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2025 Supreme(Online)(ITAT) 6107
INCOME TAX APPELLATE TRIBUNAL (AHMEDABAD BENCH)
MS. SUCHITRA R. KAMBLE, J, SHRI MAKARAND V. MAHADEOKAR, ACJ
Assessee – Appellant
Versus
Revenue – Respondent
ITA No.134 and 135/Ahd/2025
For the Appellants/Petitioners: Shri Mohit Balani
For the Respondents: Shri Rignesh Das
Rejection of registration under section 12AB based solely on community-related objectives is improper without verification of trust activities' genuineness.
Headnote:(A) Income Tax Act, 1961 - Section 12AB - Condonation of Delay - Delay in filing appeals was due to bona fide reasons and not deliberate, hence condoned - Principles laid down in Collector, Land Acquisition v. Mst. Katiji & Others and N. Balakrishnan v. M. Krishnamurthy applied. (Paras 2.1, 2.2, 2.5, 2.6)
(B) Charitable Trust Registration - The rejection of registration under section 12AB solely on the basis of trust deed clauses related to specific community found inappropriate absent an independent examination of activities, leading to premature rejection. (Paras 4.1, 4.12)
Facts of the case:
The assessee, a public charitable trust established for various welfare activities, faced rejection of provisional registration under section 12AB primarily due to perceived community restriction in its objectives, which required professional assistance.
Findings of Court:
Court held earlier decisions on community-object limitations do not govern the current registration framework. Delayed applications were upheld, urging re-evaluation of past rejections in light of new procedural laws.
Issues: The primary question concerned whether registration rejection was valid based on objectives tied to a specific community without authenticating ongoing charitable activities.
Ratio Decidendi: Rejecting an application under section 12AB at registration stages should only be based on the genuineness of the institution's overall activities, not solely on wording in trust deeds regarding community.
Result: Appeal No. 134/Ahd/2025 is allowed; Appeal No. 135/Ahd/2025 is dismissed as infructuous.
आदेश/ORDER
PER MAKARAND V.MAHADEOKAR, AM:
These two appeals by the assessee are directed against separate orders passed by the Commissioner of Income Tax (Exemption), Ahmedabad [hereinafter referred to as “CIT(E)”] dated 23.09.2023 and 06.12.2024 under section 12AB of the Income Tax Act, 1961 [hereinafter referred to as “the Act”]. Since the issues involved in both appeals pertain to the same assessee, arise out of connected proceedings, and involve a common question regarding grant of registration under section 12AB of the Act, both appeals were heard together and are being disposed of by way of this consolidated order for the sake of convenience and brevity.
2. Condonation of Delay
2.1 At the threshold, it is observed that there is a delay in filing the appeal in ITA No. 134/Ahd/2025 before us. As per the Registry report, there is a delay of 417 days in filing the appeals. The assessee, however, in its application for condonation of delay supported by a duly notarised affidavit, has stated that the delay is 424 days, caused due to bona fide reasons and circumstances beyond the assessee’s control.
2.2 The assessee explained that the impugned order rejecting provisional registration under Section 12AB dated 23.09.2023 was communicated to it through email, but the consultant inadvertently failed to take timely remedial action as the communication was not properly noticed. On later realisation, the assessee, being advised of the applicability of CBDT Circular No. 07 of 2024 dated 25.04.2024, filed a fresh application for registration on 30.06.2024, which too came to be rejected by the CIT(E) on 20.12.2024 on the ground that the said circular was not applicable to its case. Thereafter, the assessee, on professional advice, preferred the present appeals on 20.01.2025. The delay was thus claimed to be unintentional and occasioned due to bona fide belief and continuous pursuit of legal remedies, falling within the purview of Section 14 of the Limitation Act, 1963 .
2.3 During the course of hearing, the Learned Departmental Representative did not raise any serious objection to the condonation request.
2.4 We have carefully considered the rival submissions and perused the reasons assigned by the assessee in the condonation petition. It is well settled that the power to condone delay under section 253(5) of the Income- tax Act, 1961, is to be exercised in a liberal and justice-oriented manner so as to advance substantial justice rather than to defeat it on technical grounds.
2.5 The Hon’ble Supreme Court in Collector, Land Acquisition v. Mst. Katiji & Others [(1987) 167 ITR 471 (SC)] laid down the guiding principles governing condonation of delay, holding that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. The Apex Court further observed that there is no presumption that delay is occasioned deliberately, or on account of mala fides, and that a litigant does not stand to benefit by lodging an appeal belatedly.
2.6 Similarly, in N. Balakrishnan v. M. Krishnamurthy [ (1998) 7 SCC 123 ], the Hon’ble Supreme Court explained that the length of delay is not material; acceptability of the explanation is the only criterion. If the explanation does not smack of mala fides or is not put forth as part of a dilatory strategy, the court must show utmost consideration to the suitor.
Applying these settled principles, we find that the reasons assigned by the assessee are bona fide, reasonable, and sufficiently demonstrate that the delay occurred due to a chain of events beyond its control. The assessee’s conduct shows diligent pursuit of remedies, first by filing a fresh application under section 12AB invoking the CBDT Circular, and thereafter by promptly filing appeals upon rejection of that application. The delay, therefore, stands covered by t
