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Facts
The assessee, a charitable trust, filed applications for registration under Section 12A(1)(ac)(iii) and approval under Section 80G(5)(iii), which were rejected ex parte by the CIT(Exemption) due to non-response to notices. The assessee contended that they already held valid registration under Section 12A(1)(ac)(i) and that the fresh applications were erroneously filed. A delay of 129 days in filing the appeal was attributed to lack of digital literacy and procedural unfamiliarity.
Held
The Tribunal condoned the delay, finding sufficient cause. It set aside the CIT(Exemption)'s orders and remanded the matters for fresh adjudication. The CIT(Exemption) was directed to consider the existing valid registration, assess the maintainability of the new applications, re-examine the Section 80G(5)(iii) application, and provide a proper hearing. The assessee was ordered to pay Rs. 5,000 as costs for procedural indifference.
Key Issues
Whether the rejection of applications under Section 12A(1)(ac)(iii) and Section 80G(5)(iii) due to ex parte proceedings was justified, especially given the assessee's pre-existing valid registration and the reasons for non-compliance; and the condonation of delay in filing appeals.
Sections Cited
12A(1)(ac)(iii), 80G(5)(iii), 12A(1)(ac)(i), 12AB, 80G, Rule 17A, Rule 11AA
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: S/SHRI T.R. SENTHIL KUMAR & MAKARAND V.MAHADEOKAR
PER MAKARAND V.MAHADEOKAR, AM: These two appeals by the assessee are directed against the separate orders passed by the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter “CIT(Exemption)”] dated 03.09.2024 in Form No. 10AD, whereby the CIT(Exemption) rejected the assessee’s applications (i) for registration under section 12A(1)(ac)(iii) and (ii) for approval under section 80G(5)(iii) of the Income-tax Act, 1961 [hereinafter “the Act”], and further cancelled the assessee’s registration and approval granted earlier.
Condonation of Delay
Before proceeding to adjudicate the appeals on merits, we note that there is a delay of 129 days in filing both the present appeals. The assessee has moved a formal application for condonation of delay accompanied by duly sworn affidavits of Shri Prabhudas Bhanabhai Chaudhari, one of the trustees of the assessee-trust, explaining the reasons for such delay. In the affidavit, it is stated that the assessee-trust has never previously been involved in income-tax litigation, nor are the trustees conversant with the procedures and compliances on the Income Tax Portal. The deponent, aged about 68 years, has categorically affirmed that he is not familiar with the use of computers, nor does he operate the e-filing account of the trust. The applications filed under section 12A(1)(ac)(iii) and section 80G(5)(iii) were rejected by the CIT(Exemption) by orders dated 03.09.2024, which were hosted only on the portal. However, due to lack of awareness, the assessee remained unaware of the said rejection orders for a considerable time. It was only in January 2025, when the deponent came to know—through interaction with trustees of other similarly placed trusts—that their applications had been rejected and that even the assessee-trust’s name was similarly affected. Upon further enquiry and with the assistance of the Chartered Accountant, the assessee traced the rejection orders on the portal and immediately initiated steps to file appeals before the Tribunal. The appeals were filed on obtaining certified documents and engaging legal counsel at Ahmedabad. The delay, therefore, is neither deliberate nor contumacious. It has occurred on account of lack of technical access and procedural unfamiliarity, as well as the bona fide belief that the applications were under process. The assessee has acted promptly upon discovery of the rejection and has explained the entire sequence of events in the sworn affidavits, supported by a consistent timeline.
We have perused the contents of the affidavit and find the explanation for delay to be reasonable, credible, and arising from bona fide and unavoidable circumstances. It is settled principle that substantial justice should prevail over technicalities, and that the expression “sufficient cause” should receive a liberal construction in advancing the cause of justice. Accordingly, since the learned Departmental Representative (DR) has not raised any serious objection to the condonation and considering the bona fide explanation placed on record through the affidavit of the trustee, we are satisfied that sufficient cause has been shown. Hence, the delay of 129 days in filing both the appeals is hereby condoned, and the appeals are admitted for adjudication on merits.
Facts of the Case
The facts, common to both the captioned appeals, are that the assessee is a registered charitable trust. The assessee had filed applications in Form No. 10AB - first, seeking regular registration under section 12A(1)(ac)(iii) of the Income-tax Act, 1961, and second, for approval under section 80G(5)(iii) of the Act. These applications were submitted pursuant to the relevant clauses under Rule 17A and Rule 11AA of the Income-tax Rules, 1962, respectively. In connection with these applications, the office of the CIT (Exemption) issued notices to the assessee requiring it to furnish supporting documents and evidences to establish the genuineness of activities, the authenticity of objects, and the compliance with statutory conditions as prescribed. Specifically:
• In the case of the application under section 12A(1)(ac)(iii), opportunities were granted through notices dated 03.07.2024 and 06.08.2024. • In the case of the application under section 80G(5)(iii), similar notices were issued on 04.07.2024 and 08.08.2024.
However, as recorded in the respective orders in Form No. 10AD dated 03.09.2024, the assessee did not respond to the above notices, nor did it seek any adjournment or extension. In the absence of any reply or submission, the learned CIT(Exemption) proceeded to dispose of both applications ex parte, concluding that the assessee had failed to demonstrate the genuineness of its activities and compliance with the requisite conditions under the Act. Consequently, the application under section 12A(1)(ac)(iii) was rejected and the provisional registration was cancelled; similarly, the application under section 80G(5)(iii) was also rejected and the earlier provisional approval was cancelled. Notably, in both orders passed in Form No. 10AD, the learned CIT(Exemption) did not make any reference to the fact that the assessee already held a valid registration under section 12A(1)(ac)(i), which was in force up to Assessment Year 2026– 27, a fact that was critical to determining the maintainability of the fresh application under clause (iii).
Aggrieved by the orders of the CIT(Exemption), the assessee is in appeal before us raising following grounds of appeal: In 1. That on facts, and in law, the learned CIT (Exemption) has grievously erred in not granting sufficient and reasonable opportunity of hearing and in rejecting the application for registration u/s 12A (1) (ac) (iii) of the Act, vide ex-parte order.
2. That on facts and in law, the application made u/s 12A (1) (ac) (iii) of the Act ought to have been granted by learned CIT (Exemption) as prayed for.
3. The appellant craves liberty to add, alter, amend any ground of appeal.
1. That on facts, and in law, the learned CIT (Exemption) has grievously erred in not granting sufficient and reasonable opportunity of hearing and in rejecting the application for approval u/s 80G(5) (iii) of the Act, vide ex- parte order. 2. That on facts and in law, the application made u/s 80G (5) (iii) ought to have been granted by learned CIT (Exemption) as prayed for. 3. The appellant craves liberty to add, alter, amend any ground of appeal.
During the course of hearing before us, the learned Authorised Representative (AR) submitted that the assessee already held a valid registration under section 12A(1)(ac)(i), granted by the competent authority, which is valid up to A.Y. 2026–27. The AR submitted that the application under clause (iii) of section 12A(1)(ac) was erroneously filed under mistaken advice, resulting in a premature and unnecessary request for fresh registration. The AR further drew our attention to the documentary list submitted during the hearing, which includes existing registration certificate under section 12A(1)(ac)(i) valid till A.Y. 2026–27, copies of trust deed in English and Gujarati and audited financial statements for F.Ys.
2022–23 and 2023–24. It was pointed out that in the impugned orders passed in Form 10AD, the learned CIT(Exemption) has not recorded or even adverted to the fact of existing registration under section 12A(1)(ac)(i) valid till A.Y. 2026–27. Insofar as the procedural lapse is concerned, the learned AR candidly admitted that the assessee could not respond to notices issued by the CIT(Exemption) owing to lack of digital access and portal familiarity, as affirmed in the affidavits placed on record by the trustee Shri Prabhudas Bhanabhai Chaudhari. It was submitted that the lapse was unintentional and arose out of ignorance and procedural limitations, not out of any contumacious conduct or deliberate non-compliance.
We have carefully considered the rival submissions and perused the material available on record. The controversy in both appeals pertains to the rejection of the assessee’s applications in Form No. 10AB—one seeking regular registration under section 12A(1)(ac)(iii), and the other seeking approval under section 80G(5)(iii) of the Act. The learned CIT(Exemption) passed ex parte orders in both matters on 03.09.2024 in Form No. 10AD, citing non-compliance with statutory notices.
During the hearing before us, the assessee brought on record, for the first time, that it already held valid registration under section 12A(1)(ac)(i), granted under the amended regime, which is in force up to Assessment Year 2026–27. It was submitted that the fresh application under clause (iii) was mistakenly filed due to incorrect advice. In support, the assessee produced the registration certificate, trust deed, audited accounts, and affidavits affirming procedural constraints. It is admitted that the assessee did not respond to notices issued by the CIT(Exemption), and the existence of the earlier registration was not brought to his attention during the proceedings. However, this fact, now placed on record, materially affects the maintainability of the application under clause (iii). The CIT(Exemption), though constrained by lack of response, also failed to note this fact from the departmental records, resulting in an order passed without full appreciation of the background. As regards the procedural lapse, the assessee has candidly accepted its failure to respond to notices, attributing it to lack of portal access and digital literacy. The explanation is supported by affidavits from the trustee and appears genuine and not indicative of any deliberate non-compliance.
In the totality of circumstances, we are of the considered view that the ends of justice would be met by granting the assessee one more opportunity to present its case. The impugned orders were passed without considering relevant facts now placed on record, and the application under section 12A(1)(ac)(iii) itself appears to have been filed prematurely. A cautious and fact-based approach was warranted.
Accordingly, we set aside both the impugned orders passed by the CIT(Exemption) and restore both matters to his file for fresh adjudication in accordance with law. In doing so, we direct the learned CIT(Exemption) to take note of the existing valid registration granted to the assessee under section 12A(1)(ac)(i), which is in force up to A.Y. 2026–27, and determine whether the application under clause (iii) was maintainable at all, examine afresh the merits of the assessee’s application under section 80G(5)(iii), in light of the documents now placed on record before us, afford reasonable and effective opportunity of hearing to the assessee before passing a speaking and reasoned order. The CIT(Exemption is also directed to exercise discretion judiciously, keeping in mind the non-adversarial nature of proceedings under sections 12AB and 80G.
The assessee is directed to cooperate fully in the remand proceedings and ensure compliance with any requisitions or hearing notices issued by the CIT(Exemption) in a timely manner.
Before parting, we find it necessary to observe that the assessee failed to respond to the statutory notices issued by the CIT(Exemption) during the processing of its applications under sections 12A(1)(ac)(iii) and 80G(5)(iii). This non-compliance led to the passing of ex parte orders and contributed to avoidable litigation and administrative burden. The explanation offered— based on lack of portal familiarity and procedural ignorance—may be accepted as bona fide, but cannot entirely excuse the failure to take reasonable steps to monitor the progress of its statutory applications. To ensure greater diligence and responsibility in such matters going forward, and as a token of judicial disapproval of procedural indifference, we direct the assessee to pay cost of Rs.5,000/-, to be deposited to the credit of Income Tax Department, within a period of 60 days from the date of receipt of this order. The proof of payment shall be furnished before the office of the CIT(Exemption) at the time of remand proceedings.
In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the Court on 26th June, 2025 at Ahmedabad.