TMI Blog2006 (1) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... Thereafter the assessee filed another application on 9-12-2002. CIT granted registration u/s 12A with effect from 1-4-1997. Assessee was aggrieved against the grant of registration with effect from 1-4-1997. It was alleged that since the application was filed on 4-11-1993 registration should be granted with effect from 1-4-1997 (sic). Petition for the review of the order was filed on 18-6-2004 before the CIT. Meanwhile, Assessee received order of the first appellate authority on 26-6-2004 for the assessment years 1993-94, 1995-96 and 1997-98. During the course of the preparation of appeals assessee was advised that the proper remedy against the refusal of registration was appeal before the Tribunal and not review petition before the CIT. Accordingly, assessee did prefer appeal before the Tribunal. It was submitted that on this factual backdrop delay was caused of 617 days in filing appeal before Tribunal and 359 days in filing the appeal. Delay was unintentional and resulted due to wrong advice. It is, therefore, not possible to presume, that assessee had full knowledge as to the remedy available. Various applications made before the CIT proves this fact. Assessee was prosecuting r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was brought before me. Thus precedents, I am inclined to agree with the view taken by the learned Judicial Member on this aspect. In conformity with the majority opinion, we set aside the order of the CIT dated 4-9-2002 and 19-5-2003 and direct the Commissioner to grant registration u/s 12A(a) and u/s 80G with effect from 1-4-1993. In conformity with the majority opinion, we set aside the orders of the lower authorities and remand back the issue to the file of the Assessing Officer. The Assessing Officer shall examine the whole issue afresh and find out whether the assessee is entitled to exemption under sections 11,12 and 80G in respect of income received by them as a society registered under sections 12A and 80G of the Income-tax Act. In the result, all the appeals stand allowed. - HON'BLE M.K. CHATURVEDI, VICE PRESIDENT, N.R.S. GANESAN, JUDICIAL MEMBER AND CHANDRA POOJARI, ACCOUNTANT MEMBER For the Appellant : N. Quadir Hoseyn and T. Vasudevan, Advs. For the Respondent : Kalpagam Baskar and C. Venkateswarlu, Advs. ORDER N.R.S. Ganesan, Judicial Member. 1. I.T.A. Nos. 1757 1758 (Mds.)/2004 are filed by the assessee against the order passed by the Commissioner of Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration under section 12AA. Thereafter, the appeal was preferred. Therefore, the learned counsel submitted that there was delay of 617 days in filing the appeal before this Tribunal in I.T.A. No. 1757 (Mds.)/2004 and 359 days in filing the appeal before this Tribunal in I.T.A. No. 1758(Mds.)/ 2004. According to the learned counsel, the delay was beyond the control of the assessee. The learned counsel submitted that the assessee could not appear before the Commissioner of Income-tax since its representative met with an accident. This was also brought to the notice of the Commissioner of Income-tax. The learned counsel submitted that when there is a conflict between the technicality and substantial justice, in the interest of justice substantial justice has to be preferred rather than rejecting the application on technicality. Therefore, the learned counsel submitted that even though admittedly the application in forms 10A and 10G was filed on 4-11-1993, no action was taken till 2002. Therefore, in view of sub-clause (ii) of section 12AA, the registration is deemed to be granted. The learned counsel submitted that there was sufficient cause on the part of the assessee for not filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A says that the Commissioner of Income-tax has to pass an order either granting or refusing the registration before expiry of six months before the end of the month in which the application is received. Therefore, when the Commissioner of Income-tax fails to pass an order either granting or refusing to grant the registration, in view of the specific clause contained in section 12AA(2) of the Income-tax Act, the registration shall be deemed to be granted immediately after expiry of six months from the end of the month in which the application was filed. The learned counsel for the assessee further submitted that by an order dated 19-5-2003, the Commissioner of Income-tax granted registration with effect from 1-4-1997. However, he observed that there was a delay of 12 years, 7 months and 18 days ignoring the fact that the assessee has filed the application on 4-11-1993. The learned counsel further submitted that the main reason for rejecting the registration by an order dated 4-9-2002 is that there was a violation of provisions of section 11 of the Income-tax Act. The learned counsel for the assessee invited our attention to section 12A of the Income-tax Act and submitted that the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Act. This fact is not disputed by the revenue. By a letter dated 10-8-1999, it appears that the Income-tax Officer called for clarification regarding application of 75 per cent of the funds required under rule 11(1)(a) relating to assessment year 1994-95. Thereafter by a letter dated 18-7-2001, the assessee was asked to file return of income for the assessment years 1993-94 to 2000-01. Thereafter on 12-3-2002, the Commissioner of Income-tax called for an explanation on the ground that the income exceeded the expenditure, therefore, why the request for registration under section 12A should not be rejected. The assessee could not reply to the Commissioner of Income-tax's letter dated 12-3-2002 since, admittedly, the assessee's representative met with an accident. Thereafter on 4-9-2002, the assessee's request was rejected. 8. We have also carefully gone through the provisions of sections 12A and 12AA of the Income-tax Act. Section 12AA was introduced by Finance Act, 1996 with effect from 1-4-1997. Originally application for registration under section 12A has to be made before the Chief Commissioner of Income-tax. In view of section 12AA(1A), all applications pending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cting the application of the assessee. The only purpose for which the registration is granted is for establishing the identity of the institution to claim benefit under sections 11 and 12 of the Income-tax Act. The question whether the assessee is entitled for exemption under sections 11 and 12 of the Income-tax Act or under section 80G would be decided in a later stage. At the stage of grant of registration, the Commissioner of Income-tax cannot insist the assessee to explain the nature of expenditure. 10. It appears from the records that the Society was formed on 20-1-1989. The application was admittedly made in Forms 10A and 10G on 4-11-1993. It is nobody's case that the assessee has made any application to condone the delay in making the application. It is also not the case of the assessee that the assessee was prevented from making an application before the expiry of one year period. Therefore, in view of section 12AA(2), the registration has to be granted only from the first day of the year in which the application was made. In this case, the application was admittedly made on 4-11-1993. Therefore, in our view, the Commissioner ought to have granted registration with effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with CIT, Madurai. It is apparent from the letter of CIT, Madurai dated 1-7-1998 that the office of CIT, Madurai, has written letter to the assessee on 20-7-1994 for which the assessee has not replied. Even the office of CIT, Madurai has written a letter to the assessee vide dated 1-7-1998 in which certain clarification was asked for. Subsequently also, the CIT has written letter on 10-8-1999, 18-7-2001 and 12-3-2002 calling for certain clarifications regarding application of funds and information regarding filing of return of income from assessment years 1993-94 to 2000-01. Finally, the case was fixed for hearing on 16-8-2002 vide letter dated 12-8-2002 for confronting the Assessing Officer's report with regard to registrations under section 12A of the assessee. The assessee did not comply with this notice and the letter dated 13-8-2002 was received from the Auditor of the assessee by the CIT, Madurai, requesting for adjournment of the hearing as the Auditor met with accident on 7-8-2002 without any supporting evidence. The case was reposted vide letter dated 19-8-2002 for hearing on 3-9-2002 but the assessee choose not to avail of this opportunity. The CIT finally passed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f CIT, Madurai dated 19-5-2003 in which registration was granted w.e.f. 1-4-1997 and the registration was not granted w.e.f. 11-4-1989 as sought by the assessee. There was a delay in filing of both the appeals by 617 days and 359 days respectively. The assessee has filed the condonation petitions along with these appeals, supported by affidavits. 21. Against the common appellate orders of the CIT (Appeals) for the above three assessment years, the assessee preferred appeals before Tribunal on 12-7-2004 in ITA/Nos. 1759-1761/2004. 22. The assessee moved one more review petition for grant of registration under section 12A vide letter dated 18-6-2004 along with fresh Form-10A which was rejected by CIT, Madurai vide letter dated 6-8-2004. This review petition was moved after not only receipt of the assessment order for the above assessment years but also after receipt of the first appellate order against the said assessment orders. 23. Before us, both the parties argued vehemently. I have heard both the sides and gone through the materials available on record. I have also carefully gone through the reasons cited in the petitions filed for condonation of delay which are common. The reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(1)(c) provided for an appeal to the Tribunal against the order of the CIT rejecting the application for registration under section 12AA, which was not noticed earlier. Immediately thereafter, steps were taken to prepare and file the appeal before the Tribunal. It was also advised by the counsel that the question of registration and the assessment for the respective years have to be considered together. Hence, the appeals against the order of the CIT(A) from the assessment were also prepared and filed at the same time, even though the Assessee had time till 6-9-2004 to file the appeals before the Tribunal. The petitioner submits that the delay was neither wilful nor wanton but due to circumstances beyond the control of the Assessee. If the delay is not condoned and the appeal disposed of on merits, the assessee would be put to irreparable hardship and injury. It is, therefore, prayed that the Hon'ble Tribunal may be pleased to condone the delay of 617 days in filing the appeal, admit the same, dispose it of on merits and thus render justice. 24. I have also gone through the assessee's paper book and found at page 3, that there is a letter from the office of the CIT, Madura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of excess of income over expenditure. The assessee did not responded to any of the above letters. The CIT, Madurai finally fixed the hearing on 16-8-2002 vide letter dated 12-8-2002 to explain why the application for registration be rejected in given circumstances. However, on 13-8-2002, a letter from assessee's auditor was received requesting for adjournment of hearing as the authorized representative has met with an accident on 7-8-2002. The case was reposted on 3-9-2002 for hearing vide letter served on the Assessee on 19-8-2002. The CIT, Madurai rejected the application for grant of registration under sections 12A and 80G of the Income-tax Act on 4-9-2002 as the information was not forthcoming in spite of numerous opportunities given to the Assessee from very beginning from submission of application on 4-11-1993 till the last hearing on 16-8-2002. The reasons stated by the CIT, Madurai for rejecting the grant of registration in his order read as under:- The above society filed Form Nos. 10A and 10G on 4-11-1993 seeking registration under section 12A(a) and grant of recognition under section 80G of the Income-tax Act. The society was formed on 20-1-1989. A report on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal under section 253(1)(c) against the order of CIT, Madurai, rejecting the application for grant of registration under section 12A of the Act as which was not noticed earlier and in view of this reason, the Assessee's appeal was delayed by 617 days. 28. The Assessee also contended that there is reasonable cause in filing the appeal belatedly and the delay was neither wilful nor wanton but due to the circumstance beyond the control of the assessee. In this connection, I have gathered from records that the Assessee was represented by a firm of Auditors, viz., Rodriguez Co., Chartered Accountants, Madurai, which is very much evident from the order of CIT, Madurai dated 4-9-2002 (the impugned order). The assessee has filed the appeals against the order of rejection of registration only in the eventuality of creation of huge demand through the assessment orders and subsequently, the appeals were dismissed and demands were confirmed by the CIT(A). There is a delay in filing appeal of about 617 days. They only reason stated by the assessee is that the wrong remedies were perused by the Assessee by filing review petitions and fresh applications. Now, I am examining whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot ignore law of limitation and that also when there is no sufficient and reasonable cause. 29. It is abundantly clear and an admitted fact that the Department has properly attended the application made by the assessee for registration under section 12A, vide letter dated 20-7-1994, 1-7-1998, 10-8-1999, 18-7-2001, 12-8-2002 12-3-2002 (these letters are reproduced in above para or cited) but the assessee has not cooperated with Department and now the assessee cannot take the benefit of its own mistake and it appears that it is guilty of latches and negligence and it has not taken appropriate steps in pursuing the registration application. The Department, in view of the above cited letters has not kept the assessee's application for grant of registration dated 4-11-1993 unattended. Hence, the assessee cannot take shelter under section 12AA(2). In view of the facts and reasons narrated above, I am of the view that the delay of 617 days in filing appeal without sufficient cause cannot be condoned. Moreover, in the absence of sufficient cause, delay cannot be condoned merely on equitable grounds. A close scrutiny of the petition for condonation of delay reveals that no proper reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... them. In the present case, the assessee has failed to furnish the required information called for by the CIT as is evident from the order of CIT, Madurai. Therefore, on this count also, the assessee becomes disentitled for registration under section 12A. 31. Now coming to ITA No. 1758/Mds./2004, the facts are exactly identical as in ITA No. 1757/Mds./2004 as decided above except that registration under section 12AA of the Act was granted in terms of fresh application filed by the assessee on 29-11-2002 retrospectively with effect from 1-4-1997 on the basis of amended Memorandum of Association and Bye Laws registered as Society No. 80 of 1989 with the Registrar of Societies/Madurai on 11-4-1999 under the Tamilnadu Societies Registration Act, 1975 and amendments to the Memorandum of Association/Bye Law Registered No. 5/2002 on 13-11-2002 with the Registrar of Societies, Madurai South as the registration was not granted with effect from 11-4-1989 as sought by the assessee. 32. This registration was granted vide Order NOC No. 464/114/2002-03/CIT-I dated 19-5-2003 by CIT, Madurai. The assessee preferred appeal against this order on 12-7-2004 and there was a delay of 359 days in filing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondoned. Hence, the assessee is not entitled for exemption under section 11 of the Act and accordingly these appeals are dismissed without going into the merits of the case. 35. In the result, all the five appeals of the assessee are dismissed. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Since there is a difference of opinion, the following questions are framed and referred to Hon'ble President for nominating Third Member. (1) Whether in the facts and circumstances of the case, the registration under section 12A is to be granted with effect from 1-4-1993 instead of 1-4-1997? (2) Whether in the facts and circumstances, there was reasonable cause in not filing the appeal in ITA Nos. 1757 and 1758 (Mds.)/2004 in time? And whether the cause of justice requires a liberal view should be taken? (3) Whether the Commissioner has exceeded his jurisdiction in making an investigation beyond the condition prescribed under section 12A. We direct the registry to place the appeal file before the Hon'ble President for nominating Third Member. THIRD MEMBER ORDER Shri M.K. Chaturvedi, Vice President. 1. These appeals came before me as Third Member to express my opinion on the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g advice. 4. Reliance was placed on the decision of the jurisdictional High Court rendered in the case of CIT v. K.S.P. Shanmugavel Nadar [1985] 153 ITR 596(Mad.). In this case assessee filed a petition for condoning the delay on the ground that he had been pro-secuting other remedies and hence the time taken bona fide for prosecuting other remedies should be taken into consideration for condoning the delay. Hon'ble High Court has held that there existed a reasonable cause for filing the belated appeal. 5. In the case of Collector, Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 Hon'ble Supreme Court has held that the Legislature has conferred power to condone delay by enacting section 5 of the Limitation Act, 1963, in order to enable the courts to do substantial justice to parties by disposing of matters on merits. The expression sufficient cause in section 5 is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice - that being the life-purpose of the existence of the institution of courts. A justifiably liberal approach has to be adopted on principle. Every day's delay must be explained does not imply a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Member that in such circumstances to meet the ends of justice delay should be condoned. 8. Adverting now to the question No. 1 I find that the assessee-trust was created on 20-1-1989. As per the prescription of section 12A of the Act assessee was required to make application before 19-1-1990. Assessee did make application on 4-11-1993. This application was found to be belated. As such rejected by the CIT. 9. It was contended before me that the case of the assessee comes within the ken of proviso to section 12A(a)(ii). Relevant portion of the section is reproduced here as under: 12A. The provisions of section 11 and section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely:- (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the Commissioner before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, whichever is later and such trust or institution is registered under section 12AA: Provided t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner may proceed with such applications under that sub-section from the stage at which they were on that day. 12. As per the mandate of section 12AA(2) every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) of section 12A. This was not done. CIT decided the issue of registration on 4-9-2002. As such it is beyond time. I have perused the reasonings adduced by the learned Judicial Member in this regard. In my opinion, he took a correct view in the matter. I agree with his decision on this count. 13. Last issue relates to the question whether CIT exceeded his jurisdiction in making an investigation beyond the condition prescribed under section 12A. 14. I have heard the rival submissions. Hon'ble jurisdictional High Court in the case of New Life In Christ Evangelistic Association v. CIT [2000] 246 ITR 532 (Mad.) has held that enquiry into the objects of institution cannot be made under section 12A. Delhi Bench of the Tribunal in the case of Asstt. CIT v. Peare Lal Sharma Memorial Trust Society [2001] 77 ITD 50 has held that at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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