ITAT Ahmedabad: Delay in 12A/80G Final Approval Due to Post-2021 Confusion Cannot Be Held Against Assessee

April 17, 2026 : The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has ruled that delays in filing applications for final registration and approval under Sections 12A and 80G of the Income Tax Act cannot be viewed adversely when caused by genuine confusion arising from the amended statutory regime introduced from April 1, 2021.

The ruling came in a batch of four appeals filed by Navsarjan Education Trust against orders of the Commissioner of Income Tax (Exemption), Ahmedabad, rejecting its applications for final registration and approval on the ground of delay.

A Bench comprising Judicial Member Sanjay Garg and Accountant Member Annapurna Gupta observed that both taxpayers and tax authorities faced considerable uncertainty regarding timelines, forms, and procedural requirements following the overhaul of the registration framework.

Background of the Case

Navsarjan Education Trust, a charitable institution established in 1991 and engaged in providing education to underprivileged children, was granted provisional registration under Section 12A and provisional approval under Section 80G in July 2021.

Subsequently, the trust applied for final approval. However, the Commissioner (Exemption) rejected the applications, holding them to be time-barred. The authority interpreted the law to require filing within six months from the commencement of activities, which in this case dated back to 1991.

Tribunal’s Findings

The Tribunal rejected this interpretation, calling it fundamentally flawed. It noted that such a reading would effectively disqualify all pre-existing charitable institutions from obtaining final approval, which could not have been the legislative intent.

Referring to the facts recorded in the order (notably discussed in detail on pages 5 and 6 of the tribunal ruling), the Bench clarified that the timeline for seeking final approval must be computed from the date of grant of provisional approval not from the commencement of activities.

The Tribunal pointed out that requiring trusts to apply within six months of commencement of activities, even before provisional registration is granted, would be impractical and legally untenable.

Acknowledging Transitional Confusion

Importantly, the Bench took judicial notice of widespread confusion following the amendments effective from April 1, 2021. It recorded that multiple circulars and clarifications had to be issued by the Central Board of Direct Taxes to address ambiguities.

The Tribunal observed that this confusion was not limited to assessees but extended to tax authorities as well, and cited the present case as a clear example of such misinterpretation.

In this context, it held that any delay in filing applications after the grant of provisional approval on July 9, 2021, should not be held against the assessee.

Relief Granted

The Tribunal set aside the orders of the Commissioner (Exemption) and restored the matter for fresh adjudication with proper opportunity of hearing.

It also condoned substantial delays in filing appeals 591 days in one instance and 317 days in another accepting the trust’s explanation that it lacked familiarity with online procedures and did not have consistent professional assistance. These facts are specifically recorded in the order (pages 2–3 and page 7).

The Bench emphasized a liberal approach, particularly considering that the trust was engaged in charitable work for underprivileged children.

All four appeals were allowed for statistical purposes, with directions to the Commissioner (Exemption) to decide the applications afresh through a consolidated order to avoid overlapping or inconsistent outcomes.

Key Takeaway

The ruling reinforces that procedural delays rooted in genuine statutory ambiguity especially during transitional legal regimes should not defeat substantive rights, particularly in the case of charitable institutions.

Case Reference : ITA Nos.2483, 2484, 2487 & 2497/Ahd/2025, Navsarjan Education Trust vs. Dy.CIT