PRADEEP SARDA FOUNDATION,MUMBAI vs. CIT (EXEMPTIONS), MUMBAI, MUMBAI

While in its appeal being the assessee has raised the following grounds: - “1. On the fact, circumstances of the case and in law, the Hon'ble Learned Commissioner of Income Tax (Exemptions), Mumbai (hereinafter referred as "Ld. CIT(E)") erred in rejecting the application filed in Form 10AB for approval U/s 80G(5)(iii) of the Income Tax Act, 1961 (hereinafter referred as "the Act") on two grounds: • That appellant have filed the application for regularization of provisional registration by November 2022, which was filed in month of March 2025, thereby the application was delayed by 28 months.

On the fact, circumstances of the case and in law, the Ld. CIT(E) erred in not accepting the explanation / justification for delay in filing the application for regularization of provisional registration. The Management of the appellant misinterpreted the provisions of the Act which was purely unintentional. It is submitted that the appellant has duly carried out its charitable activities as per the provisions of the Act, however inadvertently failed to comply the technical formalities of regularization of provisional registration due to misinterpretation of the provisions of the Act. It is prayed to your honour to consider the regularization application and condone the delay.

On the fact, circumstances of the case and in law, the Ld. CIT (E) erred in rejecting the application filed in Form 10AB for approval Us 80G stating that appellant has violated the statutory provisions of section 11 of the Act. The Ld. CIT(E) erred in stating that appellant intends to apply or receive the funds outside India as per the MOA/Trust Deed. The Ld. CIT(E) erred in stating that appellant ought to have amended the clause of MOA/ Trust Deed to align with the provisions of the Act. The Ld. CIT(E) failed to consider the submissions made during the course of proceedings. It is prayed to your honour to allow the approval made U/s 80G(5)(iii) of the Act and give necessary directions in this regard.”

We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee filed an application in Form No. 10AB on 31.03.2025 under section 12A(1)(ac)(iii) of the Act for seeking registration under section 12AB of the Act. On verification of the application, the learned CIT(E) found that the application was not complete, and all the documents required to accompany the application were not furnished. Accordingly, the notice was issued to the assessee to furnish the complete set of documents mentioned in Rule 17A(ii) of the Income Tax Rules, 1962 (“the Rules”). In response, the assessee filed its submissions and furnished the requisite details and documents.

After going through the same, the learned CIT(E) noticed that the assessee had obtained provisional registration in Form No. 10AC vide order

The learned CIT(E), vide the impugned order, disagreed with the submissions of the assessee and held that the assessee had neither been able to show any reasonable cause for delay nor establish that the assessee's trust had genuine hardship in filing the application within the due date. The learned CIT(E) further held that the obligation to furnish Form No. 10AB within the prescribed due date is a statutory and substantive requirement, not merely a procedural formality and thus, strict compliance with the prescribed condition is necessary.

During the hearing, the learned Authorised Representative (“learned AR”) reiterated the submissions made by the assessee before the lower authorities and submitted that the management of the assessee-Trust was ITAs No.8218 & 8219/Mum/2025 5 under the impression that Form No.10AB needs to be filed before the end of the provisional registration period (i.e. 31.03.2025) as the provisional certificate was granted upto the assessment year 2025-26 and were unaware of the specific condition under section 12A(1))(ac)(iii) of the Act. Thus, the learned AR submitted that due to this misunderstanding of the provisions of section 12A(1)(ac)(iii) of the Act, the assessee-Trust filed Form No.10AB on 31.03.2025, as its provisional registration was valid till the assessment year 2025–26, i.e., till 31.03.2025. The learned AR submitted that the delay of 28 months in filing the application for regularisation of provisional registration was merely on account of a misunderstanding of the provision, and there was no mala fide intention on the part of the assessee, nor would the assessee get any benefit from the late filing of Form No. 10AB in the present case.

On the other hand, the learned Departmental Representative (“learned DR”) vehemently relied upon the order passed by the learned CIT(E). The learned DR also relied upon the decision of the Hon’ble Supreme Court in PCIT vs Wipro Ltd., reported in (2022) 140 Taxman 223 (SC) and submitted that the timeline as provided in section 12A(1)(ac)(iii) of the Act is mandatory.

Having considered the submissions of both sides and perused the material available on record, we find that the reasons stated by the assessee for seeking condonation of delay in filing Form No. 10AB fall within the parameters for grant of condonation laid down by the Hon’ble Supreme Court in the case of Collector, Land Acquisition, Anantnag vs MST Katiji and ITAs No.8218 & 8219/Mum/2025 6 others, reported in 1987 (2) SCR 387. It is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. It is evident from the record that in the present case, the assessee did not stand to benefit from the late filing of Form No. 10AB for the regularisation of provisional registration. It is further undisputed that the assessee filed Form No. 10AB on 31.03.2025 for the regularisation of provisional registration.

It is pertinent to note that the first proviso to section 12A(1)(ac) of the Act grants the power to the Principal Commissioner or Commissioner to condone the delay in filing the application if there is reasonable cause for not filing the application within the prescribed time. From the perusal of section 10A(8) of the Act, which was under consideration before the Hon’ble Supreme Court in Wipro Ltd. (supra), we find that no such power has been granted to the Assessing Officer to condone the delay in furnishing the declaration as required beyond the due date for furnishing the return of income. Thus, we are of the considered view that in such circumstances, the Hon’ble Supreme Court in Wipro Ltd. (supra) held that the requirements of section 10A(8) of the Act are mandatory in nature. However, from a plain reading of the provisions of section 12A(1)(ac) of the Act, it is evident that the statute authorises the learned CIT(E) to condone the delay in filing Form No. 10AB upon being satisfied regarding the existence of reasonable cause for the delay.

Having considered the submissions of the learned AR and the reasons stated by the assessee before the learned CIT(E), we are of the considered view that the assessee has proved sufficient cause for not filing Form No. 10AB within the prescribed time before the learned CIT(E). Accordingly, we are of the considered view that the said delay should be condoned.

In the present case, the learned CIT(E) also rejected the application filed by the assessee in Form No. 10AB for seeking registration under section 12AB of the Act on the basis that one of the clauses of the assessee’s Trust deed leaves room for the potential violation of the provisions of section 11, which reads as follows: -

From the perusal of the impugned order, we find that in response to the show cause notice issued by the learned CIT(E), the assessee submitted that the mere presence of such clause may create an unintended impression, and therefore, to remove unambiguity and fully align with the mandate of section 11, it had agreed to drop these clauses from its Trust deed. However, as no documentary evidence like resolution passed by the board of trustees for dropping the above clauses nor any application filed before the Charity Commissioner for amendment in object of the Trust was submitted by the assessee, the learned CIT(E) held that the use of such ITAs No.8218 & 8219/Mum/2025 8 words in the MOA/Trust deed, clearly conveys the intention of the assessee to utilize fund outside India thereby leaving the possibility for future endeavours which may involve expenditure outside the country. Accordingly, the learned CIT(E), inter alia, rejected the application filed by the assessee for regularisation of provisional registration for violation of section 11 of the Act.

During the hearing, the learned AR submitted that the assessee has already initiated the process for amendment of the Trust deed insofar as it provided for incurring expenditure outside India. The learned AR submitted that the entire process of amendment and seeking approval from the Charity Commissioner may require a further 2-3 months, and if an opportunity is granted, the assessee will file the revised Trust deed before the learned CIT(E) for examination.

Therefore, having considered the facts and circumstances of the present case, we deem it appropriate to set aside the impugned order and restore the application filed by the assessee in Form No. 10AB for regularisation of provisional registration under section 12AB of the Act to the file of the learned CIT(E) for de novo adjudication, as per law, after condoning the delay in filing Form No. 10AB by the assessee. We further direct the assessee to file its amended Trust deed/MOA at the earliest before the learned CIT(E), which may be considered in accordance with law. With the above directions, the grounds raised by the assessee are allowed for statistical purposes. Needless to mention, no order shall be passed without affording reasonable and adequate opportunity of hearing to the assessee.

As we remit the issue of grant of registration under section 12AB of the Act to the file of the learned CIT(E) for de novo adjudication, the order of the learned CIT(E) rejecting the application for registration under section 80G of the Act is also set aside and the matter is restored to the file of the learned CIT(E) for deciding afresh. As a result, the grounds raised by the assessee are allowed for statistical purposes.

In the result, both the appeals filed by the assessee are allowed for statistical purposes. Order pronounced in the open Court on 27/02/2026