Delay in Filing Appeal Condoned as it was Caused by Bona Fide Mistake of Tax Consultant.

Issue

Whether a delay in filing an appeal against the rejection of Section 12A/80G registration can be condoned when the delay was caused by the assessee following the incorrect advice of their tax consultant.

Facts

The assessee-society’s initial applications for both Section 12A and 80G registration were rejected.
On the advice of their tax consultant, the assessee re-applied, but only for Section 12AA registration (which was also rejected).
A new counsel later pointed out that the original rejection order should have been appealed, as 12AA registration does not automatically grant 80G approval.
By the time this correct advice was received, the statutory period for appealing the first order had expired.
The assessee filed an application for condonation of delay, citing the bona fide but incorrect advice of their previous consultant.

Decision

The High Court ruled in favour of the assessee and condoned the delay.
It held that the delay was not a deliberate act by the assessee.
The delay was found to be a direct result of a bona fide mistake and incorrect advice given by the tax consultant.

Key Takeaways

Wrong Professional Advice is “Sufficient Cause”: A delay in filing an appeal that is caused by a taxpayer’s bona fide reliance on the incorrect advice of their professional consultant can be considered a “sufficient cause” for condonation.
Substantive Justice Over Procedural Bars: The ruling prioritizes substantive justice (allowing the appeal to be heard on its merits) over a procedural time-bar, especially when the taxpayer’s conduct was not mala fide (in bad faith).
12A vs. 80G: The case highlights a critical procedural distinction: 12A registration is a prerequisite for, but does not automatically grant, 80G approval. A separate application and, if rejected, a separate appeal are necessary for 80G.

Rejection of 12A Registration Without a Hearing is Invalid; HC Remands Case.

Issue

Whether an order rejecting a trust’s application for 12A registration is legally valid if it is passed ex-parte without granting the assessee an opportunity of being heard.

Facts

The assessee trust filed an application for registration under Section 12A(1)(ac)(vi).
The Commissioner (Exemptions) [CIT(E)] rejected the application.
The stated reason for the rejection was that since the assessee had filed ITR-7 in the past, they were ineligible to apply under that specific clause.
This order was passed ex-parte without providing any opportunity of hearing to the assessee to explain their case or the applicability of the clause.

Decision

The High Court ruled in favour of the assessee and set aside the impugned rejection order.
It held that the order was an ex-parte dismissal for want of prosecution and was passed in violation of the principles of natural justice.
The matter was remanded back to the CIT(E) for a fresh decision.
The CIT(E) was directed to first decide the issue of the admissibility of the 12A application, and thereafter, take up the issue of the 80G registration.

Key Takeaways

Natural Justice is Mandatory: An adjudicating authority cannot reject an application on technical or substantive grounds without giving the applicant a fair opportunity to be heard.
Ex-Parte Orders are Unsustainable: An order passed without a hearing, where the assessee is not given a chance to defend their position, is a clear violation of natural justice and is liable to be quashed.
Hierarchy of Registration: The court’s direction confirms the procedural hierarchy: the authority must first decide the foundational registration under Section 12A. Only if that is granted can the application for Section 80G be considered.

IN THE ITAT CHANDIGARH BENCH ‘B’

Pata Trans Himalayan Empowerment Society

Income-tax Officer

Rajpal Yadav, Vice President
and Manoj Kumar Aggarwal, Accountant Member

IT Appeal No. 804 & 805 (CHD) of 2025
[Assessment year 2023-24]

OCTOBER 13, 2025

Parikshit Aggarwal, CA for the Appellant. Smt. Kusum Bansal, CIT DR for the Respondent.

ORDER

Rajpal Yadav, Vice President.- The present two appeals are directed at the instance of the assessee against the orders of ld. Commissioner of Income Tax (Exemptions) [in short ‘the ld.CIT (E)’] dated 15.04.2025 and 19.01.2023 whereby ld. CIT (E) has rejected the registration u/s 12A(1)(ac)(vi) and 80G(5) of the Act. The impugned order of the ld. CIT (E) qua grant of registration u/s 12A(1)(ac) reads as under :

Intimation Letter for 12(1)(ac)(vi)-ITEM(B)

Sir/ Madam/ M/s,

This is to inform you that your application in Form No.(10AB) vide Acknowledgment No.-713826420161124 Dated 16/11/2024 has been cancelled on 15/04/2025 by CIT EXEMPTIONS CHANDIGARH with following Remarks:

An application for registration u/s 12A(1)(ac)(vi)-ITEM(B) of the Income Tax Act, 1961 was filed by the applicant electronically on 16.11.2024 in Form 10AB. On perusal of records, it is seen that the applicant has been filing ITR-7 in the past. Therefore, the applicant clearly cannot file application u/s 12A(1)(ac)(vi)-ITEM(B). In view of the above, the present application of the applicant is cancelled being non-maintainable.

This is a system generated document and does not require any signature.

JAISHREE SHARMA

CIT EXEMPTIONS CHANDIGARH

2. A perusal of the above order would indicate that it is an intimation which has been given to the assessee without providing an opportunity of hearing to the assessee while adjudicating this issue. In other words, it is an ex-parte order, therefore, it is not sustainable in the eyes of law. We set aside the impugned order and restore this issue to the file of ld. CIT (E) for fresh adjudication after providing opportunity of hearing to the assessee.

3. As far as ITA 805/CHD/2025 is concerned, the Registry has pointed out that appeal is time barred by 805 days. The assessee has filed an application for condonation of delay. It has been pleaded in the application that originally assessee had applied for registration u/s 12AA and 80G of the Act on 30.09.2022. These applications were rejected. The assessee has re-applied only for registration u/s 12AA on 16.11.2024 and this application has been rejected vide order dated 15.04.2025. The counsel has advised the assessee that it would re-apply for 80G when issue regarding registration u/s 12AA is being decided. Thus, assessee has not re-applied for the grant of registration u/s 80G. When impugned order dated 15.04.2025 was brought to the notice of new counsel for filing an appeal before the Tribunal, only then it came to the notice of the assessee that it should have challenged the earlier order in appeal because grant of registration u/s 12AA will not automatically authorize the assessee to claim approval for 80G. It has to apply afresh. Due to this reason, the appeal has become time barred.

4. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross- objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. This expression sufficient cause employed in the section has also been used identically in subsection 3 of section 249 of Income Tax Act, which provides powers to the ld. Commissioner to condone the delay in filing the appeal before the Commissioner. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon’ble High Court as well as before the Hon’ble Supreme Court, then, Hon’ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon’ble Supreme court from the decision in the case of Collector Land Acquisition v. Mst. Katiji AIR 1987 SC 1353 :

Ordinarily a litigant does not stand to benefit by lodging an appeal late.

Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties.

“Every day’s delay must be explained” does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay? The doctrine must be applied in a rational common sense pragmatic manner.

When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non-deliberate delay.

There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.

It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so.

5. Similarly, we would like to make reference to authoritative pronouncement of Hon’ble Supreme Court in the case of N. Balakrishnan v. M. Krishnamurthy (1998) 7 SCC 123 dated 03.09.1998. It reads as under:

“Rule of limitation are not meant to destroy the right of parties. They are meant to see that parties do not resort to dilatory tactics, but seek their remedy promptly. The object of providing a legal remedy is to repair the damage caused by reason of legal injury. Law of limitation fixes a life-span for such legal remedy for the redress of the legal injury so suffered. Time is precious and the wasted time would never revisit. During efflux of time newer causes would sprout up necessitating newer persons to seek legal remedy by approaching the courts. So a life span must be fixed for each remedy. Unending period for launching the remedy may lead to unending uncertainty and consequential anarchy. Law of limitation is thus founded on public policy. It is enshrined in the maxim Interest reipublicae up sit finislitium (it is for the general welfare that a period be putt to litigation). Rules of limitation are not meant to destroy the right of the parties. They are meant to see that parties do not resort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words “sufficient cause ” under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain v. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal v. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation. While condoning delay the Could should not forget the opposite party altogether. It must be borne in mind that he is a looser and he too would have incurred quiet a large litigation expenses. It would be a salutary guideline that when courts condone the delay due to laches on the part of the applicant the court shall compensate the opposite party for his loss”.

6. In the light of the above, we are of the view that there was no deliberate attempt at the end of the assessee to make its appeals time barred. The delay has occurred on account of bonafide mistake happened due to advice of the Tax Consultant. Therefore, we condone the delay and proceed to decide the appeal.

7. We find that application for grant of registration u/s 80G has been dismissed ex-parte by the ld. CIT(E) without adjudicating on merit. Therefore, impugned order is not sustainable. In other words, it was a dismissal for want of prosecution, hence, impugned order is not sustainable. Accordingly, we set aside the impugned order and restore this issue also to the file of ld. CIT(E) for re-adjudication. It is pertinent to note that ld. CIT(E) would first decide the issue regarding admissibility of registration u/s 12A(1)(ac) and thereafter take up the issue regarding grant of registration u/s 80G. The assessee be provided fresh opportunity of hearing.

8. In the result, appeals are allowed for statistical purposes.