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Facts
The assessee trust filed an application for registration under Section 12AB of the Act. The CIT (Exemptions) rejected the application, stating it was filed beyond the limitation period. The assessee contended that the notices issued after the supposed expiry of the limitation period led them to believe the delay was condoned.
Held
The Tribunal held that the issuance of notices by the CIT after the prescribed deadline, without raising objections about the limitation period, created a bona fide belief in the assessee that the delay was condoned or not material. The matter was restored to the CIT for fresh consideration.
Key Issues
Whether the rejection of the application for registration was justified due to delay when notices were issued post-deadline, implying condonation or non-materiality of delay, and whether the CIT exercised discretion to condone delay properly.
Sections Cited
12AB, 12A(1)(ac)(iii), 12A(1)(ac), 80G(5)
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Income Tax Appellate Tribunal, Hyderabad ‘A ‘ Bench, Hyderabad
करदाता का प्रतततितित्व/ : Smt. Jyotishri Vankina, Assessee Advocate Represented by राजस्व का प्रतततितित्व/ : Shri. B. Bala Krishna, CIT-DR Department Represented by सुिवाई समाप्त होिे की ततति/ : 14.07.2025 Date of Conclusion of Hearing घोषणा की तारीख/ : 18.07.2025 Date of Pronouncement O R D E R प्रयत रवीश सूद, जे.एम./PER RAVISH SOOD, J.M. The present appeal filed by the assessee trust is directed against the order passed by the Commissioner of Income Tax (Exemptions), Hyderabad, dated 18/02/2025, rejecting the assessee's application for registration under Section 12AB of the Act. The assessee trust has assailed the impugned order on the following grounds of appeal before us:
“1. The Ld Commissioner of Income Tax (Exemptions), Hyderabad erred in outrightly dismissing the Assessee's application on wholly untenable grounds as the Ld. Commissioner of Income Tax (Exemptions), Hyderabad failed to realize that the notices dated 10-10-2024 and 26-12-2024 were replied promptly though they were sent after the expiry of the limitation period as stipulated by the Finance Act, 2020 and by the CBDT circular No. 7 of 2024 dated 25-04-2024.
2. The Ld Commissioner of Income Tax (Exemptions), Hyderabad failed to realize that no aspect of the notices dated 10-10-2024 and 26-12-2024 ever pointed out that the Assessee had contravened the limitation period as stipulated by the Finance Act, 2020 and by the CBDT circular No. 7 of 2024 dated 25-04-2024 by which the extended limitation was 30-06-2024. If the Ld CIT(Exemptions) decided that the Assessee was in contravention of the limitation, then the notices should not have been issued and the proceedings under Section 12A (1) (ac) (iii) of the Act should have never been inititated.
3. The Ld CIT (Exemptions), Hyderabad erred in not appreciating that the Assessee never committed any lapses in providing documentation and relevant information for seeking regular registration under Section 12 AB of the Act. It is further submitted that no objection was ever raised by the Ld CIT (Exemptions), Hyderabad with regard to the documentation and information provided by the Assessee which were done in a thorough and a bona fide manner.
Thé Ld CIT (Exemptions) failed to realize that without mentioning that the application of the Assesse was filed beyond the prescribed time limit as per the the Finance Act, 2020 and the CBDT circular No. 7 of 2024 dated 25- 04- 2024, the Assessee had no knowledge that it was supposed to explain the delay in filing its application for seeking regular registration under section 12 AB of the Act, the Ld. Commissioner by omitting this key detail in its notices dated 10-10-2024 and 26-12-2024 denied a fair opportunity to the Assessee to explain the delay.
5. The Assessee submits that it is well within the ambit of the Principal Commissioner or Commissioner to condone the delay of the application filed for regular registration under section 12 AB of the Act and this power is apparent from the proviso of clause (ac) of Section 12 A of the Act. The Assessee further submits that the reason for delay of 60 days in its submission of the application for regular registration under section 12 AB of the Act is completely bona fide and the delay is neither wanton nor wiliful so the mechanical rejection of the Assessee's application by the Ld. Commissioner in completely unjustified.
6. The Ld. CIT (Exemptions) did not pay any heed to the principles of natural 4 justice wherein the issue of notices by the Department would be akin to condoning the delay in submission of application. In the hearing notices dated 10-10-2024 and 26-12-2024, there is no whisper of delayed submission of application and neither cause of delay nor justification was asked for the same, whereby the Assessee was thus under a genuine and bona fide belief that its application for seeking regular registration under Section 12 AB was in order. This is further confirmed by the mechanical nature of the order passed by the Ld. Commissioner dated 18-02-2025 which did not mention any defects or irregularities in the information and documentation provided by the Assessee in full compliance to the hearing notices dated 10- 10-2024 and 26-12-2024 but instead pointed out a delay in filing the application at the very last instance instead of pointing it out in the hearing notices dated 10-10-2024 and 26-12-2024.
7. The Ld CIT (Exemptions) mentioned the date of submission of application as 30-08-2024 whereas the correct date of submission is 27-08- 2024. And, the fact that the Trust is formed with a very noble objective of creation of awareness and encouragement of healthy attitude in the Society is not given an iota of importance, rather the hyper technical reasoning of delayed submission of application by 56 days was given undue weightage while passing the impugned order.
8. The Assessee craves leave of this Hon'ble Tribunal to add, amend, alter and raise additional grounds of appeal.
Succinctly stated, the assessee is a religious-cum-charitable trust formed through a deed of declaration dated 23-03-2023 by its author Shri Adepalley Venkata Satyanarayana Prasad. The assessee trust was established to construct and maintain a temple for Swayamvara Parvati sametha Chandrashekhara Swamy and propagate wellness, education, cultural heritage, and Sanatan Dharma through charitable and religious activities.
On a perusal of the record, it transpires that the assessee trust was granted provisional registration under Sections 12A(1)(ac)(vi) and 80G(5) of the Act by the Commissioner of Income Tax (Exemptions), Hyderabad, on 19-04-2023, valid for three assessment years i.e. AYs 2024-25 to 2026-27.
4. Subsequently, the assessee trust filed an application in “Form 10AB” on 27-08-2024 seeking regular registration under Section 12AB of the Act.
In response, the CIT (Exemptions) initiated proceedings under Section 12A(1)(ac)(iii) and issued notices dated 10-10-2024 and 26-12- 2024, to which the assessee trust duly responded with complete documentation and clarifications. However, the CIT (Exemptions), vide his impugned order dated 18-02-2025, rejected the application for the reason that the same was filed beyond the limitation period prescribed under the Finance Act, 2020, and CBDT Circular No. 7/2024 dated 25- 04-2024, which had extended the deadline till 30-06-2024. Accordingly, the CIT (Exemption) held the application filed by the assessee trust for regular registration on 27-08-2024 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 pronouncements pressed into service by the Ld. AR to drive home her contentions.
Admittedly, the application for regular registration was filed by the assessee trust on 27-08-2024, 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 10-10-2024 and 26-12-2024, 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 in 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.
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 of approximately 56 days 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 dispose of the same after granting a reasonable opportunity of being heard to the assessee trust.
Resultantly, the impugned order dated 18-02-2025 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.