ITAT Mumbai condones delay in Form 10AB, restores 12AB and 80G applications of Faiz-e-Garib Nawaz Trust

Background

The Mumbai “F” Bench of the Income Tax Appellate Tribunal has condoned an 18-month delay in filing Form 10AB by Faiz-e-Garib Nawaz Trust and set aside the orders of the Commissioner of Income Tax (Exemptions), Mumbai, rejecting the Trust’s applications for regular registration under Section 12AB and approval under Section 80G of the Income-tax Act, 1961.

The Trust’s provisional registration under Section 12A had earlier been granted, but its application for conversion into regular registration was rejected solely on the ground that Form 10AB was filed beyond the prescribed timeline. The CIT(E) also denied approval under Section 80G, treating it as consequential to the rejection under Section 12AB.

Before the Tribunal, the assessee contended that the delay was neither deliberate nor mala fide, but arose due to bona fide confusion caused by frequent amendments, CBDT circulars and extensions under the revamped charitable registration regime. It was further submitted that any defect in the trust deed, including a clause permitting utilisation of funds outside India, would be rectified and placed on record if an opportunity was granted.

Matter remanded to CIT(E) for fresh adjudication

Rejecting the Revenue’s stand of strict adherence to timelines, the Tribunal relied on a consistent line of coordinate bench decisions, including Rotary Club of Mumbai Sobo Charitable Trust v. CIT(E), to hold that procedural timelines should be applied pragmatically in deserving cases. The Bench observed that once provisional registration had been granted and the assessee demonstrated bona fide reasons for delay, the authorities were duty-bound to examine the application on merits rather than reject it mechanically.

The Tribunal further held that at the stage of grant of registration under Section 12AB, the enquiry is confined to the objects of the trust and the genuineness of its activities. Since the assessee had undertaken to amend the trust deed and remove the objectionable clause, denial of registration without affording such opportunity violated principles of natural justice.

Accordingly, the ITAT condoned the delay, set aside the impugned orders, and restored both the Section 12AB registration and Section 80G approval applications to the file of the CIT(E) for fresh adjudication. The appeals were allowed for statistical purposes.