Atmashreya Charitable Trust Vs CIT (Exemptions) (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal considered whether the Commissioner of Income-tax (Exemptions) was justified in rejecting Atmashreya Charitable Trust’s delayed Form No. 10AB application for regularisation of provisional registration under section 12AB of the Income-tax Act, 1961. The assessee had been granted provisional registration in Form No. 10AC on 27.05.2021, valid for Assessment Years 2021-22 to 2023-24. It subsequently filed Form No. 10AB on 30.07.2025. The CIT(E) treated the application as belated under section 12A(1)(ac)(iii). The assessee explained that although the provisional registration certificate mentioned a three-year period, it had bona fide believed that the registration was valid for five years and that no further application was required until expiry of that period. The CIT(E) rejected this explanation, holding that reasonable cause or genuine hardship had not been established.
The CIT(E) also referred to Circular No. 07/2024 dated 25.04.2024 and relied upon the Supreme Court decisions in PCIT vs. Wipro Ltd. and Commissioner of Customs vs. Dilip Kumar & Co. The Tribunal observed that section 12A(1)(ac) underwent a material statutory change with effect from 01.10.2024 through insertion of a proviso empowering the Principal Commissioner or Commissioner to condone delay where reasonable cause existed. Therefore, although the prescribed time limit continued to be statutory and mandatory, the Act itself now expressly recognised an exception through a specific condonation power.
The Tribunal distinguished Wipro Ltd. because that case concerned section 10B(8), where the Assessing Officer had no statutory power to condone non-compliance with the prescribed time limit. Similarly, Dilip Kumar & Co. did not eliminate the express statutory condonation power incorporated in section 12A(1)(ac). On the assessee’s explanation, the Tribunal observed that its understanding of the registration period was not a correct appreciation of the statutory requirement, but in the peculiar facts it could not be characterised as inherently implausible or as deliberate disregard of law. The assessee had also derived no discernible advantage merely from delayed filing. At the same time, the Tribunal held that the substantial delay could not be mechanically condoned and that the question whether “reasonable cause” existed had to be examined by the authority specifically vested with that jurisdiction. Since the CIT(E) had proceeded on the premise that the statutory time limit could not be condoned and had not examined the explanation under the correct statutory framework, the Tribunal set aside the impugned order and restored the matter to the CIT(E).
The CIT(E) was directed to reconsider the request for condonation, examine whether reasonable cause existed, provide adequate opportunity of hearing and pass a speaking order. If the delay is condoned, the Form No. 10AB application must thereafter be examined on merits without being influenced by observations in the earlier order. The Tribunal expressly left the assessee’s substantive eligibility for section 12AB registration open and allowed the appeal for statistical purposes.
Cases Discussed
- PCIT vs. Wipro Ltd. (2022) 140 taxmann.com 223 (SC) — Distinguished; section 10B(8) did not confer a power to condone non-compliance with the prescribed time limit, whereas section 12A(1)(ac) expressly provides a condonation power.
- Commissioner of Customs vs. Dilip Kumar & Co. (2018) 9 SCC 1 — Distinguished in the context of the express statutory power of condonation incorporated in section 12A(1)(ac).
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal by the assessee is directed against the order dated 22.02.2026 passed by the learned Commissioner of Income-tax (Exemptions), Mumbai [in short, ‘the learned CIT(E)’], whereby the application filed by the assessee in Form No. 10AB for regularisation of its provisional registration under section 12AB of the Income-tax Act, 1961 [‘the Act’] came to be rejected on the ground of delay.
2. Briefly stated, the assessee was granted provisional registration in Form No. 10AC vide order dated 27.05.2021, valid for Assessment Years 2021-22 to 2023-24. The assessee thereafter filed Form No. 10AB on 30.07.2025 seeking regularisation of the provisional registration. The learned CIT(E) noticed that, having regard to the provisions of section 12A(1)(ac)(iii) of the Act, the application ought to have been filed within the prescribed period. The application was, therefore, treated as belated.
2.1 In response to the show-cause notice, the assessee explained that, although the provisional registration certificate expressly mentioned a period of three years, it was under a bona fide belief that the registration was valid for five years and, consequently, no further application was required until expiry of the provisional period. It was further submitted that the assessee subsequently became aware of the requirement of filing Form No. 10AB for regularisation. The learned CIT(E), however, was not satisfied with the explanation and rejected the application, holding that the assessee had failed to demonstrate reasonable cause for the delay. The relevant finding of ld CIT(E) is reproduced as under: –
“3.2 In view of the aforesaid violation of the statutory time limitation prescribed for filing the application in Form No. 10AB, the applicant trust/institution has submitted following reason for delay in filing of Form10AB, vide no. para 13 of the said Form 10AB;
(4) “Although the certificate clearly mentioned that the registration was provisional for a period of 3 years, as per law it ought to have been valid for 5 years. Without undertaking a detailed reading of the certificate, we bona fide assumed the validity to be 5 years and therefore believed that no further action was required until its expiry.”
(5) “We were recently made aware that trusts that had already been registered prior to 01.04.2021 and who inadvertently selected the incorrect clause are required to file Form 10AB within the prescribed time to obtain final registration.”
4. Upon consideration of the foregoing submissions advanced by the applicant, it is evident that the applicant-trust/institution has exhibited a casual and indifferent approach towards its statutory obligations under the Income Tax Act. Further, the applicant has failed to demonstrate any reasonable cause for the delay, nor has it been able to establish the existence of any genuine hardship faced by the applicant-trust/institution in filing the application within the prescribed due date. The statutory time limit for seeking regularisation of provisional registration is unambiguously laid down under section 12A(1)(ac)(iii) of the Act.
Accordingly, the explanation furnished is found to be unsatisfactory and insufficient for the purposes of condonation under the law.
4.1 In view of the above contention of the applicant, it is noted that that the CBDT has, from time to time, granted various extensions and provided for general condonation of delay, the latest being vide Circular No. 07/2024 dated 25.04.2024, permitting filing or re-filing of applications for registration in cases where trusts had failed to do so within the prescribed time or where such applications were rejected on specified grounds. However, the applicant has failed to avail the benefit of the said relaxation within the stipulated period.
4.2 It is clarified that the obligation to furnish Form No. 10AB within the prescribed due date is a statutory and substantive requirement, not a mere procedural formality. When an assessee seeks to avail the benefit of an exemption under section 12A of the Act, being a beneficial provision, strict compliance with the prescribed conditions is necessary. This includes the timely filing of Form No. 10AB within the due date specified under Section 12A of the Act.
4.3 This position has been reaffirmed by the judgement of Hon’ble Supreme Court in the cases of PCIT vs. Wipro Ltd. (2022) 140 taxmann.com 223 (SC) where the apex court has held that compliance with statutory conditions, such as filing within the prescribed time is mandatory and cannot be relaxed, as exemption is a matter of legislative grace and available only upon strict fulfilment of the prescribed requirements.
4.4 Reliance is also placed on the judgement of Hon’ble Supreme court in case of Commissioner of Customs vs. Dilip Kumar & Co. (2018) 9 SCC 1, where it was held that exemption notifications must be read strictly, and the person claiming the exemption has to clearly prove eligibility. It was also held that if there is ambiguity about the scope of an exemption, the benefit of such ambiguity will go to the Revenue and not to the assesse.
5. In view of the foregoing discussion, it is noted that registration under section 12AB is to be granted in terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the trust or institution, the genuineness of activities, and the compliance of any other law for the time being in force as are material for the purposes of achieving its objects. In the view of above mentioned violation, the undersigned is left with no other option but to reject the application seeking registration under section 12AB of the Act.
6. In the view of the above, the application for regularization of provisional registration in Form 10AB filed by the assessee is not allowable on the ground of late filing of the application (Form 10AB). However, the applicant is at liberty to pursue the remedies available in Statute, without any prejudice.
7. In conclusion, this application for grant of registration u/s 12A stands rejected.”
3. Before us, the learned counsel submitted that the delay was neither deliberate nor with any intention to derive an advantage. It was contended that the assessee was under a bona fide misconception regarding the period of validity of the provisional registration and, having regard to the nature of the mistake and the absence of any corresponding benefit derived by the assessee from the delay, the delay deserved to be condoned and the application considered on merits.
4. We have considered the rival submissions and perused the material available on record. The first question which falls for consideration is whether the learned CIT(E) was justified in declining to entertain the request for condonation merely on the ground that the statutory time-limit for filing Form No. 10AB had expired.
4.1 Section 12A(1)(ac) prescribes the time within which an application for registration is required to be furnished. In the case of an institution provisionally registered under section 12AB, clause (iii) requires the application to be made at least six months prior to expiry of the period of provisional registration or within six months of commencement of activities, whichever is earlier. The requirement of filing the application within the prescribed period is thus undoubtedly statutory.
4.2 However, the statutory scheme underwent a material change with effect from 01.10.2024, when a proviso was inserted in section 12A(1)(ac), empowering the Principal Commissioner or Commissioner to condone the delay where he is satisfied that there was reasonable cause for not filing the application within the prescribed time. Thus, while the prescribed time-limit remains mandatory, the statute itself now recognises an exception by conferring a specific power of condonation upon the competent authority. The existence of such statutory power materially distinguishes the present case from cases where the statute contains no provision for condonation.
4.3 In this context, the reliance placed by the learned CIT(E) upon the judgment of the Hon’ble Supreme Court in Pr. CIT v. Wipro Ltd., (supra), does not, in our considered view, conclude the issue against the assessee. In Wipro Ltd.,(supra) the Hon’ble Supreme Court was concerned with a statutory condition for exercising an option under section 10B(8), in a provision which did not confer upon the Assessing Officer any power to condone non-compliance with the prescribed time-limit. The ratio of that decision cannot be divorced from the statutory scheme which fell for consideration therein. The present case stands on a different footing, since section 12A(1)(ac) itself now confers the power of condonation upon the Principal Commissioner or Commissioner where reasonable cause is demonstrated.
4.4 The further reliance placed upon Commissioner of Customs v. Dilip Kumar & Co., ((supra), also does not dispense with the statutory power of condonation expressly incorporated in section 12A(1)(ac). The question before us is not whether the statutory time-limit can be ignored, but whether the explanation furnished by the assessee constitutes reasonable cause within the meaning of the proviso to section 12A(1)(ac).
4.5 Examining the explanation on that touchstone, we find that the assessee was granted provisional registration on 27.05.2021. The assessee admittedly proceeded on the understanding that the provisional registration would continue for the period perceived by it to be applicable and that no immediate application for regularisation was required. Though such understanding cannot be regarded as a correct appreciation of the statutory requirement, the explanation, viewed in the peculiar facts of the case, cannot be characterised as inherently implausible or actuated by any deliberate disregard of the law. The assessee has also not derived any discernible advantage merely by filing the application belatedly.
4.6 At the same time, the delay is substantial and, therefore, cannot be condoned mechanically. The question whether the explanation constitutes “reasonable cause” is required to be examined by the authority specifically vested with such jurisdiction under the statute. Since the learned CIT(E), proceeding on the premise that the statutory time-limit could not be condoned in the facts of the case, has not considered the assessee’s explanation in the correct statutory framework, we consider it appropriate to restore the matter for such consideration.
4.7 Accordingly, the impugned order is set aside and the matter is restored to the file of the learned CIT(E). The learned CIT(E) shall consider afresh the assessee’s request for condonation of delay in filing Form No. 10AB in the light of the proviso to section 12A(1)(ac), examine whether the explanation furnished by the assessee constitutes reasonable cause, and pass a speaking order in accordance with law after affording adequate opportunity of being heard. In the event the delay is condoned, the learned CIT(E) shall thereafter examine the application for regularisation of registration on its merits in accordance with the provisions of the Act, without being influenced by the observations contained in the impugned order on the merits of registration.
4.8 We make it clear that we have expressed no opinion on the assessee’s substantive eligibility for registration under section 12AB. All such issues are left open for consideration by the learned CIT(E) in accordance with law.
5. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 13/08/2026.
