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Judgment
PER BRAJESH KUMAR SINGH, AM,
This appeal preferred by the assessee is against the order of Ld. Commissioner of Income Tax (Exemption), Lucknow order dated 24.09.2025, rejecting the application of the assessee filed u/s 12A(1)(ac)(iii) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] on the ground that the assessee failed to file an application in Form 10AB of the Act within the extended due dates. The relevant extracts of the order of the Ld. CIT(E) are reproduced as under:
“ The applicant filed an online application under sub-clause (iii) of clause (ac) to sub-section (1) of section 12A of the Income Tax Act, 1961 (the Act) on 11.01.2025 for approval. The applicant is provisionally registered vide order dated 07.04.2022 with unique registration number AAGTM2234EE20211 from AY 2022-23 to AY 2024-25
2.As per the provisions contained in clause (iii) of clause (ac) to sub-section (1) of section 12A of the Income-tax Act, the application was required to be filed at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier. Since, the applicant is provisionally approved form AY 2022-23 to 2024-25, therefore, the application in Form 10AB was required to be filed, in either case, on or before 30.09.2023. further, the CBDT, vide Circular no. 7/2024 dated 25.04.2024 had extended this due date to 30.06.2024. Despite this, the applicant failed to furnish the application within the extended due date.
3.Since the applicant has failed to file application in Form 10AB within extended due dates, therefore, the belated application cannot be accepted, hence, rejected as not maintenance.”
Aggrieved with the said order, the assessee is in appeal before us on the following grounds of appeal:
“ 1 That in the facts and in the circumstances of the case and in law the Ld. Commissioner of Income Tax (Exemption), Lucknow ("Ld CIT(E)') has erred in rejecting the application for registration filed in Form 10AB as "not maintainable" solely on the ground of delay in filing, without appreciating the genuine hardship and reasonable cause that prevented the Appellant from filing the application within the prescribed time,
2.Failure to exercise discretion to condone delay. That in the facts and circumstances of the case and in law the Ld. CIT(E) failed to appreciate that the provisions of Section 12A/12AB are beneficial legislation intended to promote charitable activities The Ld. CIT(E) ought to have exercised their powers to condone the delay in filing the application (filed on 11.01 2025) in the interest of substantive justice, rather than rejecting the same in limine on hyper-technical grounds
3.Violation of Principles of Natural Justice. That in the facts and circumstances of the case and in law the Ld. CIT(E) erred in not providing the Appellant with a specific opportunity to explain the reasonable cause for the delay before summarily rejecting the application. The rejection order is passed mechanically without considering that the substantive right of exemption should not be denied due to procedural lapses
4 Non-adjudication on Merits. That in the facts and circumstances of the case and in law the Ld. CIT(E) erred in not examining the objects and the genuineness of the activities of the Trust. The Appellant has been carrying out genuine charitable activities and fulfils all conditions for registration under Section 12AB The application should have been decided on merits rather than being dismissed on the threshold of limitation.
5.Directory nature of timelines. That in the facts and circumstances of the case and in law the Ld. CIT(E) failed to appreciate that the timelines prescribed under the Act for filing registration applications have been held by various judicial forums to be directory and not mandatory, especially when the delay is not intentional or mala fide.
The above grounds are without prejudice to each other. The Appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of the appeal.
The Appellant prays that appropriate relief be granted based on the above grounds of appeal and the facts and circumstances of the case.”
We have heard both the parties and perused the material available on record. In this case, the application of the assessee was rejected on the ground that the applicant had failed to file application in Form 10AB within extended due dates and therefore, the belated application was not accepted by the Ld. CIT(E) and rejected it as not maintainable. However, as noted above, the applicant was provisionally registered vide order dated 07.04.2022 from A.Y. 2022-23 to 2024-25. On similar facts, the Mumbai Bench of the Tribunal in the case of Shamkris Charity Foundation vs. Commissioner of Income tax (Exemption) in ITA No.- 3394/Del/2025 vide order dated 27.10.2025 has held that such a delay can be condoned by the Ld. CIT(E) u/s 12A(i)(ac)(vi) of the Act. The relevant extracts of the said order are reproduced as under:
“4.We heard the parties and perused the material on record. The assessee is having a provisional registration under section 12A of the Act from AY 2022-23 to 2024-25 (page 26 to 28 of paper book). The assessee made an application in Form 10AB for final registration on 24.08.2024 which was rejected by CIT(E) on the ground that there is a delay in filing the Form 10AB and that the object clause of the trust deed contains clause which enables potential spending outside India. With regard to the delay in filing the application for final registration, the assessee submitted a petition for condonation of delay (page 107 to 109 of paper book) before the CIT(E) stating that the delay is due to the inadvertent error on the part of the employee who was in charge of the income tax related matters of the assessee. The ld DR vehemently opposed the said submission stating that the trustees should have monitored the income tax matters and should have taken some action against the said employee which is not the case here. In this regard it is relevant to notice that prior to 01.10.2024, the power to condone the delay in filing Form 10AB was vested with CBDT and CBDT has been extending the time limit for making the application from time to time, the last one of which extended the time limit to 30.06.2024. The Finance Act (No.2) of 2024 inserted the following proviso to section 12A(1)(ac)(vi) which reads as under –
"Provided that where the application is filed beyond the time allowed in sub-clauses (i) to (vi), the Principal Commissioner or Commissioner may, if he considers that there is a reasonable cause for delay in filing the application, Shamkris Charity Foundation condone such delay and such application shall be deemed to have been filed within time"
5.The Memorandum explaining the provisions Finance Bill in this regard stated that –
A trust or institution desirous of seeking registration under section 12AB is inter alia required to apply within timelines specified in clause (ac) of sub-section (1) of section 12A
2.It has been noted that at times trusts or institutions are unable to file application within specified timelines. In case a trust or institution is unable to apply within time specified, it may become liable to tax on accreted income as per provisions of Chapter XII-EB of the Act. A situation of permanent exit of trust or institution from the exemption regime may also arise.
3.It is proposed that the Principal Commissioner/ Commissioner may be enabled to condone the delay in filing application and treat such application as filed within time. The delay may be condoned if he considers that there is a reasonable cause for the same.
4.These amendments will take effect from the 1st day of October, 2024
6.From the perusal of the above amendment we notice that the legislature after considering the hardship faced by the Trusts by not filing the necessary Form for final registration within time and in order to reduce the risk of the trust exiting has enabled the Principal Commissioner/ Commissioner to condone the delay with effect from 01.10.2024. The CBDT as per Circular No.7/2024 dated 25.04.2024 extended the time limit to 30.06.2024. In assessee's case, the application has been filed on 24.08.2024 which falls in the interim period where the assessee has submitted before the CIT(E) explaining the cause for delay of 54 days in filing the application. Considering the facts which is unique to the present case and the legislative intent, we are of the considered view that the approach while considering application made by the assessee for final registration under section 12A need to be equitable, balancing and judicious. Accordingly we direct the CIT(E) to consider the application made by the assessee for final registration on merits and allow the same in accordance with law..”
(emphasis supplied by us)
Therefore, respectfully following the above order of the Tribunal, we are of the considered view that non-submission of the application in Form 10AB before the due date is a curable defect and the Ld. CIT(E) has the power to condone the delay if there was a reasonable cause for the delay in filing the said application. The assessee in ground no. 1 of the appeal submits that the Ld. CIT(E) did not appreciate the genuine hardship and reasonable cause that prevented the assessee from filing the application within the prescribed time. Further, in ground no. 2 of the appeal, it is submitted that the Ld. CIT(E) ought to have exercised their powers to condone the delay in filing the application (filed on 11.01 2025) in the interest of substantive justice, rather than rejecting the same in limine on hyper-technical grounds. In the impugned order, we notice that there is no discussion by the Ld. CIT(E) regarding the plea taken by the assessee of genuine hardship and reasonable cause that prevented the assessee from filing the application within the prescribed time. Further, Ld. CIT(E) has also not exercised his power of condoning the delay as provided u/s 12(1)(ac)(vi) of the Act. We therefore, in the given facts of the case, set aside the order of the Ld. CIT(Exemption) and direct the Ld. CIT(E) to consider the application of the assessee for the delay in filing the application in Form 10AB and if the same is condoned to consider the same for grant of approval under section 12A(i)(ac)(iii) of the Act to the trust in accordance with law. Further, we also clarify that in case the assessee has not filed any condonation application for the delay in filing the Form 10AB, the assessee will be at liberty to do so now and the Ld. CIT(E) will decide the condonation application in terms of section 12(1)(ac)(vi) of the Act and the registration u/s 121(ac)(iii) as per law.
In the result, appeal of the assessee is allowed for statistical purposes.