ITAT Mumbai Grants Relief: Condonation of Delay in Filing Form 10AB and Restoration of Section 12AB & 80G Benefits

The transition to the new registration regime for charitable trusts and institutions under the Income Tax Act, 1961, has brought about significant procedural changes. With these changes, strict timelines were introduced for converting provisional registrations into regular ones. However, a recent judicial pronouncement by the Income Tax Appellate Tribunal (ITAT), Mumbai, has reinforced the principle that substantive justice should not be stifled by technical delays, especially when the intent of the assessee is bona fide.

In the notable case of Rotary Club of Mumbai Sobo Charitable Trust Vs CIT(Exemptions), the Mumbai Bench of the ITAT addressed critical issues regarding the delay in filing Form 10AB, the rectification of trust deed clauses, and the consequential impact on approval under Section 80G.

To understand the gravity of the Tribunal's decision, it is essential to contextualize the statutory framework. Under the Finance Act, 2020, a new registration mechanism was introduced. Existing trusts and new applicants were initially granted provisional registration via Form No. 10AC.

Subsequently, to finalize this registration, entities are required to file Form No. 10AB within specific timelines prescribed under Section 12A(1)(ac)(iii) of the Income Tax Act, 1961. This section mandates that a provisionally registered trust must apply for regular registration at least six months prior to the expiry of the provisional period or within six months of the commencement of activities, whichever is earlier. Failure to adhere to these timelines has frequently led to the rejection of applications by the Commissioner of Income Tax (Exemptions) [CIT(E)], causing hardship to genuine charitable organizations.

Case Background and Factual Matrix

The appellant, Rotary Club of Mumbai Sobo Charitable Trust, is a public charitable trust registered under the Bombay Public Trusts Act, 1950. The assessee had successfully obtained provisional registration under Section 12A of the Act via Form No. 10AC on January 19, 2022. This provisional status was valid up to the Assessment Year (AY) 2024-25.

The Procedural Lapse

To convert this provisional status into a regular registration, the assessee filed the application in Form No. 10AB on November 4, 2024. However, this filing was delayed by approximately 400 days beyond the statutory deadline mandated for trusts that had already commenced activities.