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Facts
The Marine Drishti Coastal Foundation, a Section 8 company, was provisionally registered under Section 12A. Its applications for final registration under Section 12AB were rejected twice by the CIT(E) based on alleged non-commencement of activities and selection of a wrong section code. Concurrently, its application for Section 80G approval was also rejected, citing the cancellation of 12AB registration and non-submission of necessary documents. The assessee filed appeals for all three rejections with the ITAT.
Held
The Tribunal condoned a 248-day delay for the first appeal (ITA 454) and, upon reviewing evidence, concluded that the assessee had commenced activities, directing the CIT(E) to grant Section 12AB registration. The second appeal for Section 12AB registration (ITA 455) was dismissed as withdrawn by the assessee. For the Section 80G approval (ITA 456), the matter was remitted back to the CIT(E) for fresh consideration, instructing them to account for the now granted 12AB registration and to provide the assessee with an opportunity to submit all required documents.
Key Issues
Whether a delay in filing an appeal against the cancellation of Section 12AB registration should be condoned; Whether the assessee had commenced activities to qualify for final registration under Section 12AB of the Income Tax Act; Whether the rejection of Section 80G approval was justified, especially when related to the status of Section 12AB registration.
Sections Cited
12AB, 80G, 12A(1)(ac)(vi), 253(5), 8 of Companies Act, 2013
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Income Tax Appellate Tribunal, “B’’BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
O R D E R
PER KESHAV DUBEY, JUDICIAL MEMBER:
These appeals at the instance of the assessee are directed against the orders of the ld. CIT(Exemptions) Bangalore dated 29.04.2024 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024-25/1064443144(1) & dated 06.01.2025 vide DIN & Notice No.ITBA/EXM/F/EXM43/2024- 25/1071886304(1) cancelling the registration u/s 12AB of the Income Tax Act, 1961 (in short “The Act”) as well as order dated 17/02/2025 vide DIN & Notice No. ITBA/EXM/F/EXM45/2024- 25/1073364434(1) cancelling the approval u/s 80G of the Act. Since the issue in all these appeals of the same assessee trust are related to the Registration of assessee, these are clubbed together, , 455 & 456/Bang/2025 Marine Drishti Coastal Foundation, Goa Page 2 of 15 heard together and disposed of by this common order for the sake of convenience.
At the outset, there is a delay of 248 days in filing the appeal before this Tribunal. The ld. A.R. of the assessee drew our attention to an application for condonation of delay dated 27/02/2025 along with the affidavits of the Trustee director as well as the Chartered Accountant in original sworn before the notary public on 01.03.2025 stating therein the cause for the delay.
Before us, the ld. A.R. of the assessee vehemently submitted that the delay was caused mainly due to the fact that after passing of the order dated 29/04/2024 rejecting the registration on the ground that the assessee had not commenced its activities, CA Neeraj Pathak who appeared before the ld. CIT(E) had informed the assessee that as per the guidance by the AO, the assessee has to file once again revised application after the commencement of its objects and accordingly the assessee had filed the revised application once again before the ld. CIT(E) instead of filing appeal before the Hon’ble ITAT. The ld. CIT(E) once again passed an order dated 06/01/2025 rejecting the registration on the ground that wrong section code was selected by the assessee trust. Thereafter, the tax consultant of the assessee finally advised that an appeal , 455 & 456/Bang/2025 Marine Drishti Coastal Foundation, Goa Page 4 of 15 may be filed against the first rejection order dated 29/04/2024 and accordingly there was a delay of 248 days in filing appeal before this Tribunal. Further The ld. A.R. also submitted that the delay is unintentional and no benefit can be attributed to the assessee in filing the appeal belatedly. It is also submitted that if the delay is not condoned, the assessee would be put to great hardship and irreparable injury and on the other hand, no hardship or injury would be caused to the revenue if condonation of delay is allowed and accordingly prayed that such unintended delay may be condoned as there is sufficient cause and the appeal may be admitted for adjudication.
The Ld. D.R. on the other hand, submitted that the appeal may be dismissed in limine as the delay was substantial and it is only due to the callous approach of the assessee.
We have heard the rival submissions and perused the materials available on record. It is to be noted that u/s 253 (5) of the Act, the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exist a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation therefore, becomes relevant to determine whether the same reflects sufficient and reasonable cause on the part of the assessee in not filing this appeal within the prescribed time. On going through the above, we find that due the wrong advice of CA Neeraj Pathak who appeared before the ld. CIT(E), the assessee had filed once again revised application before the CIT(E) instead of filing appeal before the ITAT. The ld. CIT(E) once again passed an order dated 06/01/2025 rejecting the registration on the ground that wrong section code was selected by the assessee trust against which the assessee is in appeal before us in ITA No. 455/Bang/2025. Thereafter, the tax , 455 & 456/Bang/2025 Marine Drishti Coastal Foundation, Goa Page 5 of 15 consultant of the assessee finally advised that an appeal may be filed against the first rejection order dated 29/04/2024 and accordingly the appeal was filed with a delay of 248 days before this Tribunal. Further on going through the reason for delay as stated in the affidavit it cannot be said that the assessee is very callous in its approach in filing the appeal before us and we are satisfied that there is sufficient cause on the part of the assessee in filing the appeal belatedly before us.
6.1 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late. (2) Refusing to condone delay can result in a meritorious matter being thrown at the 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 after hearing the parties. (3) 'Every day's delay must be explained' does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the 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 nondeliberate delay. (5) There is no presumption that delay is occasioned deliberately, or on account of 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. (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so. 6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves , 455 & 456/Bang/2025 Marine Drishti Coastal Foundation, Goa Page 6 of 15 to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorized by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalize an illegal and unconstitutional order passed by the lower authority.
6.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.
6.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We must see the cause for the delay. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the , 455 & 456/Bang/2025 Marine Drishti Coastal Foundation, Goa Page 7 of 15 condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly, the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years, 248 days cannot be considered to be inordinate or excessive. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. Therefore, in our opinion, by preferring the substantial justice, the delay of 248 days have to be condoned and accordingly we condone the delay and admit the appeal for adjudication.
Now the brief facts of the case are that the assessee “Marine Drishti Coastal Foundation” was incorporated on 24/05/2022 under section 8 of the Companies Act, 2013 as a non-profit organization to promote commerce, arts, science, sports, education, research, charity, protection of the environment, promote diverse cultural and heritage of ancient Indian history or any such other object. The assessee company was granted provisional registration in Form No. 10AC on 17/08/2022 under sub clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act vide URN- AAPCM8001RE20221 from AY 2023-24 to AY 2025-26. Thereafter, the assessee company applied for the final registration in Form No. 10AB on 30/10/2023 under sub clause (iii) of clause (ac) of sub-section (1) of section 12A of the Act. The ld. CIT(E) vide Order dated 29/04/2024 rejected the application in form 10AB dated 30/10/2023 filed for registration u/s 12AB of the Act and cancelled the registration on the ground that the assessee has not commenced its activities towards the attainment of the objects of the trust.
Before us, ld. A.R. of the assessee vehemently submitted that the ld. CIT(E), Bangalore grossly erred in rejecting the registration on the ground that the assessee has not commenced its activity especially when the assessee trust had submitted the provisional financials along with the bank statement evidencing the commencement of the activities towards the objects. The ld. AR of the assessee submitted that it is not a case that no activities had been commenced but in fact very little amount spent towards the objects as the trust is at the inception stage.
The ld. D.R. appearing from the side of revenue relied on the order passed by ld. CIT(E), Bangalore.
We have heard the rival submissions and perused the materials available on record. We take a note of the fact that the assessee was incorporated only on 24/05/2022 under section 8 of the Companies Act, 2013. Further we also take a note of the fact that the assessee company was granted provisional registration in Form No. 10AC on 17/08/2022 under sub clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act vide URN- AAPCM8001RE20221 from AY 2023-24 to AY 2025-26. The ld. CIT(E) rejected the application in Form No.10AB dated 30.10.2023 filed for the final registration on the ground that the assessee has not commenced its activities towards the attainment of the objects of the trust.
11.1 On going through the order of the ld. CIT(E), we find that the ld. CIT(E) on perusal of the submissions and as reported by the JAO, is of the opinion that the assessee has not commenced its activities. However, we observe that the assessee trust had also submitted the provisional financials along with the bank statement evidencing the commencement of activities towards the objects, however on perusal of the financials, the ld. CIT(E) is of the view that the assessee has not made any expenditure towards the objects of the assessee. Before us, the ld. AR of the assessee however submitted that it is not a case that no activities had been commenced but in fact very little amount spent towards the objects as the trust is at the inception stage.
11.2 On going through the Activity report, financials filed before us as well as submissions as made before the ld. CIT(E), we observe that for the financial year 2022-23, the assessee had conducted a significant activity involving nearly 450 marine lifesavers and around 50 forest department officials. These individuals underwent intensive training to handle a variety of marine stranding, including those involving dolphins, turtles, snakes, and wild bird species on Goa’s beaches. The training also included the development of their first reaction skills when faced with stranded species. Further during the F.Y 2024-24, the assessee was not into any major activity because the assessee trust was awaiting the membership of International Life Saving Federation which was ultimately approved by the letter dated 04/03/2024 (Placed at page 37.a of Appeal Set). Before us, the assessee trust also produced copy of the invoice dated 06/04/2024 from Special Rescue Training Academy Pvt. Ltd. towards providing training to 3 peoples & invoices for consultancy contract, invoices of rollup standee normal & designing along with the copy of invoice towards purchase of Rice, Sugar, Coffee etc.
, 455 & 456/Bang/2025 Marine Drishti Coastal Foundation, Goa Page 10 of 15 (Placed at pages 42-52 of Appeal Set.) Further, the assessee trust had also produced certain photographs (Placed at pages 53-70 of Appeal Set.) evidencing commencement of the activities by the assessee.
11.3 Therefore, we find force in the argument of ld. Counsel of the assessee that it is not a case that no activities had been commenced but in fact a little amount spent towards the objects as the trust is at the inception stage. We are of the firm opinion that for the purpose of granting registration, the ld. CIT(E) shall call for such documents or information or make such inquiry as he thinks necessary in order to satisfy himself about the twin object:- (a) the genuineness of the activity of the trust and (b) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its object.
11.4 In the present case, there is not even a whisper about any non-genuineness of the activities carried on by the assessee trust. The only allegation by the ld. CIT(E) is that the assessee had not commenced its activities towards the object of the Trust which in our opinion is not true by taking into consideration the Activity report, photographs & financials along with provisional produced before us. We are also of the considered opinion that it is not the quantum of expenditure which is relevant for the purpose of granting registration but in fact the genuineness of the activity of the trust in accordance with the object of the trust is relevant for granting registration. In the present case, it is a fact that the assessee had already commenced its activity towards the attainment of the object as the assessee trust had conducted the training programme which comes under the framework of the Annual Lifesaver Revalidation Programme in the presence of Deputy , 455 & 456/Bang/2025 Marine Drishti Coastal Foundation, Goa Page 11 of 15 conservator of Forests. Since it was the inception stage of its operation, the assessee was not able to spend towards the large scale activity. Therefore, considering the totality of the fact of the case, as the assessee had already commenced its activities which is also not held to be non-genuine by the ld. CIT(E), we are inclined to allow the appeal filed by the assessee & direct the ld. CIT(E) to grant registration u/s 12AB of the Act. It is ordered accordingly.
In the result, appeal filed by the assessee is allowed. for adjudication. In this appeal, the assessee has raised the following grounds of appeal:-
Brief facts of the case are that after the rejection of the registration u/s 12AB of the Act by the ld. CIT(E) vide Order dated 29/04/2024, the assessee company again filed a revised application before the ld. CIT(E) in Form 10AB on 31/08/2024 for final Registration under item (B) of sub-clause (vi) of clause (ac) of sub-section (1) of section 12A of the Act after commencing activities towards attainments of its object. The ld. CIT(E) once again vide Order dated 06/01/2025 rejected the application in form 10AB dated 31/08/2024 filed for registration u/s 12AB of the Act and cancelled the registration on the ground that the assessee has selected the wrong section code while applying Form 10AB for registration u/s 12A(1)(ac)(vi)-ITEM(B) of the Act.
14.1 Again being aggrieved by the Order of the ld. CIT(E) dated 06/01/2025, the assessee has filed the present appeal before this Tribunal in within time.
During the course of hearing, the ld. A.R. of the assessee requested to allow the withdrawal of the Appeal in which is yet again against the rejection of the registration u/s 12AB of the Act of the same assessee and hence, as per the request of the AR of the assessee, the appeal in is dismissed as withdrawn.
In the result appeal filed by the assessee is dismissed. wherein the assessee has raised following grounds of appeal:
Brief fact of the case are that on receipt of application in Form No. 10AB dated 31/08/2024 for approval u/s 80G(5) of the Act, the ld. CIT(E) observed that assessee’s application filed for , 455 & 456/Bang/2025 Marine Drishti Coastal Foundation, Goa Page 14 of 15 registration u/s 12AB of the Act was rejected and registration cancelled. Further, the ld. CIT(E) also observed that the assessee was mandated to submit necessary documents to prove the genuineness of the activities of the trust or institution and fulfillment of all the conditions laid down in clauses (i) to (v) of section 80G of the Act and accordingly application in form no. 10AB dated 31/08/2024 filed for approval u/s 80G of the Act was rejected and approval cancelled.
18.1 Since we have allowed the appeal in directing the ld. CIT(E) to grant of registration u/s 12AB of the Act to the assessee & taking into consideration the fact that the assessee had not submitted the necessary documents during the registration proceedings u/s 80G of the Act, we deem it fit and proper to remit this issue of approval u/s 80G of the Act to the file of ld. CIT(E) to decide afresh in accordance with law after taking into consideration the registration granted to the assessee u/s 12AB of the Act. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to produce/submits the documents/record/Certificates /reports/financials etc. as may be required by the ld. CIT(E) for granting approval u/s 80G of the Act. It is ordered accordingly.
In the result, appeal filed by the assessee in is also partly allowed for statistical purposes.
Order pronounced in the open court on 31st July, 2025