The Income Tax Appellate Tribunal (ITAT), Delhi Bench has condoned an extraordinary delay of 1,947 days in an appeal concerning rejection of registration under Section 12A of the Income-tax Act, 1961, holding that the circumstances surrounding the delay, including the COVID-19 pandemic and the assessee-trust’s bona fide belief regarding its registration status, justified giving precedence to substantial justice over technical limitation requirements.

The bench of Satbeer Singh Godara (Judicial Member) and Naveen Chandra (Accountant Member) has ultimately restored both appeals to the Commissioner of Income Tax (Exemption), Delhi [CIT(E)] for fresh adjudication in accordance with law after providing the assessee up to three effective opportunities of hearing.

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The dispute centred on the assessee-trust’s registration under Section 12A/12AA. According to the record, the trust had originally applied for registration in Form No. 10A on October 15, 2019. However, the application was rejected by the CIT(E) on September 11, 2020.

One of the most significant aspects of the ruling was the extraordinary delay in approaching the Tribunal.

The assessee’s appeal against the September 11, 2020 order was filed with a delay of 1,947 days. The trust sought condonation of the delay, explaining that 626 days fell within the period covered by the Supreme Court’s COVID-19 limitation relaxation, leaving an actual delay of 1,321 days.

The assessee attributed the remaining delay principally to a bona fide misunderstanding about the status of its registration. According to the explanation placed before the Tribunal, the rejection order was passed during the peak period of the COVID-19 pandemic, when the persons managing the trust were themselves under considerable stress.

The trust claimed that it had mistakenly understood the September 11, 2020 order as reflecting registration under Section 12AA and therefore did not immediately pursue an appeal against it.

The assessee further submitted that it subsequently filed its income-tax return for Assessment Year 2020-21, claiming the benefit of Section 11. The return was processed on July 10, 2021 without any demand, and according to the assessee, the Income Tax Department did not object to the benefit claimed under Section 11.

The trust also stated that it subsequently filed Form No. 10A under the new registration regime and obtained registration under Section 12A for the period from AY 2022-23 to AY 2026-27.

The record further showed that the trust continued receiving the benefit of Section 11 while its returns were processed and that it understood from these circumstances that its registration position was valid.

The registration controversy resurfaced when the assessee applied for re-registration under Section 12A in Form No. 10AB on September 29, 2025.

The trust received a notice seeking documents on December 23, 2025 and submitted its reply on December 30, 2025. During subsequent interactions with Income Tax Department officials, the managing persons of the trust claimed that they came to know that the trust did not have a valid registration dating back to its incorporation.

The assessee thereafter pursued clarification from departmental officials while waiting for the appeal concerning the original rejection order.

The re-registration application was ultimately rejected on March 25, 2026, on the ground that the assessee did not have an order granting registration under Section 12A prior to April 1, 2021. This prompted the trust to pursue the appellate remedy in relation to the original 2020 rejection.

The assessee argued that the delay was neither intentional nor deliberate. It maintained that the managing persons were under the bona fide belief that the trust possessed valid registration under Section 12A from the beginning.

It also contended that denying condonation would result in substantial tax consequences without the underlying eligibility for registration ever being examined on merits. The trust therefore urged that the matter should be considered substantively rather than being rejected solely on limitation.

The assessee also relied on principles of natural justice, pointing out that the original rejection order had been passed during the COVID-19 pandemic and was alleged to have been passed ex parte.

The department did not substantially dispute the assessee’s explanation for the delay.

The Tribunal noted that the Revenue could hardly dispute the circumstances cited by the assessee, particularly the COVID-19 pandemic and the circumstances that allegedly prevented the trust from initiating the appeal within the prescribed period.

While dealing with the condonation application, the Bench referred to the Supreme Court’s landmark decision in Collector, Land Acquisition v. Mst. Katiji & Others (1987) 167 ITR 471 (SC). The ITAT observed that the judgment has settled the principle that technical considerations should give way to the cause of substantial justice in appropriate circumstances.

The Tribunal also took note of an important procedural circumstance: the CIT(E) had not examined the underlying issue on merits.

Against this background, the Bench held that the extraordinary delay could be condoned.

“The impugned delay of 1947 days is hereby condoned.”

After condoning the delay, the Tribunal proceeded to consider the merits of the procedural dispute.

The Bench observed that the CIT(E)’s September 11, 2020 order had refused Section 12A registration on the basis of the assessee’s failure to furnish the corresponding details.

Rather than deciding the registration eligibility itself, the ITAT considered it appropriate to restore the matter to the CIT(E) for a fresh adjudication in accordance with law.

The Tribunal therefore restored both the lead appeal to the CIT(E).

The CIT(E) has been directed to provide the assessee three effective opportunities of hearing before passing a fresh order.

The ITAT did not grant a final finding that the assessee was entitled to Section 12A registration.

Instead, the Tribunal confined its decision to condoning the delay and restoring the registration dispute to the competent authority for fresh examination.

The order specifically records that all other remaining issues were kept open at this stage.

Thus, the ruling does not amount to a declaration that the trust is eligible for tax exemption. The question of whether the assessee satisfies the statutory requirements for registration remains to be determined by the CIT(E) after examining the matter afresh.

The Delhi ITAT ultimately allowed both appeals for statistical purposes.

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