ITAT Mumbai: Delay in Filing 12AB Registration Can Be Condoned; Matter Remanded for Fresh Consideration Alongside 80G Approval

Key Facts and Tribunal Findings

The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, has set aside the rejection of registration under Section 12AB and consequential denial of approval under Section 80G in the case of Shree Mumbai Digambar Jain Seva Sangh, remanding the matter to the Commissioner of Income Tax (Exemptions) [CIT(E)] for fresh adjudication. The assessee trust had obtained provisional registration under Section 12A in October 2021, valid up to Assessment Year 2024–25. It subsequently filed an application for final registration under Section 12AB in March 2025. The CIT(E) rejected the application on the ground that it was filed beyond the statutory time limit prescribed under Section 12AB(1)(ac)(iii), which requires filing within six months from commencement of activities or prior to expiry of provisional registration, whichever is earlier.

The CIT(E) also rejected the assessee’s application for approval under Section 80G, holding that such approval is contingent upon valid registration under Section 12AB. Before the Tribunal, the assessee contended that its activities had commenced prior to obtaining provisional registration, and therefore, the six-month limitation from commencement of activities was not applicable. It further relied on CBDT Circular No. 7 of 2024, which extended timelines, and sought condonation of delay. The Tribunal noted that there was a delay even after considering the extended timeline, but took cognizance of the proviso inserted by the Finance (No. 2) Act, 2024, empowering authorities to condone delay upon showing reasonable cause.

In view of this statutory amendment and the explanations provided by the assessee, the Tribunal held that the delay deserved reconsideration. It directed the CIT(E) to treat the application as filed within time and adjudicate the matter afresh after granting proper opportunity of hearing. Consequently, the issue relating to approval under Section 80G was also remanded, being dependent on the outcome of registration under Section 12AB.

Legal Analysis

The Tribunal’s decision highlights the evolving statutory framework governing charitable registrations, particularly the introduction of discretionary powers to condone delays under Section 12A. It underscores that procedural delays in filing applications for registration should not automatically result in denial where the assessee demonstrates reasonable cause. The ruling also clarifies the interdependence between Sections 12AB and 80G, reaffirming that approval under Section 80G is contingent upon valid registration status.

By remanding the matter, the Tribunal emphasized adjudication on merits rather than strict procedural rejection, aligning with principles of fairness and statutory intent.