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Facts
The assessee trust, having provisional registration, applied for regular registration under Section 12AB which was rejected by the CIT(Exemptions) due to being filed beyond the prescribed limitation period. The CIT(Exemptions) observed the application was late even considering the extended deadline per a CBDT Circular. The assessee challenged this rejection, arguing mechanical rejection without opportunity to explain delay and failure to exercise discretion.
Held
The Tribunal held that the CIT(Exemptions) erred by not providing an opportunity to the assessee to explain the delay, especially since notices were issued after the deadline, creating a bona fide belief. Citing the new proviso to Section 12A(1)(ac) (introduced by Finance Act, 2024) which allows condonation of delay for reasonable cause, the Tribunal set aside the rejection order. The matter was remanded to the CIT(Exemptions) for fresh consideration, directing to allow the assessee to file an application for condonation of delay.
Key Issues
Whether the CIT(Exemptions) was justified in rejecting an application for regular registration under Section 12AB solely on the ground of delay in filing, without affording the assessee an opportunity to explain the delay and considering the provisions for condonation of delay.
Sections Cited
12AB, 12A(1), 12A(1)(ac), 80G
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Income Tax Appellate Tribunal, Hyderabad ‘ A ‘ Bench, Hyderabad
करदाता का प्रतततितित्व/ : Shri Santosh Kumar Sabat, Assessee C.A. Represented by राजस्व का प्रतततितित्व/ : Shri U. Mini Chandran, Department Represented by CIT-DR सुिवाई समाप्त होिे की ततति/ : 20.08.2025 Date of Conclusion of Hearing घोर्णध की तधरीख/ 26.08.2025 : Date of Pronouncement O R D E R प्रनत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M.
The present appeal has been filed by the assessee trust against the order passed by the Commissioner of Income Tax (Exemptions) [hereinafter referred to as “CIT(Exemptions)”], dated 2 Yug Nirman Yojana Gayatri Pariwar Trust 28.02.2025 rejecting its application filed in “Form No. 10AB” for regular registration under Section 12AB of the Income-tax Act, 1961 (for short, “the Act”).
The assessee trust has assailed the order passed by the CIT(Exemption) declining its application for regular registration u/s 12AB of the Act on the following grounds of appeal before us:
“1. The Id. Commissioner of Income Tax (Exemptions), Hyderabad has erred in taw and on facts in rejecting the application for grant of approval under section 12AB of the Act.
2. The CIT (Exemption) has ignored the objective and activities of the society towards charitable objects and ignoring the fact that the provisional registration under Sub clause (vi) of clause (ac) of section 12A(1) has been granted to the appellant society which is arbitrary and uncalled for. 3 That, the Appellant craves leave and reserves its rights to vary, amend, alter and/or add to the grounds of appeal
and to produce other documentary evidences as may be necessary at the time of hearing of the appeal.
4. That it is prayed, the rejection of 80G order may be deleted in the interest of justice and equity for which the appellant shall as in duty bound ever pray.”
Succinctly stated, the assessee trust was granted provisional registration by the CPC, Bengaluru in “Form 10AC” dated 04.04.2022 valid for three assessment years i.e. AY 2022-23 to 2024-25. 3 Yug Nirman Yojana Gayatri Pariwar Trust
Subsequently, the assessee trust filed an application in “Form 10AB” on 05.08.2024 seeking regular registration under Section 12AB of the Act.
In response, the CIT (Exemptions) initiated proceedings under Section 12A(1)(ac)(iii) of the Act and issued notices dated 10.10.2024 and 24.12.2024, to which the assessee trust responded with complete documentation and clarifications. However, the CIT (Exemptions), vide his impugned order dated 28.02.2025, rejected the application for the reason that the same was filed beyond the limitation period prescribed under the Finance Act, 2020, as per which the assessee trust should have applied in “Form 10AB” for regular registration u/s 12AB, at least six months before the expiry of provisional registration or within six months from the date of commencement of activities, whichever is earlier. Also, the CIT(Exemption) observed that the assessee trust had even failed to file the application upto 30.06.2024 as was extended as per the CBDT Circular No. 7/2024 dated 25-04-2024. Accordingly, the CIT (Exemption) held the 4 Yug Nirman Yojana Gayatri Pariwar Trust application filed by the assessee trust for regular registration on 05.08.2024 as barred by limitation.
Ostensibly, the assessee trust has assailed the order passed by the CIT(Exemption) for its regular registration under Section 12AB of the Act based on its multi-facet grounds, viz. (i). the CIT(Exemption) had grossly erred in law and facts of the case in mechanically rejecting the application without affording any opportunity to the assessee trust to explain the delay; (ii). the issuance of notices by the CIT (Exemption) even after the expiry of the limitation period, thereby gave rise to a bona fide belief to the assessee trust that its application was valid and accepted; (iii). that the CIT(Exemption) had not drawn any adverse findings on the merits or documents filed by the assessee trust; and (iv). that the CIT (Exemption) has failed to exercise the discretion vested with him under the proviso to Section 12A(1)(ac) for condoning the delay involved in the application filed by the assessee trust.
We have heard the Ld. Authorized Representatives for both parties, perused the order of the CIT(Exemption) and the judicial 5 Yug Nirman Yojana Gayatri Pariwar Trust pronouncements pressed into service by the Ld. AR to drive home his contentions.
Admittedly, the application for regular registration was filed by the assessee trust on 05.08.2024, i.e., beyond the extended due date of 30-06-2024 as per the CBDT Circular No.7/2024. However, we cannot remain oblivion of the fact that the CIT (Exemptions) had thereafter issued notices on 10-12-2024 and 24.12.2024, seeking additional details and documents to which the assessee trust had responded.
We are of firm conviction that the issuance of notices after the prescribed deadline, without any objection as to limitation at that stage, gave rise to an expectation and bona fide belief to the assessee trust that the delay had either been condoned or was not material. In our view, in the backdrop of the aforesaid facts, the CIT(Exemption) ought to have given the assessee trust an opportunity to explain the delay involved in filing of the application before him.
6 Yug Nirman Yojana Gayatri Pariwar Trust
Apart from that, we find that the impugned order does not record any defect either in the activities or objects of the assessee trust or the documents submitted. Also, the bona fides of the assessee trust are not in dispute, and the delay in filing the application, in our considered view, prima facie, does not appear to be deliberate.
We find that the legislature in all its wisdom had vide the Finance Act, 2024 from 01.10.2024 made available on the statute a “Proviso” to Section 12A(1)(ac) that formally allows the CIT(Exemption) to condone the delay if reasonable cause is shown, which, thus, renders the application valid and deemed to be filed on time. We thus, in terms of our aforesaid deliberations, are of the considered view that the matter deserves to be restored to the file of the CIT (Exemptions), Hyderabad for fresh consideration. The assessee trust shall remain at liberty to file an application for the condonation of the delay involved in the filing of the present application in “Form 10AB” seeking regular registration under Section 12AB of the Act. The CIT (Exemptions), Hyderabad shall consider such application in accordance with the extant law and 7 Yug Nirman Yojana Gayatri Pariwar Trust dispose of the same after granting a reasonable opportunity of being heard to the assessee trust.
Resultantly, the impugned order dated 28.02.2025 is set aside and the matter is restored to the file of the CIT (Exemptions), Hyderabad for fresh adjudication, as per law.
In result, the appeal filed by the assessee trust is allowed for statistical purposes in terms of our aforesaid observations.
Order pronounced in the Open Court on 26th August, 2025. - (मंजूनाथ जी) (श्री रवीश सूद) (MANJUNATHA G.) (RAVISH SOOD) लेखा सदस्य/ACCOUNTANT MEMBER न्यायिक सदस्य/JUDICIAL MEMBER Hyderabad, dated 26.08.2025. TYNM/sps