2025 (6) TMI 1393 - AT - Income Tax

Delay of 61 days in filing the appeal before the Tribunal - sufficient reasons for delay - HELD THAT - As noted that u/s 253(5) of the Act the Tribunal may admit the appeal filed beyond the period of limitation where it has established that there exist a sufficient cause on the part of the assessee for not presenting the appeal within the prescribed time. The explanation therefore becomes relevant to determine whether the same reflects sufficient and reasonable cause on the part of the assessee in not filing this appeal within the prescribed time. On going through the reason for delay as stated in the affidavit it cannot be said that the assessee is very callous in its approach in filing the appeal before us. While considering a similar issue the Apex Court in the case of Collector Land Acquisition v. Mst. Katiji and Ors 1987 (2) TMI 61 - SUPREME COURT laid down six principles. As observed by Apex Court if the application of the assessee for condoning the delay is rejected it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned it would amount to legalizing an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution the Government cannot retain even a single pie of the individual citizen as tax when it is not authorized by an authority of law. Therefore if we refuse to condone the delay that would amount to legalize an illegal and unconstitutional order passed by the lower authority. Whether delay was excessive or inordinate ? - There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. We have to see the cause for the delay. When there was a reasonable cause the period of delay may not be relevant factor. In fact the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. 1984 (4) TMI 24 - MADRAS HIGH COURT considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Accordingly the Madras High Court condoned nearly 21 years of delay in filing the appeal. When compared to 21 years 61 days cannot be considered to be inordinate or excessive. In view of the above we are condoning the short delay of 61 days in filing the appeal before us and accordingly admit the appeal for adjudication. Rejection of approval u/s 80G - As rightly contended by the ld. A.R. of the assessee the order of rejection passed by the ld. CIT(E) is in the name of Bangalore Medical College and not in the name of the Assessee trust Bangalore Medical College Alumni Association . Further ld. A.R. of the assessee drawn our attention that in the course of 80G proceedings before ld. CIT(E) the notices were also erroneously issued in the name of Bangalore Medical College instead of Bangalore Medical College Alumni Association thereby leading to confusion and procedural irregularity. This being so in the interest of justice and fair play and as requested by the ld. A.R. of the assessee we deem it fit proper to remit the entire issues in dispute to the file of ld. CIT(E) to decide afresh. Appeal filed by the assessee is partly allowed for statistical purposes.

The core legal questions considered by the Tribunal in this appeal are:

1. Whether the delay of 61 days in filing the appeal before the Tribunal can be condoned under section 253(5) of the Income Tax Act, 1961, considering the reasons advanced by the assessee.

2. Whether the order of the learned Commissioner of Income Tax (Exemptions) rejecting the application for approval under section 80G of the Income Tax Act, 1961, is legally sustainable, particularly in light of procedural irregularities and the failure to provide a proper opportunity to the assessee.

3. Whether the rejection order passed in the name of a different entity ("Bangalore Medical College") instead of the actual assessee trust ("Bangalore Medical College Alumni Association") constitutes a procedural irregularity and violation of principles of natural justice.

4. Whether the learned Commissioner erred in rejecting the application under section 80G without appreciating the nature of the activities of the assessee and without considering the registration under section 12A of the Act.

Issue-wise Detailed Analysis

1. Condonation of Delay in Filing Appeal

Legal Framework and Precedents: Section 253(5) of the Income Tax Act empowers the Tribunal to admit an appeal filed beyond the prescribed period if sufficient cause for the delay is shown. The principles governing condonation of delay were elaborated by the Apex Court in Collector, Land Acquisition v. Mst. Katiji, which laid down six guiding principles emphasizing that substantial justice should prevail over technicalities and that delay caused without mala fide intention or culpable negligence should be condoned.

Court's Interpretation and Reasoning: The Tribunal examined the affidavit filed by the assessee explaining the delay, which was attributed to confusion arising from multiple registration proceedings involving similarly named entities and internal delays in obtaining approvals. The Tribunal found the reasons to be reasonable and not indicative of callousness or mala fide intent.

Key Evidence and Findings: The affidavit detailed the factual circumstances causing the delay, including organizational complexities and professional consultations. The Tribunal also noted the absence of any benefit to the assessee from the delay.

Application of Law to Facts: Applying the principles from Katiji and subsequent case law, the Tribunal held that the delay of 61 days was not excessive or inordinate, especially when compared with precedents where courts condoned delays spanning years. The Tribunal emphasized that denying condonation would legalize an illegal order and cause substantial injustice.

Treatment of Competing Arguments: While the Departmental Representative argued for dismissal on grounds of negligence and substantial delay, the Tribunal preferred the cause of substantial justice over technicalities, aligning with judicial precedents.

Conclusion: The Tribunal condoned the delay of 61 days and admitted the appeal for adjudication.

2. Validity of Rejection Order under Section 80G

Legal Framework and Precedents: Section 80G of the Income Tax Act provides for approval of donations to certain funds or charitable institutions, subject to fulfillment of prescribed conditions. The assessee must prove genuineness of activities and compliance with clauses (i) to (v) of section 80G. Principles of natural justice require that the assessee be given a fair opportunity to present its case and produce relevant documents.

Court's Interpretation and Reasoning: The Tribunal noted that the learned Commissioner rejected the application on the ground that the assessee failed to respond to notices and did not submit necessary documents. However, the Tribunal found that the notices and rejection order were erroneously issued in the name of "Bangalore Medical College" instead of the correct assessee trust "Bangalore Medical College Alumni Association".

Key Evidence and Findings: The assessee's AR highlighted the existence of two separate entities with similar names undergoing parallel proceedings before the same Commissioner. The BMC Development Trust had been granted approval, whereas the BMC Alumni Association was erroneously addressed, causing confusion and procedural irregularity.

Application of Law to Facts: The Tribunal held that the misnaming in notices and order constituted a violation of the principles of natural justice, as it deprived the assessee of a proper opportunity to respond and present its case. This procedural irregularity warranted reconsideration of the matter afresh.

Treatment of Competing Arguments: The Departmental Representative admitted the error in the name used in the order but relied on the merits of the rejection. The Tribunal, however, prioritized procedural fairness and the right to be heard.

Conclusion: The Tribunal deemed it fit to remit the matter to the learned Commissioner for fresh adjudication after providing the assessee a reasonable opportunity to be heard and to submit all relevant documents.

3. Appreciation of Activities and Registration under Section 12A

Legal Framework and Precedents: Registration under section 12A is a prerequisite for claiming exemption under section 80G. The Commissioner must consider such registration and the nature of activities of the trust while deciding on approval under section 80G.

Court's Interpretation and Reasoning: The Tribunal observed that the learned Commissioner did not adequately consider the registration under section 12A nor appreciate the nature of the activities of the assessee trust. The rejection was based on non-submission of documents, which, according to the assessee, were available on record.

Key Evidence and Findings: The assessee submitted that the activities were charitable and compliant with the Act, and that relevant documents were available but not duly considered due to procedural errors.

Application of Law to Facts: The Tribunal found that the rejection without proper appreciation of the trust's activities and registration was legally unsustainable and contributed to the need for remand.

Treatment of Competing Arguments: The Departmental Representative did not specifically contest this point but relied on the rejection order's findings.

Conclusion: The Tribunal directed that the learned Commissioner consider the registration under section 12A and the nature of activities afresh while deciding the approval application.

Significant Holdings

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

"If the application of the assessee for condoning the delay is rejected, it would amount to legalize injustice on technical ground when the Tribunal is capable of removing injustice and to do justice."

"The misnaming in notices and order constitutes a violation of the principles of natural justice, as it deprived the assessee of a proper opportunity to respond and present its case."

"The order passed without considering the registration under section 12A and without appreciating the nature of the activities of the trust is legally unsustainable."

The Tribunal held that the delay of 61 days in filing the appeal is condoned and the appeal is admitted for adjudication.

The rejection order under section 80G is set aside due to procedural irregularities and violation of natural justice, and the matter is remitted to the learned Commissioner for fresh consideration after affording the assessee a reasonable opportunity to be heard and to produce all relevant documents.

← Previous Next →