AMRUT PUBLIC CHARITABLE TRUST,MUMBAI vs. ITO, EXEMPTION WARD 1(1), MUMBAI

The learned CIT(Exemptions), after examining the submissions, held that as per clause (iii) of the first proviso to section 80G(5), an institution holding provisional approval is required to apply for regular approval at least six months prior to the expiry of the provisional approval or within six months of commencement of its activities, whichever is earlier. It was held that since the assessee’s provisional approval under section 80G(5) was granted on 31.12.2022, the application for regular approval ought to have been filed by June 2023. However, the assessee filed the application only on 28.03.2025, resulting in a delay of more than 20 months, which, according to the learned CIT(Exemptions), rendered the application non-maintainable. The learned CIT(Exemptions) further held that filing of Form No. 10AB within the prescribed time is a statutory and substantive requirement and not a mere procedural formality. Reliance was placed on the decisions of the Hon’ble Supreme Court in PCIT vs. Wipro Ltd. (2022) 140 taxmann.com 223 (SC) and Commissioner of Customs vs. Dilip Kumar & Co. (2018) 9 SCC 1, to hold that exemption provisions require strict compliance and that delay cannot be condoned in absence of statutory enabling provision.

Aggrieved by the order of the learned CIT(E), the assessee is in appeal before us and has raised following grounds:

That the learned CIT(Exemption) failed to consider the principle of substantive justice over technicalities, which is paramount in the case of charitable organizations. The Tribunal is requested to adopt a liberal and pragmatic approach and condone the technical delay, thereby allowing the application to be decided on its merits and not on a procedural lapse.

That the learned CIT(Exemption) failed to consider that the appellant trust is otherwise eligible for the grant of final 80G approval, as it has substantially complied with all the statutory and regulatory requirements and its activities are genuinely charitable, as evidenced by its accounts and activities during the provisional approval period.

Without prejudice to the above, the appellant requests that the application originally filed under clause (iii), be considered as an application filed under clause (iv)(B) of section 80G(5) of the Income Tax Act, 1961.

Your appellant prays for permission to add to, amend or alter any or all the grounds of appeal at any time prior to the hearing of the appeal.

It was further submitted that immediately upon discovery of this discrepancy during an internal review in March 2025, the assessee acted with promptitude and filed the application for regular approval under section 80G(5) in Form No. 10AB on 28.03.2025. It was emphasised that there was no deliberate inaction, negligence or mala fide intent on the part of the assessee, and the delay occurred purely due to technical confusion arising from the issuance of multiple Form No. 10AC orders by the Department itself.

The learned AR submitted that while the learned CIT(E) rejected the application under section 80G(5) on the ground of delay of more than 20 months, the same authority, on the very same set of facts, granted regular registration under section 12AB(1)(b) to the assessee for a period of ten years from A.Y. 2027–28 to A.Y. 2036–37. It was submitted that this fact clearly establishes that the charitable character, objects and activities of the assessee stood accepted by the Department, and the rejection under section 80G(5) was solely on a procedural ground.

The learned AR further submitted that a detailed application for condonation of delay dated 14.01.2026 has been filed before the Bench, wherein the assessee has explained the reasons constituting “reasonable cause”. In support thereof, the assessee has filed a sworn affidavit of the trustee, Shri Bhupesh S. Shah, and a separate affidavit of the Chartered Accountant, Shri P. P. Jayaraman, both duly notarised.

It was submitted that the trustee’s affidavit categorically affirms the issuance of two separate Form No. 10AC orders, the reliance on professional advice, the bona fide misunderstanding regarding timelines, and the immediate corrective action taken upon discovery of the error. The affidavit also affirms that non- condonation of delay would cause irreparable hardship and severely hamper the charitable activities of the trust. It was further submitted that the Chartered Accountant, in his affidavit, has candidly owned the mistake and affirmed that the delay arose from a bona fide interpretational error owing to the overlapping transition regime, and that the assessee acted immediately once the correct legal position was realized. It was submitted that such conduct demonstrates transparency and bona fides rather than negligence or contumacious disregard of law.

The learned Authorised Representative placed reliance on judicial precedents, including the decision of the ITAT, Pune Bench in the case of Ramtirth Godavari Seva Samiti (ITA No. 2602/PUN/2025), wherein delays in filing applications under the new charitable registration regime were condoned, recognising that the regime is complex and prone to bona fide lapses. Reliance was also placed on the decision of the Mumbai Bench of the Tribunal in the case of Anybody Can Help Foundation (ITA No. 7245/MUM/2025), wherein the matter was restored to the file of the CIT(E) with a direction to grant approval under section 80G if the assessee was otherwise eligible.

Further reliance was placed on CBDT Circular No. 7/2024, wherein the Board itself has acknowledged widespread confusion in the new registration and approval framework and has granted extensions to mitigate genuine hardship faced by charitable institutions.

Without prejudice, it was submitted that even if the application filed under clause (iii) of section 80G(5) is held to be defective, the same may be directed to be considered under clause (iv)(B) of section 80G(5), so as to advance the cause of substantial justice.

The learned AR thus prayed that the delay in filing Form No. 10AB be condoned, the impugned order of the learned CIT(Exemptions) be set aside, and the matter be restored to the file of the CIT(Exemptions) with a direction to examine the assessee’s application for approval under section 80G(5) on merits and in accordance with law.

The learned Departmental Representative strongly objected to the prayer of the assessee for condonation of delay. It was submitted that the statutory scheme governing approval under section 80G(5) of the Act prescribes a clear and mandatory time limit for filing the application in Form No. 10AB, as provided under clause (iii) of the first proviso to section 80G(5).The learned Departmental Representative submitted that the statute does not vest any power in the CIT(E) to condone delay in filing the application beyond the prescribed time limit. It was contended that, in the absence of an express statutory provision conferring such power, the learned CIT(Exemptions) was correct in treating the application as non-maintainable and rejecting the same. It was further submitted that exemption provisions under the Act are to be construed strictly and any deviation from the statutory conditions would render the claim untenable. The learned Departmental Representative supported the reasoning adopted by the learned CIT(Exemptions) and submitted that the impugned order does not suffer from any infirmity warranting interference.

We have carefully considered the rival submissions and perused the material available on record, including the impugned order passed by the learned Commissioner of Income Tax (Exemptions), the written submissions filed before us, the application seeking condonation of delay, and the sworn affidavits filed by the trustee of the assessee trust as well as by the Chartered Accountant.

It is an undisputed fact that the assessee trust was granted registration under section 12A, which was valid up to A.Y. 2026– 27, and provisional approval under section 80G(5) in Form No. 10AC, which was valid up to A.Y. 2025–26. It is also undisputed that the assessee filed its application for regular approval under section 80G(5) in Form No. 10AB on 28.03.2025, which, according to the learned CIT(Exemptions), resulted in a delay of more than 20 months when reckoned with reference to the timeline contemplated under clause (iii) of the first proviso to section 80G(5). The application was rejected solely on the ground of delay, without entering into the merits of the assessee’s eligibility or the genuineness of its charitable activities.

It is further a matter of record that, on the very same set of facts and during the same period, the Department granted the assessee regular registration under section 12AB(1)(b) for a period of ten years from A.Y. 2027–28 to A.Y. 2036–37, thereby expressly accepting the charitable objects and genuineness of the assessee’s activities. Thus, the rejection of approval under section 80G(5) is not founded on any adverse finding with respect to the substantive conditions prescribed under the Act, but rests entirely on a procedural lapse.

The assessee has consistently explained that the delay occurred on account of bona fide confusion arising from the existence of two separate Form No. 10AC orders carrying different terminal years of validity, one pertaining to registration under section 12A and the other to provisional approval under section 80G(5). This explanation is not only plausible but is also supported by contemporaneous documentary evidence, including sworn affidavits and the conduct of the assessee in taking prompt corrective action upon discovery of the mistake. The trustee, in a duly notarised affidavit, has affirmed reliance on professional advice and absence of any deliberate or contumacious disregard of statutory requirements. The Chartered Accountant has, in his affidavit, candidly acknowledged the interpretational error arising from the overlapping timelines under the transition regime and has affirmed that the assessee acted immediately upon realising the correct legal position.

At this stage, it is relevant to note that the complexity of the new registration and approval regime for charitable institutions is not merely an assertion of the assessee, but stands acknowledged at the administrative level as well. The CBDT, in Circular No. 7/2024, has recognised that charitable institutions have faced genuine difficulties and procedural lapses while navigating the transition to the new regime, owing to multiple statutory provisions, forms, timelines and portal-related compliances. While the said Circular does not dilute statutory requirements, it reflects the administrative understanding that rigid adherence to procedural timelines, in isolation, may result in unintended and disproportionate consequences for genuine charitable institutions.

The controversy raised before us is also no longer res integra. The coordinate Bench of the Tribunal in Anybody Can Help Foundation vs. ITO (Exemptions) (ITA No. 7245/Mum/2025, order dated 06.01.2026) has examined the scheme of section 80G(5) in the context of the new registration regime and has laid down clear principles governing rejection of applications on technical grounds of limitation. The Tribunal has held that where an application in Form No. 10AB is rejected solely on the ground of delay, without recording any adverse finding regarding the charitable nature of activities or non-compliance with the substantive conditions of section 80G(5), such rejection is legally unsustainable. It has further been held that a purely technical lapse should not result in permanent denial of approval, particularly when the trust is otherwise eligible and its activities are not in doubt.

The learned DR has objected to the grant of relief on the ground that the statute, as it stood at the relevant point of time, did not empower the learned CIT(E) to condone delay and that exemption provisions are required to be construed strictly. There can be no dispute with the proposition that exemption provisions must be complied with in accordance with law. However, as rightly held by the coordinate Bench, the issue before us is not whether the learned CIT(E) could have condoned the delay, but whether an application otherwise eligible can be rejected outright on a purely technical ground, leading to irreversible civil consequences, without any examination on merits.

In our considered view, where the delay is satisfactorily explained, the conduct of the assessee is bona fide, the charitable character and genuineness of activities stand accepted by the Department itself in parallel proceedings, and the administrative authorities themselves have acknowledged the practical difficulties faced by charitable institutions under the new regime, a mechanical rejection of the application solely on the ground of limitation defeats the object of the statutory scheme and results in disproportionate hardship.

In view of the foregoing discussion, and having regard to the totality of facts and circumstances of the case, we are of the considered opinion that the impugned order passed by the learned CIT (E) cannot be sustained.

We find that the rejection of the assessee’s application in Form No. 10AB has been made solely on the ground of delay, without recording any adverse finding in respect of the charitable objects of the trust, the genuineness of its activities, or compliance with the substantive conditions prescribed under clauses (i) to (v) of section 80G(5) of the Act. The delay has been satisfactorily explained as arising from bona fide confusion under the transition regime, which explanation stands supported by sworn affidavits and contemporaneous material and has not been rebutted by the Revenue.

We also note that, on the very same set of facts, the Department has granted the assessee regular registration under section 12AB(1)(b) for a period of ten years, thereby accepting the charitable nature and genuineness of its activities. In such circumstances, rejection of approval under section 80G(5) on a purely technical ground, without examination on merits, would lead to irreversible and disproportionate consequences, defeating the object of the statutory scheme.

Respectfully following the binding ratio laid down by the coordinate Bench of the Tribunal in Anybody Can Help Foundation vs. ITO (Exemptions) (ITA No. 7245/Mum/2025, order dated 06.01.2026), and applying the settled judicial principle that procedural prescriptions are intended to advance the cause of justice and not to defeat substantive rights, we hold that the impugned rejection of the assessee’s application is not sustainable in law.

Accordingly, we set aside the impugned order passed by the learned CIT(Exemptions) and restore the matter to his file with the following directions: i. The learned CIT(Exemptions) shall condone the delay in filing the assessee’s application in Form No. 10AB, the same having been satisfactorily explained as bona fide and unintentional; and ii. The learned CIT(Exemptions) shall thereafter examine the assessee’s application for approval under section 80G(5) on merits, strictly in accordance with law, and grant approval if the assessee is otherwise found to be eligible, after verifying compliance with the statutory conditions and the genuineness of its charitable activities, after affording due opportunity of being heard to the assessee.

In the result, the appeal filed by the assessee is allowed for statistical purposes.