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Facts
A charitable trust, after initially securing provisional registrations, applied for final registration under Sections 12A(1)(ac)(iii) and 80G(5)(iii), which were rejected by the CIT (Exemption) citing general details and insufficient evidence. The CIT (Exemption) had provided only a 5-day window to respond to a second notice. The trust, having acted on previous incorrect advice to re-apply instead of appealing, subsequently filed belated appeals to the ITAT, explaining a delay of over 897 days.
Held
The Tribunal condoned the significant delay in filing the appeals, accepting the explanation of bona fide reliance on incorrect professional advice as reasonable cause. It held that the CIT (Exemption) denied the trust a proper and effective opportunity of being heard by providing inadequate time to respond to a notice, violating principles of natural justice. Consequently, the Tribunal set aside the rejection orders and remanded the applications to the CIT (Exemption) for fresh consideration, ensuring a reasonable opportunity of hearing.
Key Issues
Whether the CIT (Exemption) afforded a reasonable opportunity of hearing before rejecting the applications for final registration and approval, and if the substantial delay in filing the appeal should be condoned based on the given reasons.
Sections Cited
12A(1)(ac)(vi), 80G(5)(iv), 12A(1)(ac)(iii), 80G(5)(iii), 12AB, 10(23C), 80G(5)
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned twin appeals at the instance of appellant are directed against the separate orders dated 27.10.2022 framed by CIT (Exemption), Pune denying applications filed on Form No.10AB for grant of regular registration u/s.12A(1)(ac)(iii) and approval u/s.80G(5)(iii) of the Act.
2. Registry has informed that there is delay of 897 days and 904 days respectively in filing the instant appeals before this Tribunal. Appellant has filed an Affidavit for condonation of delay explaining the reasons which led to delay.
“1. That I am the duly appointed Authorised Trustee of the above- named Trust and am f competent and authorised to swear this affidavit on behalf of the Trust and the Chronology Applications and Events in our trust's case is – (a) First Provisional Registration The Trust, Initially filed its first application in Form 10A for provisional registrations under section 12A(1)(ac) (vi) on 12.08.2021 and 80G (5) (iv) on 13.08.2021 respectively.
This applications was duly processed and approved by the Learned Commissioner of Income Tax (Exemptions), Pune, on 24.09.2021, granting provisional registration valid period from A.Y. 2022-2023 to A.Y. 2024-2025 for 12AB and 24.09.2021 to AY 2024-2025 for 80G as per law.
(b) First Final Registration Application As required under the provision, the Trust filed its final registration applications in Form 10AB under section 12A (1) (ac) (iii) on 16.04.2022 and under section 80G (5) (iii) within the stipulated time frame. The Learned Commissioner of Income Tax (Exemptions), Pune, however, rejected the said applications vide order dated 27.10.2022, thereby denying the Trust regular registration under section 12AB and 80G.
(c) Action after Rejection Instead of filing a statutory appeals before the Hon'ble ITAT against the rejection orders, the then tax consultant advised surrendering the existing provisional registrations and reapplying for a fresh provisional registrations under section 12A(1)(ac) (vi) and 80G (5) (iv).
Acting upon this advice, the Trust applied afresh for provisional registration on 06.02.2023 for 12AB and on 04.02.2023 for 80G, which was approved on 28.02.2023 valid period of said Registration is AY 2023-204 to AY 2025-2026 for 12AB and 28.02.2023 to AY 2025-26 for 80G.
The Trust, being under a bona fide belief that reapplication would resolve the matter, did not pursue the appellate remedy within the statutory limitation period. There was neither any intention to delay nor any deliberate disregard of legal timelines.
That the delay in filing the appeal against the order dated 27.10.2022 occurred solely because the Trust was relying upon the advice of its previous tax consultant. The consultant failed to appreciate the significance of challenging the rejection before the Hon'ble ITAT and incorrectly suggested that the defect could be rectified by reapplication.
That upon later obtaining professional advice from a new tax consultant, the Trust was made aware that the correct legal course after the rejection dated 27.10.2022 was to file an appeal before the Hon'ble ITAT within the prescribed time. It was also realised that the surrender and fresh provisional application did not in any manner substitute or cure the requirement of appellate adjudication.
Immediately thereafter, the Trust initiated steps to prepare and file the appeal along with this application for condonation of delay.
That the delay in filing the appeal is purely on account of a bonafide misunderstanding of the legal position caused by the incorrect professional advice given by the previous tax consultant. The Trust has at all times acted in good faith and with due diligence based on the professional guidance available to it at the relevant time.
5. That the Trust humbly prays to the Hon'ble Tribunal to consider the peculiar facts and circumstances of this case, including the chronological sequence of applications and the bona fide reasons for the delay, and to condone the delay so that the matter may be decided on merits in the interest of justice.
That the Trust undertakes to ensure full compliance with all statutory requirements in the future and assures the Hon'ble Tribunal that such delay will not recur.” 3. After hearing both the sides and perusing the averments made in the affidavit, we are satisfied that ‘reasonable cause’ prevented the appellant in filing the instant appeals within the stipulated time. We find the delay in filing the appeals is not intentional and appellant would not have gained by delaying the filing of appeal. We therefore taking justice oriented approach and following the judgments of Hon’ble Supreme Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. reported in (1987) 2 SCC 107 and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382). condone the delay of 897 and 904 days in filing the appeals before this Tribunal and admit the appeals for adjudication.
4. Tersely stated, the common facts emanating from the record are that the appellant is a trust formed with the main object of providing education, healthcare, basic medical facility and providing food to the needy poor people. Appellant was having provisional registration and valid from 24.09.2021 to 2024-25. Pursuant to such provisional registration, appellant trust filed application on Form No.10AB under clause (iii) of section 12A(1)(ac)(iii) for grant of registration on 15.04.2022. In addition, the appellant trust by separate application also applied for grant of approval u/s.80G(5)(iii) of the Act. In order to verify the genuineness of activities of the appellant trust, the ld. CIT (Exemption) issued notices dt. 29.08.2022/30.08.2022 through ITBA portal calling upon the appellant trust to file certain information/clarification. Another notices were also given vide notice dated 20.10.2022 requesting to submit the compliance by 25.10.2022. The appellant submitted details partially. In the circumstances, the ld. CIT(Exemption) rejected the applications filed for grant of regular registration observing as under :
Finding of ld.CIT(E) in : “3. The details submitted by the appellant on note on activity are very general in nature. The appellant has submitted only some photographs in support of evidences. No credible evidence is submitted in support of the claim.
3.1 Hence, the undersigned is unable to draw any satisfactory conclusion about genuineness of activities of the appellant.
4. In view of the above, the application filed by the appellant is hereby rejected.” Finding of ld.CIT(E) in : “3.1 In the instant case it is noticed that the assessee is neither registered u/s 12AB read with section 12A(1)(ac)(i) / 12A(1)(ac) (iii) nor approved u/s 10(23C) read with clause (i) / (iii) of first proviso to the said section and the case is not covered under the exclusions provided vide proviso to clause (i) of section 80G(5) of the Act. The assessee is also not a Regimental Fund or Non-Public Fund established by the armed forces of the Union for the welfare of the past and present members of such forces or their dependants. In fact, the application of the assessee in form No. 10AB for registration u/s 12AB filed under the provisions of section 12A(1)(ac)(iii) of the Act has been rejected vide order dated 27/10/2022. Therefore, the condition (i) of section 80G(5) of the Income Tax Act, 1961 is not fulfilled in this case.”
Being aggrieved by the rejection of the applications the appellant trust preferred the present appeals before this Tribunal assailing the impugned orders passed by ld.CIT(E).
6. Before us, the ld. AR submitted that appellant trust is genuinely engaged into charitable activities and has stated that appellant submitted partial information before ld.CIT(E) in response to the first notice. However, the appellant failed to submit the required evidences/documents called for by the Ld.CIT(E) as sufficient opportunity was not provided by ld.CIT(E) for submitting the additional evidences and the second notice given by the ld. CIT (Exemption) falls short of legal requirement of atleast giving 15 days time to respond to the notice. The appellant has all the evidences to substantiate the charitable activities. Therefore, in the interest of justice, ld. Counsel for the appellant prayed for remanding the matter to the file of ld.CIT(Exemption) for furnishing the requisite documents/evidences.
On the other hand, the ld. DR relied on the order of ld. CIT(Exemption).
We have heard the rival submissions and perused the relevant material on record. We find that, in the instant case(a) under consideration, the appellant trust filed applications on Form No.10AB dated 15.04.2022 and 16.04.2022 respectively seeking registration u/s.12A(1)(ac)(iii) and approval u/s.80G(5)(iii) of the Act. Appellant made partial compliance to the first notice issued by ld.CIT(E), however, it failed to comply with the second notice issued by ld.CIT(E). We note that ld.CIT(E) issued second notice on 20.10.2022 through ITBA portal requesting the appellant trust to file compliance on or before 25.10.2022. Perusal of impugned orders under challenge would reveal that ld.CIT(E) has provided much less opportunity to furnish the additional documents and to negate the adverse inference drawn by ld.CIT(E). This inaction of ld.CIT(E) deprived the appellant from reasonable opportunity. In this regard, we would like to take note of the judgment of Hon’ble Patna High Court in the case St. Paul’s Anglo Indian Education Society (20023) 263 ITR 377 (Patna) wherein the Hon’ble Court held that “opportunity of being heard should be real, reasonable and effective and same should not be empty formalities, it should not be a paper opportunity, the doctrine of natural justice is a facet of fair play in action and no person shall be saddled with a liability without being heard”. By virtue of aforesaid judgment, we hold that rejection of applications of the appellant is unjustified as the appellant was deprived of reasonable opportunity and time to produce the relevant documents to substantiate its claim. The impugned orders passed by ld.CIT(E) deprived the appellant trust from providing reasonable opportunity and therefore the appellant deserves an opportunity of being heard.
We therefore set aside the impugned findings of ld.CIT(E) and remand the issues raised in the instant appeals to the file of ld. CIT(E) for denovo consideration of applications. Needless to mention that ld.CIT(E) shall afford reasonable opportunity of hearing to the appellant in the set aside proceedings.
Effective grounds of appeal raised by the appellant in these twin appeals are allowed for statistical purposes.
10. In the result, both the appeals filed by the appellant trust are allowed for statistical purposes.
Order pronounced on this 23rd day of December, 2025.