Delay Condonation: transition-related filing delay in statutory approval applications condoned and application restored for merits consideration.

Rejection of a Form No.10AB application for statutory tax approval was held unsustainable where the delay arose from bona fide transition-regime confusion; contemporaneous notarised affidavits, prompt filing upon discovery and parallel recognition of charitable status supported a non-mala fide explanation. The legal principle applied requires condoning unexplained procedural delay when substantive eligibility is not controverted, permitting restoration of the application to the competent officer for merits adjudication after hearing rather than imposing an irreversible technical forfeiture.

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Issues: Whether rejection of an application in Form No. 10AB under section 80G(5) of the Income-tax Act, 1961, solely on the ground of delay is sustainable where the delay is satisfactorily explained as bona fide arising from transition-regime confusion, and whether the delay should be condoned and the application restored for merits consideration.

Analysis: The application for regular approval under section 80G(5) was rejected exclusively on limitation grounds based on clause (iii) of the first proviso to section 80G(5). Contemporaneous material on record includes notarised affidavits explaining the existence of two separate Form No.10AC orders with differing terminal years, prompt filing of Form No.10AB upon discovery, and parallel grant of regular registration under section 12AB(1)(b) accepting the charitable nature of activities. Administrative acknowledgement of transition-related confusion appears in Circular No. 7/2024. Coordinate Tribunal authority has addressed similar procedural rejections under the new regime and held that where delay is satisfactorily explained and substantive eligibility is not controverted, outright rejection on technical limitation alone is legally unsustainable. The combination of a plausible documentary explanation, absence of mala fide conduct, and acceptance of charitable status in concurrent proceedings weighs in favour of permitting adjudication on merits rather than imposing irreversible consequences for a procedural lapse.

Conclusion: The rejection of the application in Form No. 10AB solely on the ground of delay is not sustainable; the delay is condoned as bona fide and unintentional, and the matter is to be restored to the file of the Commissioner of Income Tax (Exemptions) for examination of the application on merits in accordance with law, after affording opportunity of hearing.

Ratio Decidendi: Where delay in filing an application for statutory approval is satisfactorily explained as bona fide arising from genuine transition-regime confusion, and the institution's substantive eligibility is not negatived (including acceptance in parallel proceedings), a mechanical rejection on limitation alone is legally unsustainable and the application must be considered on merits after condoning the delay.

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