ITAT Mumbai: Procedural delay in Form 10AB not fatal when reasonable cause established

Background and case overview

The Mumbai Bench of the Income Tax Appellate Tribunal in the case of Cartrade Foundation Vs CIT examined whether a delay in filing Form No. 10AB for conversion of provisional registration into final registration under Section 12AB could be condoned, and whether such delay alone could justify rejection of registration under Section 12AB and, consequentially, Section 80G of the Income Tax Act, 1961.

Two appeals were filed by the assessee against separate orders dated 24.09.2025 and 22.10.2025 passed by the Commissioner of Income Tax (Exemptions), Mumbai [CIT(E)], whereby:

  • The assessee’s application for registration under Section 12AB was rejected; and
  • The assessee’s application for approval under Section 80G was also rejected, solely on the basis that registration under Section 12AB had not been granted.

The Tribunal examined:

  1. Whether the delay in filing Form No. 10AB for conversion of provisional registration could be condoned in light of the statutory framework and CBDT circulars.
  2. Whether certain clauses in the Memorandum of Association (MOA), perceived as permitting expenditure outside India, were a valid ground to deny registration at the Section 12AB stage.
  3. Whether rejection of Section 80G approval could stand merely because registration under Section 12AB was refused.

Factual matrix

Provisional registration and delayed Form 10AB

  • The assessee, a company registered under Section 8 of the Companies Act, 2013, had been granted provisional registration under Section 12AB in Form No. 10AC vide order dated 31.12.2021, with validity up to assessment year 2024–25.
  • As per Section 12A(1)(ac)(iii), an assessee with provisional registration is required to apply for regular (final) registration:
    • At least six months prior to expiry of the provisional registration; or
    • Within six months from commencement of activities,
      whichever is earlier.

On this basis, the CIT(E) held that the last date for filing Form No. 10AB was 30.09.2023. However, the assessee filed Form No. 10AB only on 20.03.2025, i.e., well beyond this period.

Proceedings before CIT(E)

  1. Scrutiny of application and documents

    • The assessee applied in Form No. 10AB on 20.03.2025 under Section 12A(1)(ac)(iii) for regular registration under Section 12AB.
    • On examination, CIT(E) noticed that the application was incomplete and that documents prescribed under Rule 17A(2) of the Income Tax Rules, 1962 had not been fully furnished.
    • A notice was issued calling upon the assessee to file the requisite documents.

  2. Assessee’s response and condonation plea

    • The assessee responded and submitted the required documents.
    • It also filed a separate application for condonation of delay in filing Form No. 10AB, explaining that:
      • The delay was unintentional and inadvertent.
      • Trustees were unaware of the amended procedural requirement mandating timely refiling of Form No. 10A/10AB for conversion of provisional approval into final registration.
      • There was also an element of administrative oversight in not tracking the new timelines.

  3. Reliance on CBDT Circular No. 7 of 2024

    • The assessee placed reliance on CBDT Circular No. 7 of 2024 dated 25.04.2024, issued under Section 119, which extended the time limit for filing Form No. 10AB (where the deadline was expiring on 30.09.2023) up to 30.06.2024.
    • By virtue of this Circular, the assessee argued that even if delay is reckoned from 30.06.2024, the actual delay was approximately 8.5 months, not 18 months as considered by CIT(E).

  4. CIT(E)’s decision

    • The CIT(E), in the impugned order, did not deal with or adjudicate the condonation application.
    • The application in Form No. 10AB was rejected primarily on the ground that it was filed well beyond the prescribed time limit, and that the delay was fatal.
    • No finding was recorded on whether “reasonable cause” for delay existed.

Objection regarding MOA clauses

In addition to the issue of delay, the CIT(E) also:

  • Examined clauses 21 and 22 of the assessee’s Memorandum of Association, which read: