for the said delay. It was filed, accompanied by an explanation for the said delay. It was filed, accompanied by an explanation for the said delay. It was submitted that the delay occurred for multiple bona fide reasons: submitted that the delay occurred for multiple bona fide reasons: submitted that the delay occurred for multiple bona fide reasons: firstly, the resignation of the Chartered Accountant who was firstly, the resignation of the Chartered Accountant who was firstly, the resignation of the Chartered Accountant who was handling the trust’s taxation matters, for whom no immediate handling the trust’s taxation matters, for whom no immediate handling the trust’s taxation matters, for whom no immediate replacement could be secured; secondly, the authorised signatory of replacement could be secured; secondly, the authorised signatory of replacement could be secured; secondly, the authorised signatory of the trust, Ms. Anjali Shroff, was unaware of the registration the trust, Ms. Anjali Shroff, was unaware of the registration the trust, Ms. Anjali Shroff, was unaware of the registration procedures and, consequently, the statutory notices issued by the procedures and, consequently, the statutory notices issued by the procedures and, consequently, the statutory notices issued by the Commissioner of Income Tax (Exemptions) [CIT(E)] remained Commissioner of Income Tax (Exemptions) [CIT(E)] remained Commissioner of Income Tax (Exemptions) [CIT(E)] remained unaddressed; and thirdly, she was preoccupied with multiple unaddressed; and thirdly, she was preoccupied with multiple unaddressed; and thirdly, she was preoccupied with multiple litigations pending before other judicial for s pending before other judicial forum, the list of which has , the list of which has been filed as under: 1. 25.06.2021 Court rejected affidavit 2. 06.09.2021 Filed Application for stay and interim relief in Khed Court Filed Application for stay and interim relief in Khed Court 3. 01.12.2021 Stay was granted 4. 27.08.2024 Khed Judge Vacated stay 5. 11.09.2024 Government should be a party to the Suit in appeal in Government should be a party to the Suit in appeal in High Court 6. 25.03.2025 High Court judgment, in favor of the Appellant. High Court judgment, in favor of the Appellant. 2.1 In support of the application for condonation of delay, reliance In support of the application for condonation of delay, reliance In support of the application for condonation of delay, reliance has been placed by the appellant on various authoritative has been placed by the appellant on various authoritative has been placed by the appellant on various authoritative pronouncements of Hon’ble Hon’ble Courts.
The submissions of both parties have been heard and the The submissions of both parties have been heard and the The submissions of both parties have been heard and the materials placed on record carefully pe materials placed on record carefully perused. The reasons cited for rused. The reasons cited for the delay, in our considered view, constitute ‘sufficient cause’ the delay, in our considered view, constitute ‘sufficient cause’ the delay, in our considered view, constitute ‘sufficient cause’
Shrijal Welfare Foundation Shrijal Welfare Foundation 3 & 2825/MUM/2025 within the meaning of Section 5 of the Limitation Act. For within the meaning of Section 5 of the Limitation Act. within the meaning of Section 5 of the Limitation Act. evaluating sufficiency of cause for condonation of delay, the Hon’ble evaluating sufficiency of cause for condonation of delay, the Hon’ble evaluating sufficiency of cause for condonation of delay, the Hon’ble Supreme Court in the case of Collector of Land Acquisition v. lector of Land Acquisition v. Supreme Court in the case of Katiji AIR (1987) 167 ITR 471 (SC) Katiji AIR (1987) 167 ITR 471 (SC) has laid down following six has laid down following six principles:
(i) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (ii) Refusing to condone delay can result in a meritorious matter Refusing to condone delay can result in a meritorious matter being thrown out at the being thrown out at the very threshold and cause of justice being defeated. As against this when delay is very threshold and cause of justice being defeated. As against this when delay is very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits condoned the highest that can happen is that a cause would be decided on merits condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. after hearing the parties. (iii) "Every day's delay must be explai "Every day's delay must be explained" does not mean that a pedantic approach ned" does not mean that a pedantic approach should be taken. Why not every hour's delay, every second's delay? The doctrine should be taken. Why not every hour's delay, every second's delay? The doctrine should be taken. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common must be applied in a rational common-sense pragmatic manner. (iv) When substantial justice and technical considerations are pitte When substantial justice and technical considerations are pitted against each other, When substantial justice and technical considerations are pitte cause of substantial justice deserves to be preferred for the other side cannot claim to cause of substantial justice deserves to be preferred for the other side cannot claim to cause of substantial justice deserves to be preferred for the other side cannot claim to 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. (v) There is no presumption that delay is occasioned There is no presumption that delay is occasioned deliberately, or on account of deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit culpable negligence, or on account of mala fides. A litigant does not stand to benefit culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk. by resorting to delay. In fact, he runs a serious risk. (vi) It must be grasped that judiciary is respected not on account of its power It must be grasped that judiciary is respected not on account of its power to legalize It must be grasped that judiciary is respected not on account of its power injustice on technical grounds but because it is capable of removing injustice and is injustice on technical grounds but because it is capable of removing injustice and is injustice on technical grounds but because it is capable of removing injustice and is expected to do so."
Further, the Hon’ble Supreme Court in the case of Concord of 3.1 Further, the Hon’ble Supreme Court in the case of Further, the Hon’ble Supreme Court in the case of India Insurance Co. Ltd. v. Smt. Nirmala Devi (1979) 118 ITR India Insurance Co. Ltd. v. Smt. Nirmala Devi (1979) 118 ITR India Insurance Co. Ltd. v. Smt. Nirmala Devi (1979) 118 ITR 507 (SC) held that what is to be looked into is whether there is any eld that what is to be looked into is whether there is any eld that what is to be looked into is whether there is any taint of mala fide or element of recklessness or ruse and if neither is taint of mala fide or element of recklessness or ruse and if neither is taint of mala fide or element of recklessness or ruse and if neither is present, legal advice honestly sought and actually given, must be present, legal advice honestly sought and actually given, must be present, legal advice honestly sought and actually given, must be treated as sufficient cause for condoning the delay. Further, the treated as sufficient cause for condoning the delay. Furthe treated as sufficient cause for condoning the delay. Furthe Hon’ble Supreme Court in the case of Ram Nath Sao v. Gobardhan Ram Nath Sao v. Gobardhan Hon’ble Supreme Court in the case of Sao, AIR 2002 SC 1201 Sao, AIR 2002 SC 1201 held that by taking a pedantic or hyper taking a pedantic or hyper-
Shrijal Welfare Foundation Shrijal Welfare Foundation 4 & 2825/MUM/2025 technical view, the explanation furnished by the assessee for the explanation furnished by the assessee for the explanation furnished by the assessee for condonation of delay should not be rejected condonation of delay should not be rejected particularly where particularly where assessee had arguable points of law on merits and refusal arguable points of law on merits and refusal arguable points of law on merits and refusal for condonation of delay will cause erroneous loss and irreparable condonation of delay will cause erroneous loss and irreparable condonation of delay will cause erroneous loss and irreparable injury to the aggrieved party by terminating injury to the aggrieved party by terminating lis at the inception at the inception.
3.2 The object of prescribing the time perio The object of prescribing the time period for filing of the appeal d for filing of the appeal is to expedite the proceedings before the concerned authorities and is to expedite the proceedings before the concerned authorities and is to expedite the proceedings before the concerned authorities and advance cause of the substantial justice. advance cause of the substantial justice. In the present case, the In the present case, the delay is attributable to genuine and justifiable factors, and there is delay is attributable to genuine and justifiable factors, and ther delay is attributable to genuine and justifiable factors, and ther no indication of mala no indication of malafide conduct or culpable negligence. The ide conduct or culpable negligence. The conduct of the assessee is not such as to disqualify it from the conduct of the assessee is not such as to disqualify it from the conduct of the assessee is not such as to disqualify it from the equitable relief of condonation. Accordingly, the delay in filing the equitable relief of condonation. Accordingly, the delay in filing the equitable relief of condonation. Accordingly, the delay in filing the appeals appeals appeals stands stands stands condoned. condoned. condoned. The The The appeals appeals appeals are are are admitted admitted admitted for for for adjudication on merits. adjudication on merits.
3.3 As regards the impugned orders, it is seen that the Ld. CIT(E) As regards the impugned orders, it is seen that the Ld. CIT(E) As regards the impugned orders, it is seen that the Ld. CIT(E) rejected the application for registration under Section 12AB of the rejected the application for registration under Section 12AB of the rejected the application for registration under Section 12AB of the Income Tax Act, 1961, on the ground that the assessee failed to Income Tax Act, 1961, on the ground that the assessee failed to Income Tax Act, 1961, on the ground that the assessee failed to comply with statutory notices issued electronically via the Income- comply with statutory notices issued electronically via the comply with statutory notices issued electronically via the tax Business application tax Business application (ITBA) portal. The order records that the portal. The order records that the application was found to be incomplete, and despite issuance of application was found to be incomplete, and despite issuance of application was found to be incomplete, and despite issuance of notices dated 30.04.2024 and 14.05.2024 seeking compliance in notices dated 30.04.2024 and 14.05.2024 seeking compliance in notices dated 30.04.2024 and 14.05.2024 seeking compliance in terms of Rule 17A(2), the assessee failed to respond. The relevant terms of Rule 17A(2), the assessee failed to respond. terms of Rule 17A(2), the assessee failed to respond. finding of the Ld. CIT(E) in relation finding of the Ld. CIT(E) in relation to application for section 12AB to application for section 12AB is reproduced as under: is reproduced as under:
Shrijal Welfare Foundation Shrijal Welfare Foundation 5 & 2825/MUM/2025 “3. On verification of the application in Form 10AB filed by On verification of the application in Form 10AB filed by On verification of the application in Form 10AB filed by the assessee, it was found that the application was not the assessee, it was found that the application was not the assessee, it was found that the application was not complete, complete, complete, and and and all all all the the the documents documents documents required required required to to to be be be accompanying the application were not furnished. Hence, a accompanying the application were not furnished. Hence, a accompanying the application were not furnished. Hence, a notice was issued to the applicant vid notice was issued to the applicant vide DIN & Notice No e DIN & Notice No ITBA/EXM/FVEXM43/2024 ITBA/EXM/FVEXM43/2024-25/1064460601(1) 25/1064460601(1) dated dated 30.04.2024 requesting the assessee 30.04.2024 requesting the assessee to provide the complete the complete set of documents set of documents mentioned in Rule 17(2). The assessee has The assessee has not filed his reply. Further notice was also issued vide DIN & not filed his reply. Further notice was also issued vide DIN & not filed his reply. Further notice was also issued vide DIN & Notice NO MTBA/EXM/F/EXM43/2024 Notice NO MTBA/EXM/F/EXM43/2024-25/1064874151 (1) 25/1064874151 (1) dated 14.05.2024 requesting to provide dated 14.05.2024 requesting to provide the complete set of he complete set of documents mentioned in documents mentioned in Rule 17A(2).
4. The Applicant has made no 4. The Applicant has made no compliance to the terms of the compliance to the terms of the above notices. above notices. Registration under section 12AB is Registration under section 12AB is to be granted in terms of the provisions of section 12AB(1)(b) of the terms of the provisions of section 12AB(1)(b) of the terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the trust or Act after being satisfied about the objects of the trust or Act after being satisfied about the objects of the trust or institution, the genuineness of activities, and institution, the genuineness of activities, and ithe compliance ithe compliance of any other law for the time being in force as are material f of any other law for the time being in force as are material f of any other law for the time being in force as are material for the purposes of the purposes of achieving its objects. In the absence of eving its objects. In the absence of necessary compliance by the Applicant, I am unable to arrive necessary compliance by the Applicant, I am unable to arrive necessary compliance by the Applicant, I am unable to arrive at a satisfaction on these parameters. As such, in view of the at a satisfaction on these parameters. As such, in view of the at a satisfaction on these parameters. As such, in view of the statutory limitation to decide on the application on or before statutory limitation to decide on the application on or before statutory limitation to decide on the application on or before 31.05.2024, I am left with no other option but to reject the 4, I am left with no other option but to reject the 4, I am left with no other option but to reject the application application application seeking seeking seeking registration registration registration under under under section section section 12AB of the Act.” 3.4 Before us, the learned counsel for the assessee submitted that , the learned counsel for the assessee submitted that , the learned counsel for the assessee submitted that the non-compliance occurred due to lack of awareness of the ITBA compliance occurred due to lack of awareness of the ITBA compliance occurred due to lack of awareness of the ITBA e-proceeding process eding process by the trustee and the absence of any physical and the absence of any physical notice, compounded by the trustee’s preoccupation with court notice, compounded by the trustee’s preoccupation with court notice, compounded by the trustee’s preoccupation with court matters. We find merit in this contention. Given the statutory matters. We find merit in this contention. Given the statutory matters. We find merit in this contention. Given the statutory consequences of denial of registration, and having regard to the consequences of denial of registration, and having regard to the consequences of denial of registration, and having regard to the principle that substantial justice must prevail, we are of the opinion ple that substantial justice must prevail, we are of the opinion ple that substantial justice must prevail, we are of the opinion that one further opportunity ought to be granted to the assessee. that one further opportunity ought to be granted to the assessee. that one further opportunity ought to be granted to the assessee. Consequently, the impugned orders passed by the Ld. CIT(E) Consequently, the impugned orders passed by the Ld. CIT(E) Consequently, the impugned orders passed by the Ld. CIT(E) rejecting the application under Section 12AB rejecting the application under Section 12AB and 80G and 80G are set aside. The matter is remanded back to the CIT(E) with a direction to The matter is remanded back to the CIT(E) with a direction to The matter is remanded back to the CIT(E) with a direction to Shrijal Welfare Foundation Shrijal Welfare Foundation 6 & 2825/MUM/2025 provide a fresh opportunity to the assessee to furnish all requisite opportunity to the assessee to furnish all requisite opportunity to the assessee to furnish all requisite documents in support of its application, and to pass a reasoned documents in support of its application, and to pass a reasoned documents in support of its application, and to pass a reasoned order in accordance with law after affording due opportunity of order in accordance with law after affording due opportunit order in accordance with law after affording due opportunit hearing.
3.5 The grounds raised raised in both the appeals are accordingly in both the appeals are accordingly allowed for statistical purposes. allowed for statistical purposes.
In the result, both the appeals are allowed for statistical In the result, both the appeals are allowed for statistical In the result, both the appeals are allowed for statistical purposes.