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Facts
The assessee's application for registration under section 12AB of the Income Tax Act, 1961, was rejected by the CIT(E) due to a significant delay in filing Form 10AB. The assessee attributed the delay to inadvertent oversight by a person with limited knowledge of taxation rules.
Held
The Tribunal condoned the delay in filing Form 10AB, considering it was due to unintentional reasons and lack of knowledge, especially in light of recent changes in law and CBDT clarifications. The matter was restored to the CIT(E) for fresh adjudication on merits.
Key Issues
Whether the delay in filing an application for registration under Section 12AB of the Income Tax Act, 1961, can be condoned and if the application should be decided on merits.
Sections Cited
12A(1)(ac)(iii), 12AB, Income Tax Act, 1961
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY & SHRI ARUN KHODPIA, AM
Assessee by : Shri Ashok Mehta, AR : Shri Arun Kanti Datta, CIT-DR Revenue by Date of Hearing 29.01.2026 : Date of Pronouncement : 20.02.2026 O R D E R
Per Arun Khodpia, AM:
The present appeal preferred by the assessee is directed against the order of Commissioner of Income Tax (Exemption) [in short “Ld. CIT(E)”], dated 28.06.2025, rejecting the application of assessee in Form 10AB under section 12A(1)(ac)(iii) of the Income Tax Act, 1961 (the Act) seeking registration under section 12AB of the Act. The main reason for rejecting the application of assessee was delay in filing of application in Form 10AB of the Act. It is observed by the ld. CIT(E) while rejecting the subject application that the Shree Surat Jain Panchayat Fund assessee-trust should have applied for regularization of provisions registration latest by the end of September 2023 (being six months from the end of Financial Year in which the activities were carried out), however the Trust could have filed application for regularization of provisional registration under section 12A on 29.10.2024 i.e., after a delay of 12 months. The assessee in response to aforesaid delay have submitted that the delay in filing of application was due to inadvertent oversight, as the person appointed by the Trust to look after its taxation assignments was having limited knowledge of taxation rules.
Such reasons assigned by the assessee was not found favour with the ld. CIT(E), who observed that the contention of assessee is not acceptable as oversight cannot be considered as a reasonable cause of delay, the assessee-trust is supposed to comply with compliances of law, it is well-settled principle that ignorance of law cannot be pleaded as defense or valid excuse. Before us, following grounds of appeal raised by the assessee to challenge the aforesaid order of ld. CIT(E):
“1. The learned Commissioner of Income Tax Exemptions Mumbai erred in rejecting the application of the trust under section 12AB vide order dated 28-6- 2025.
2. The learned Commissioner of Income Tax Exemptions Mumbai erred in not condoning the delay in filling the application, without considering the fact that the trust is a non-profit organization with limited resources and the delay was on account of the new law which was not understood properly by trustees or the accountant in-charge of filling the application.”
Shree Surat Jain Panchayat Fund 3. At the outset before us, the ld. AR of the assessee submitted that the delay in filing of application was inadvertent due to lack of knowledge in the person appointed, further it is submitted that there were certain recent changes in the scheme of statute regarding registration of trusts and filing of applications, which is acknowledged and clarified by the CBDT by its Circular No. 7/2024 dated 25.05.2024, considering the issue of wrong section code and understanding issues by the assessees, thereby extended and relaxed the date of filing of application up to 30.06.2024. Since, the assessee in present matter has filed its application on 29.10.2024, the major portion of delay out of 12 months has been covered by the Circular of CBDT, which was issued on 24.04.2024 but the ld. CIT(E) has not taken into consideration such directions of CBDT. The remaining delay of approx four months was due to misunderstanding of law by the person, who was looking after the taxation matters of the assessee- trust. It is argued that, the assessee trust should not be penalized for such reasons as there was no adverse comments by the ld. CIT(E) to find any violation or adversity in the objects, activities or on merits in the application of the assessee trust. It was the submission that the delay in filing of application in Form 10AB may please be condoned and the matter to be set-aside to the file of ld. CIT(A) for fresh consideration on merits. In support Ld AR, placed his reliance on the following decisions: a. in the case of Shri Ramtirth Godavari Seva Samiti vs. CIT(E) dated 05.01.2026, Shree Surat Jain Panchayat Fund b.
Fatima Charitable Trust vs. CIT(E) dated 08.12.2025 and c.
Mata Chameladevi Educational and Charitable Trust vs. CIT(E) dated 06.06.2025
Per contra, the ld. CIT-DR representing the revenue vehemently supported the orders of ld. CIT(E).
We have considered the rival submissions and perused the material available on record and case laws relied upon by the ld. AR. Admittedly in present case which falls during the period, when the CBDT was also observing that there is certain misunderstanding of law and difficulties faced by the assessee and stack holders in filing of Form 10A/10AB, therefore some relaxation has been allowed to them. Accordingly, the Circular No. 7/24 (supra) was issued and the date of filing of application are relaxed up to 30.06.2024. The decision relied upon by the ld. AR are in the case of Shri Ramtirth Godavari Seva Samiti vs. CIT(E) dated 05.01.2026, Fatima Charitable Trust vs. CIT(E) dated 08.12.2025 and Mata Chameladevi Educational and Charitable Trust vs. CIT(E) dated 06.06.2025, the respective benches of Tribunal has taken a view that, if the delay was caused due to unintentional mistake and there was no deliberate or intentional act of the assessee proved to be delaying the filing of prescribed forms, than in the interest of natural justice, the delay should be Shree Surat Jain Panchayat Fund condoned. Further, we take support from the settled principle of law as held by Hon’ble Apex Court in the case of Jaiswal Vidya Shankar vs. ITO (SLP Nos. 26310 & 26311 of 2024, that while dealing with the issue of condonation of delay the authorities ought to adopt a justice-oriented and liberal approach.
In terms of aforesaid observations in the facts and circumstances of the present case, we are of the considered view that the delay in filing of Form 10AB in the present matter was due to unintentional reasons so deserves to be condoned and the application of assessee to be decided on merits, we thus condoned the delay in filing of Form 10AB by restoring the matter back to the file of ld. CIT(E) for fresh adjudication.
Needless to say, reasonable opportunity of being heard shall be provided to the assessee in the set-aside proceedings.
In result, the appeal of assessee stands allowed, in our aforesaid observations.
Order pronounced in the open court on 20-02-2026.