DVS Welfare Foundation Vs ITO (ITAT Mumbai)
Management Disputes and Illness Justify Delay: ITAT Directs Belated Section 12AB Application to Be Treated as Filed in Time
Background of the Case
The assessee, a charitable institution incorporated as a company, challenged rejection of its application for regularisation of provisional registration under Section 12AB of the Income-tax Act, 1961.
The institution filed Form 10AB on 28 August 2024, against the extended deadline of 30 June 2024, resulting in a delay of 59 days.
A separate procedural difficulty arose because its appeal before the Tribunal was itself delayed by 417 days.
The Tribunal examined the explanations for both defaults. While the appeal delay involved management changes, medical difficulties and lack of communication, the Form 10AB delay principally arose from disputes among directors and disruption in the management of the institution.
Explanation for the 417-Day Appeal Delay
The assessee furnished an affidavit from its managing director, Dipak Rav, supported by documents concerning changes in directors and medical issues.
The affidavit explained that disputes and conflicts among directors had disrupted the institution’s functioning. Three directors resigned on 13 December 2025, and two new directors were appointed on the same date.
According to the affidavit, the outgoing directors did not communicate the relevant information or hand over documents, resulting in lack of awareness about the registration rejection.
The managing director also stated that he suffered from a serious spinal condition involving a slipped disc, remained bedridden for a substantial period and was staying in Bhilwara, Rajasthan. His illness and absence from Mumbai affected his ability to attend to the proceedings.
He further referred to limited familiarity with tax law, lack of competent staff to monitor the portal and failure of the regular tax consultant to communicate the rejection.
Tribunal Accepts Sufficient Cause
The Departmental Representative strongly opposed condonation.
However, after examining the affidavit and supporting documents, the Tribunal found the reasons reasonable and sufficient.
It relied on Collector, Land Acquisition, Anantnag v. Mst. Katiji, 167 ITR 471 (SC), emphasising that condonation should be approached rationally and pragmatically, with substantial justice receiving appropriate weight.
The Tribunal also referred to Sreenivas Charitable Trust, 280 ITR 357 (Mad.), concerning liberal construction of “sufficient cause”, and the Mumbai Tribunal’s decision in Bajaj Hindusthan Ltd.
It noted that, although the Revenue opposed condonation, no counter-affidavit had been filed.
The Tribunal concluded that the delay was not intentional defiance of the law and condoned the entire 417-day delay.
Separate Explanation for Delayed Form 10AB
On the registration application, the assessee explained that management disputes had culminated in resignations and appointment of directors on 30 May 2024, shortly before the extended filing deadline.
The outgoing directors allegedly failed to hand over the necessary records and information. The institution also lacked staff familiar with income-tax compliance, and its consultant had not ensured timely filing.
Consequently, Form 10AB was filed on 28 August 2024, 59 days after the extended deadline.
The assessee maintained that the delay was bona fide and requested restoration of the application for consideration on merits.
The Department opposed relief on this delay as well.
Bona Fide Management Difficulties Recognised
The Tribunal accepted that the delay in seeking regular registration arose from management disputes culminating in directors’ resignations.
It also noted that timely filing of the original provisional registration application was undisputed.
The Tribunal referred to Narke Green Foundation Charitable Institution, ITA No. 1864/Mum/2025, which advocated a flexible and pragmatic approach to procedural requirements where the explanation was genuine and bona fide.
The assessee additionally relied on Amba Shanti Foundation and Shamkris Charity Foundation.
The underlying principle was that procedural requirements should facilitate justice, while the authority must still examine whether the explanation establishes sufficient cause.
Application Directed to Be Treated as Timely
The Tribunal held that the institution should receive an opportunity to present its registration case before the CIT(E).
It restored the Section 12AB application to the CIT(E), expressly directing that it be considered as filed in time and decided on merits in accordance with law.
This operative direction is significant. The Tribunal did not merely leave the question of the 59-day delay open for reconsideration. It removed that filing obstacle by requiring the application to be treated as timely.
The appeal was allowed for statistical purposes.
Author’s Comments
The order grants two distinct procedural remedies: condonation of the 417-day Tribunal appeal delay and a direction to treat the Form 10AB application as filed within time.
The explanations were assessed through the affidavit, medical material and records concerning management changes. The decision therefore rests on the circumstances supported before the Tribunal, rather than on delay being excusable merely because the applicant was charitable.
Registration itself was not granted by the Tribunal. The CIT(E) must still examine the application on merits under the applicable statutory requirements.
The practical outcome is that the institution’s registration claim must now receive substantive consideration, without rejection on the ground of the 59-day filing delay.
List of Cases Discussed:
1. Collector, Land Acquisition, Anantnag & Anr. Vs Mst. Katiji & Ors. (Supreme Court); (1987) 167 ITR 471. Followed for the principle that sufficient cause must be examined pragmatically and substantial justice should not be defeated by non-deliberate delay.
2. Sreenivas Charitable Trust (Madras High Court); (2006) 280 ITR 357. Followed on liberal construction of sufficient cause and exercise of discretion according to the circumstances of each case.
3. Bajaj Hindusthan Ltd. Vs Jt. CIT (ITAT Mumbai); 277 ITR (AT) 1. Referred to as an instance where the Tribunal condoned a delay of 180 days.
4. Narke Green Foundation Charitable Institution (ITAT Mumbai); ITA No. 1864/Mum/2025. Followed on the need for a flexible approach to procedural requirements where the explanation for delay is bona fide.
5. Amba Shanti Foundation Vs CIT (Exemption) (ITAT Mumbai); ITA Nos. 1862 & 1863/Mum/2025. Relied upon by the assessee in support of relief concerning the delayed registration application.
6. Shamkris Charity Foundation Vs CIT (Exemption) (ITAT Mumbai); ITA No. 3394/Mum/2025. Relied upon by the assessee in support of its request for reconsideration of the registration application.
FULL TEXT OF THE ORIGINAL ORDER OF ITAT MUMBAI
These appeal has been filed by the Assessee against the order dated 28th January, 2025, passed by the Learned Commissioner of Income tax (Exemptions), [“Ld. CIT (E)”] Mumbai, under Section 12AB of Income Tax Act, 1961 (“the Act”).
2. The Assessee has raised the following grounds of appeal :
1.0 On facts and circumstances of the case and in law, the Ld. CIT-(Exemption) erred in rejecting the application filed u/s 12A for regularisation of the provisional registration granted u/s 12AB r.w.s. 12A(1)(ac)(vi), since the application had been filed after expiry of time limit prescribed u/s 12A(1)(ac)(iii) of the Act.
2.0 The Ld. CIT(Exemption), before rejecting the application filed u/s 12A for regularisation of provisional registration, erred in not considering the understated vital facts, being:
(a) There exist bonafide reasons and compelling circumstances beyond control of the appellant, which had caused the delay in filing of the application in sec 12A.
(b) The appellant had filed exhaustive documentary evidences to justify the charitable activities conducted by the appellant.
3. The brief facts of the case are that the Assessee is incorporated as charitable institution company under the Companies Act, had made application in Form 10AB on 28-08-2024 for regularization of provisional registration under Section 12AB of the Act and that was delayed by 59 days from the extended due date of 30-06-2024.
4. Apart from that, it is found that impugned appeal before this tribunal is also delay by 417 days, as filed on 22-05-2026 against an order of CIT(E) dated 31-03-2025.
5. The ld AR of the assessee has reiterated the reasons for delay in filing of appeal as mentioned in the affidavit of the managing director of the company Mr. Dipak Rav alongwith documents for change in management and illness and medical issues with him. The affidavit furnished by the assessee is as under:
I, Shri Dipak Rav, having my place of residence situated at 941, Balaji Mandir Ke Pass, Phooliya Kalan, Bhilwara, Rajasthan – 311407, do hereby declare on solemn affirmation as under:–
1.0 THAT, I am the Managing Director of M/s DVS Welfare Foundation, which is assessed to Income Tax under the jurisdiction of Income Tax Officer, Exemption Ward, Thane and holding the PAN No. AAICD7221K;
2.0 THAT, the order passed by the Commissioner of Income Tax-(Exemption), Pune related to regularization of Provisional Registration u/s 12A(1)(ac)(iii) had been passed on 28/01/2025 and due date to file the appeal before the Hon‟ble ITAT was on 31/03/2025. However, the said appeal had been filed on 22/05/2026, which is late by 417 days. The delay in filing of the appeal before the Hon‟ble ITAT had occurred under the bonafide reasons and compelling circumstances beyond my control, stated as under:–
a) There existed several disputes and conflicts between the directors, resultantly 3 directors of the company had tendered their resignations on 13/12/2025 and 2 new directors were appointed on same day. The evidence of resignation of old directors are enclosed herewith. Further, the earlier directors did not inform and did not handover the relevant documents to newly appointed directors and therefore, I was not aware about the rejection order passed by the CIT (Exem) and accordingly, I could not file the appeal before Hon‟ble ITAT in time;
b) Further, I was suffering from serious medical illness of spine-slip disc and was bed-ridden for substantial period of time at my home town situated at Bhilwara, Rajasthan including the period when the appeal was required to be filed before Hon‟ble ITAT. My serious medical illness and my non-presence in Mumbai had precluded me to file the appeal before the Hon‟ble ITAT in time;
c) I am an undergraduate and am not conversant with Income Tax laws. I did not have competent staffs to peruse the Income Tax portal. Also, my regular Chartered Accountant deserted me and did not inform me about rejection of registration order and accordingly, I could not file the appeal before the Hon‟ble ITAT in time.
I declare that there is no willful or deliberate attempt nor any gross negligence to delay the filing of appeal before the Hon‟ble ITAT and the delay had occurred under the bonafide reasons as stated herein above. I respectfully make a prayer before the Hon‟ble ITAT to adopt a liberal approach and condone the delay in filing of the appeal and decide the case on merits and in law;
3.0 THAT, the extended due date to file an application in Form 10AC, as per CBDT Circular No. 7/2024 dated 25/04/2024 for renewal of provisional registration u/s 12A(1)(ac)(iii) was on 30/06/2024, however, the said application had been filed on 28/08/2024, which is late by 59 days. The delay in filing of the application in Form 10AB had occurred under the bonafide reasons and compelling circumstances beyond my control, stated as under:–
a) There existed several disputes and conflicts between the directors, resultantly the directors of the company had subsequently tendered their resignations on 30/05/2024 and new directors were appointed on same day. The evidence of resignation of old directors are enclosed herewith. The earlier directors did not inform and did not handover the relevant documents to newly appointed directors and therefore, the application for renewal of registration could not be filed in time;
b) The erstwhile directors were not conversant with Income Tax laws and the company did not have competent staffs to peruse the Income Tax matters. Also, the regular Chartered Accountant deserted the company and did not inform about filing of the application for renewal of provisional registration and accordingly, the application seeking renewal of registration could not be filed in time.
I declare that there is no willful or deliberate attempt nor any gross negligence to delay the filing of the application in Form – 10AB for renewal of provisional registration u/s 12A(1)(ac)(iii) before the CIT(Exem) and the delay had occurred under the bonafide reasons as stated herein above. I respectfully make a prayer before the Hon‟ble ITAT to adopt a liberal approach and condone the delay in filing of the application u/s 12A(1)(ac)(iii) and decide the case on merits and in law.
Solemnly declared and affirmed at Mumbai on this 22nd day of Sept, 2026.
SIGNED AND DELIVERED by the within-named Shri Dipak Rav, being the director of M/s DVS Welfare Foundation in the presence of ….
6. The ld. AR of the assessee requested to condone the delay for the reasons mentioned in affidavits, being sufficient and reasonable cause for delay in filing of an appeal.
7. Per contra, ld CIT DR, vehemently opposed the delay condone.
8. We have considered the contentions in affidavit with medical reports and appointment of directors of the company for having disputes, and found that assessee company has delayed in filing of appeal by 417 days, and the reasons described for such delay are resignations, new appointment of directors and medical issues with director, who was looking after these matters. The assessee requested for delay condone for the aforementioned reasons as reasonable and sufficient.
9. We have perused the documents furnished in support of application / affidavit for delay condone, and observed that reasons for delay in filing of appeal before Tribunal were reasonable and sufficient for delay condone. The Hon’ble Supreme Court in case of Collector, land acquisition, Anantnag & Anr.v. Mst Katiji & Ors., (1987) 167 ITR 471 (SC), wherein, it had laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
(2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
(3) „Every day‟s delay must be explained‟ does not mean that a pedantic approach should be made. Why not every hour‟s delay, every second‟s delay? The doctrine must be applied in a rational, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a non deliberate delay.
(5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
The Madras High Court in the case of Sreenivas Charitable Trust (2006) 280 ITR 357 (Mad) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance and the expression “sufficient cause” should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression “sufficient cause” should receive a liberal construction.
The Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) (277 ITR 1) has condoned the delay of 180 days when the appeal was filed after the pronouncement of the Judgment of the Apex Court. Furthermore, the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay.
10. In view of afore mentioned discussion and judgment of the Hon’ble Apex Court and others, we find that reasons for delay in filing of appeal of 417 days were reasonable and sufficient, it was not intentional in defiance of the law, and in the interest of substantive justice, this delay is hereby condoned.
11. At the outset on the merits of case, the ld AR of the assessee submitted that the Ld CIT(E) has rejected applications for provisional registration under Section 12AB for 59 days delay filing of application. This delay caused due to disputes amongst directors of the company, and directors have resigned on 30-05-2024, for this reason the management could not made an application for renewal of provisional registration before the due date of 30-06-2024, and filed that on 28-08-2024. In view of such peculiar conditions, the application got delayed by 59 days. Requested for delay condone and restore the matter back to file of CIT(E) for delay condone.
12. The ld CIT DR appearing for the revenue contended that this delay may not be condoned.
13. We have considered the rival submissions, perused the material on record and observed that delay in making application for regularization of provisional registration by 59 days due to management issues within the company, culminated in resignation of directors. We find that the assessee would have filed provisional registration application in time which is undisputed. Moreover, the delay in fling application for regularization of provisional registration attributed to the bona fide reasons of disputes amongst directors. We noticed that on identical issue of delay in the coordinate bench of ITAT, Mumbai in the case of Narke Green Foundation Charitable Institution ITA no.1864/Mum/2025 gave following directions:
“5.9 At this juncture we refer to the pragmatic approach advocated by Justice V.R. Krishna Iyer, wherein he advocated a flexible approach to procedural law, that serve as “handmaid” to justice, and not a hinder it. The Principle of Justice Krishna Iyer emphasised that procedural laws should be tools to facilitate administration of justice various decisions of Hon’ble Supreme Court has emphasised to strike a balance between strict adherence to procedural rules and the need to ensure that justice is not denied due to technicalities.
5.10 We agree with the above preposition observed by Hon’ble Pune Tribunal. However genuine and bona-fide reason stated by the assessee cannot be over looked. Further we also note that, flexible and pragmatic approach to such procedural laws is necessary as against recognising a strict adherence to do which could sometime lead to injustice. Hon’ble Supreme Court in plethora of cases always emphasized that while considering delay, one must first ascertain bonafide of the explanation offered by the party seeking condonation. Thereafter there must be sufficient cause which is substantial based on the genuine reasonable explanation.
5.11 While condoning the delay it is crucial to ensure the party seeking condonation provide genuine explanation for the delay. In present facts of the case, we note that, the reason that caused delay is based on a bonafide belief on behalf of the assessee without there being any malafide intention.”
14. The assessee relied upon the order of the co-ordinate bench of Tribunal, Mumbai Bench.
a) Amba Shanti Foundation vs. CIT (Exemption) ITA No. 1862 & 1863/ Mum/2025 (Mum-ITAT)
b) Shamkris Charity Foundation vs. CIT (Exemption) ITA No. 3394/ Mum/2025 (Mum-ITAT)
15. In our considered opinion, in view to the principles of natural justice, assessee must get an opportunity to present its case before the Ld.CIT(E).
16. Therefore, we respectfully follow the above decision, and deem it appropriate to restore the application for regularization of provisional registration under section 12AB of the Act to the file of the learned CIT(E), consider as filed in time and to decide on merits, in accordance with law.
17. In the result, appeal of the assessee ITA No. 6191/MUM/2026 is allowed for statistical purposes.
Order pronounced in the open court on 12.10.2026.
