TMI Blog2014 (9) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... s for making such application, as discovered from the order of the DIT(E) is that its counterpart Visakhapatnam Urban Development Authority was granted registration under S.12AA of the Act, vide order dated 31.7.2006. Belated filing of appeal is not just the only aberration or stand alone instance of lapse on the part of the assessee – there were several instances which clearly demonstrate the casual and negligent approach of the assessee in dealing with issues pertaining to income-tax, which under the normal circumstances require greater attention - the assessee did not produce its books of account and information called for in spite of availing sufficient opportunity - the assessee is not only negligent in filing appeal before the Tribunal, but also in the matter of pursuing its application, before the DIT (E) for getting registration u/s12AA by producing the books of account and other information - it is quite certain that there is no reasonable cause for the delay, and the filing of the present appeal is only a knee jerk reaction of the assessee – thus, it is not a fit case for condonation of delay - the plea of the assessee for condonation of delay is rejected – Decided aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al may not be necessary as it was pursuing the registration u/s. 10(23C)(iv) of the I.T. Act and also as it was under the bonafide belief that all the expenditure incurred by it for the objects and the purpose authorised by the Act was allowable as a deduction. It was also under the bonafide belief that the amounts received by the appellant on sale of plots is on behalf of the Government of Andhra Pradesh and is, therefore, not subject to taxation. However, when the Income-Tax authorities did not agree with the contentions of the appellant and made huge additions, the appellant, the mater received greater attention of the appellant and it was examined in greater details by consulting the tax experts and on their advice and after thorough examination of the various provisions of the Act, the appellant filed an appeal before the Hon'ble ITAT on 31.10.2012 contesting the rejection of registration u/s. 12AA of the I.T. Act by the learned Director of Income-tax (Exemption) with a delay of 1804 days. The appellant humbly submits that the delay is for the reasons submitted above which are beyond the control of the appellant. The appellant, therefore, prays the Hon'ble ITAT to kindly condo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eved that its income, i.e. the excess of 15% of development charges as reduced by the expenses, is taxable consequent to omission of S.10(20A). Therefore, the assessee started filing its returns of income from assessment year 2003-04 offering its income to tax. Subsequently, when the Visakhapatnam Urban Develop- ment Authority applied for registration under S.12AA of the Act before the Commissioner of Income-tax, and was granted registration by the order dated 31.7.2006, and further due to amendment of the provisions of S.12AA by insertion of a proviso to the effect that no condonation of delay can be allowed for the applications filed on or after 1.6.2007, the assessee having become aware of these facts as well as legal position that the income of a person would be exempt under S.11 of the Act, if registration under S.12AA is granted, filed the application for registration on 15.3.2007. It was further contended that the Director of Income-tax (Exemption) while rejecting the assessee's application for registration under S.12AA of the Act by the order dated 20.9.2007, observed that the assessee could have utilised the amendment introduced by the new clause in S.36(1)(xii) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... some brain storming within its own organization as to what would be the repercussions of the shift in the stand of the department with regard to assessee's eligibility to deduction under S.36(1)(xii). Said process took a little longer time as the assessee was facing huge tax demands at the relevant point of time and was pursuing the alternatives of seeking the stay for collection of such huge tax demands and also attending to filing of appeals and feeding the relevant information to its consultants looking after the tax matters, and ultimately, the assessee, duly aided by the consultants, came to a decision that it would be necessary to seek registration under S.12AA of the Act, by preferring an appeal against the order dated 20th September, 2007 and as soon as that decision was taken, the assessee has preferred the present appeal before the Tribunal on 30th October, 2012. 7. It was submitted further that when it initially came to the notice of the assessee that exemption is available to the assessee under S.11 of the Act, he also became aware of the fact that exemption can also be sought under S.10(23C)(iv) and accordingly, preferred an application on 28.5.2007 seeking exemptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laced on the following decisions- i) Collector, Land Acquisition V/s. Mst. Katiji Ors. (167 ITR471)-SC ii) CIT V/s. West Bengal Infrastructure Development Finance Corporation Limited.(334 ITR 269)-SC iii) CIT V/s. Sanmac Motor Finance Ltd. (322 ITR 309)-Mad. iv) Subudhi Finance Ltd. V/s. CI T Ors, (334 ITR 90)-Mad. v) Pay Accounts Officer, Chepauk V/s. ITO (316 ITR 197)-Mad vi) Sterlite Industries (India )Ltd. V/s. Additional. CIT(102 TTJ (Mum)53-Mum. vii) Louis Berger International Income. V/.s. ADIT(ITA Nos.9378 to 939/Hyd/2012) viii) Smt. Banu Begum V/s. DCIT CC-6, Hyderabad (ITA No.2075/Hyd/2011) ix) Agricultural Market Committees V/s. Director of Income-tax (Exemption) Hyderabad (ITA Nos.1130 and 1131/Hyd/.2004 and others). x) Jodhpur Development Authority V/s. CIT(2012)145 TTJ)(Jd) 221 xi) ITO V/s. Moradabad Development Authority (133 ITD 485)- Del. xii) Bureau of Indian Standards (27Taxmann.com 127(Del)) 9. Reiterating the contentions urged in the counter petition of the respondent, the learned Senior Standing Counsel, Shri S.R.Ashok, appearing for the department, on the contrary, strongly opposed the contentions of the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to chose to file the present appeal with an unreasonable delay of 1804 days. In the circumstances, it is pleaded that this is not a fit case of condoning the delay, and the appeal should be dismissed, in limine, being barred by limitation. 10. The learned Standing Counsel for the Department also submitted that the appellant has raised certain new grounds in the course of the arguments, which do not find place in the reasons mentioned in the condonation petition. It was submitted that the issues now being raised are only a reorientation of dead thought and merely a knee jerk reaction on the part of the assessee, when they were confronted with the demand. 11. The learned Standing Counsel for the Department submitted that if the assessee's version of pursuing remedy against the order of rejection of its application for exemption under S.10(23C) of the Act, as stated to be one of the reasons, is to be believed then, it should have shown diligence in challenging that rejection order passed under S.10(23C)(iv) by either preferring appeal or a rectification petition within a reasonable time and should not have waited for more than four years to file a rectification application. Onl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee vide order dated 21.12.2011, the CIT(A) enhanced the assessment by denying exemption also to the extent of sale of plots. The learned Authorised Representative for the assessee submitted that due to the complexities of the Act, the assessee was unable to choose between the deductions under S.36(1)(xii) on the one hand and under S..10(23C) on the other. Initially, the assessee was of the view that the entire receipts had to be excluded, as they are like tagged grants. However, only later on, it leaned towards the deduction under S.36(1)(xii) and coming to know about the communication dated 24.8.2011, and the order of the CIT(A) for the assessment year 2008-09, enhancing the assessment dated 21.12.2011, the assessee not only filed an appeal against the order dated 20.9.2007 of the Director of Income-tax (Exemption), but also filed rectification application against the order dated 21.5.2008 rejecting the application for 10(20A). It was submitted that only because of the bona fide belief that the assessee is carrying that the deduction under S.36(1)(xii) would mitigate the hardship caused on account of omission of S.10(23A) of the Act, and further belief that the remedy by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-judge bench, whereas the decision in the case of Commissioner of Income-tax V/s. West Bengal Infrastructure Development Finance Corporation Ltd. (supra), was rendered by a Bench constituted of three-judges. Further more, the three-judge bench decision, being an earlier one, and having not been considered by the later two-judge bench decision of the Hon'ble Supreme Court, the former one has more binding effect than the later one. He further submitted that the dispute involved in the case of Chief Post Master General V/s. Living Media India Ltd. (supra) arose out of the regulasr activities of the post office unlike the case of the assessee wherein interpretation of the very complex legislation relating to income-tax Act, is involved and further, the assessee did not have any exposure to these provisions for a very long period. It was further submitted that the decision in the case of Chief Post Master General V/s. Living Media India Ltd. (supra) involved claim of the post office to higher postal charges whereas in assessee's case huge tax demands are involved and the assessee runs the risk of payment of these charges from out of the monies collected from the public in the form of d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0(23C)(iv) and it was under the impression that the expenditure incurred by it for the objects and purposes authorized by the Act is allowable as deduction. iv) The assessee was under a bona fide belief that the amounts received on sale of plots is on behalf of the Government of Andhra Pradesh and hence, not subject to taxation. v) Only after the Assessing Officer did not agree with the contentions of the assessee and made huge additions, the matter received greater attention and the issue was examined in greater detail by consulting tax experts and on their advice, appeal was filed before the Tribunal. Now, we have to examine whether the assessee has satisfactorily explained the cause of delay and how far the said explanation is acceptable. 16. Law is well settled that there is no straight jacket formula to measure what constitutes sufficient cause. It depends upon the facts of each individual case. Condonation of delay is not a matter of empty formality. The assessee is required to show sufficient cause that the assessee was either bona fide or was prevented by sufficient cause from pursuing the remedy. The assessee has to establish that there was no negligence or inactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... having services of qualified professionals who are well aware of the provisions of the Income-tax Act. Apart from applying for registration under S.12AA of the Act, the assessee also made an application on 28.5.2007 before the Chief Commissioner of Income-tax seeking approval under S.10(23C)(iv), which proves that the assessee was not only aware of the provisions of the Act but also had the services of qualified professionals. Therefore, the contention of the assessee that it was not aware of the provisions of the Act is not believable. More so, when the assessee is a statutory authority and not an ordinary or illiterate assessee, who may not be well-versed with the legal complexities of the provisions of the Act. It is strange that a statutory body like the assessee governed by the senior officers of the Government is pleading the ignorance of law as an excuse, when such a plea cannot be accepted even in the case of an ordinary citizen in accordance with the fundamental legal and statutory proposition/presumption that ignorance of law is no excuse. The assessee has further tried to reason that as it had a bona fide belief that registration under S.12AA is not necessary as it was p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that there is no reasonable cause for the assessee to have preferred the appeal after a delay of 1804 days. On the contrary, the conduct and approach of the assessee gives an impression that it was neither sure nor serious about the claim made under various provisions of the Act and was only adopting a trial and error method to test the pulse of the department. Only when huge demand stared at its face, the assessee suddenly woke up and came forward to file the present appeal. 18. Belated filing of appeal before us is not just the only aberration or stand alone instance of lapse on the part of the assessee. From the facts and material on record, we find several instances which clearly demonstrate the casual and negligent approach of the assessee in dealing with issues pertaining to income-tax, which under the normal circumstances require greater attention. Though it is neither relevant nor necessary to examine what prompted the assessee to apply for registration under S.12AA after about five years, since the withdrawal of exemption under S.10(20A), but what is relevant to note is the conduct of the assessee after it made the application for registration u/s.12AA of the Act. As wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le Supreme Court is to be interpreted in such a manner then the limitation provision engrained into the statute book would lose its meaningful purpose and become otiose and there would be no finality to litigations. Similarly, in the case of CIT V/s. Sanmac Motor Finance Ltd. (supra) the Hon'ble Madras High Court held that the length of delay is not a matter to be considered, but the acceptability of reasons for the delay should be the criteria for condoning the delay. In the facts of the present case, as we have already held, the assessee has not shown sufficient cause warranting condonation of delay. Hence, this decision cannot be said to be laying down the proposition that delay has to be condoned even if there is no sufficient cause. The learned Authorised Representative for the assessee has relied on the decision of the Hon'ble Madras High Court in the case of Subudhi Finance Ltd. V/s. CIT (supra), to contend that the limitation begins to run from the day when it came to the knowledge of the assessee. Hence, in the case of the present assessee, the delay would be computed from 24.8.2011 the date on which the Asstt. Commissioner of Income-tax informed the counsel for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt cannot be interpreted in such a manner to say that in the case of a Governmental undertaking, delay has to be condoned as a matter of rule, irrespective of the reasonableness of the explanation and absence of bona fide. The learned Authorised Representative for the assessee has also relied upon many decisions of the Tribunal as well as High Courts. It is not necessary to discuss each of these decisions, as they are based on the well settled propositions of law that when there is a reasonable cause, delay should be condoned and a liberal approach should be taken avoiding technicalities. There is no dispute to the aforesaid proposition of law. However, what constitutes a reasonable cause is purely a question of fact and will depend upon the facts and circumstances involved in a particular case and the conduct of the assessee in pursuing the appellate remedies. Hence, a ratio laid down in a decision cannot be applied uniformly to every case, without looking to the factual aspects involved in that case. 20. The Hon'ble Supreme Court in the case of Chief Post Master General V/s. Living Media India Ltd. (supra), relied upon by the learned Senior Standing Counsel for the Revenue be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ausible and acceptable explanation, we are posing a question why the delay is to be condoned mechanically merely because the Government or a wing of the Government is a party before us. 28. Though we are conscious of the fact that in a matter of condonation of delay when there was no gross negligence or deliberate inaction or lack of bona fides, a liberal concession has to be adopted to advance substantial justice, we are of the view that in the facts and circumstances, the Department cannot take advantage of various earlier decisions,. The claim on account of impersonal machinery and inherited bureaucratic methodology of making several notes cannot be accepted in view of the modern technologies being used and available. The law of limitation undoubtedly binds every body including the Government. 29. In our view, it is the right time to inform all the government bodies, their agencies and instrumentalities that unless they have reasonable and acceptable explanation for the delay and there was bona fide effort, there is no need to accept the usual explanation that the file was kept pending for several months/years due to considerable degree of procedural red tape in the process. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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