Partha Sarthi Education Society, New Delhi V. The Director of Income tax (E), New Delhi

ITA 1235/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2127 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 05-11-2009
• Assessment Year: misc
• Appeal Filed On: 31-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BK GUPTA
• Assessee Lawyers: V MOHAN
• Section: 80G; 12A; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D: NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO. 1235/DEL/2009 (U/S 12AA(1)(B) ) PARTHA SARTHI EDUCATION SOCIETY, 7, MANIPRABHA, BEHIND SECTOR D-4, VASSANT KUNJ, NEW DELHI-110070. PAN : AAAAP6724B VS. DIRECTOR OF INCOME TAX (E), DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VED JAIN, C. A. & SHRI V. MOHAN, C.A. RESPONDENT BY : SHRI B.K. GUPTA, SR. D.R. O R D E R PER: C.L. SETHI, J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 31 ST JULY, 2007 PASSED BY THE LD. DIT(E), DELHI REJECTING THE ASSESSEES APPL ICATION DATED 04.11.2007 SEEKING REGISTRATION U/S 12A AND EXEMPTION U/S 80G OF THE INCOME TAX ACT, 1961. HOWEVER, THIS APPEAL, FILED BY THE ASSESSEE, IS RELATED TO THE MATTER REGARDING REGISTRATION U/S 12A OF THE ACT. 2. THE ASSESSEE HAS TAKEN A GROUND THAT THE LD. DIT (E) IS WRONG IN HOLDING THAT THE ACTIVITIES OF THE TRUST ARE NOT GENUINE AN D HAS, THUS, ERRED IN REJECTING THE ASSESSEES APPLICATION FOR REGISTRATION U/S 12A OF THE ACT. 3. AT THE OUTSET, IT IS NOTICED THAT THE PRESENT AP PEAL HAS BEEN FILED BY THE ASSESSEE BELATEDLY BY 543 DAYS. IN SUPPORT OF THE PRAYER TO CONDONE THE DELAY IN ITA NO. 1235/DEL/2009 2 FILING THIS APPEAL, THE ASSESSEE HAS FILED AN AFFID AVIT OF ITS PRESIDENT/CHAIRMAN STATING THEREIN AS UNDER:- 1. THAT I AM THE PRESIDENT OF PARTHA SARTHI EDUC ATION SOCIETY. 2. THAT THE SAID SOCIETY WAS REGISTERED WITH THE REGIS TRAR OF SOCIETIES AS ON 30 TH NOVEMBER, 2006 WITH THE OBJECT OF IMPARTING EDUCAT ION. 3. THAT AN APPLICATION FOR REGISTRATION UNDER SECTION 12A IN FORM NO. 10A WAS FILED WITH THE DIRECTOR OF INCOME TAX (EXEM PTION) NEW DELHI AS ON 4 TH JANUARY, 2007. 4. THAT ALL THE REQUISITE DETAILS AND EXPLANATION CALL ED FOR IN THE MATTER WERE DULY FILED WITH DIRECTOR OF INCOME TAX (EXEMPT ION) TIME TO TIME. 5. THAT AN ORDER DATED 31 ST JULY, 2007 WAS PASSED BY THE DIT(EXEMPTION) DELHI, REJECTING THE APPLICATION OF SOCIETY FOR REGISTRATION UNDER SECTION 12A. 6. THAT THE SAID ORDER OF THE DIT(E) DELHI WAS RECEIVE D BY THE SOCIETY AS ON 6 TH AUGUST, 2007. 7. THAT AS THE UNDERSIGNED WAS GOING THROUGH A SEVER F AMILY CRISIS AND A BAD PHASE DURING THAT PERIOD, THE SAID ORDER WAS KEPT IN THE FILE WITHOUT FURTHER ATTENTION. 8. THAT DUE TO THE PREVAILING CONDITIONS NO HELP OF AN Y LEGAL ADVISOR COULD BE TAKEN AT THAT TIME. 9. THAT AFTER SETTING DOWN AND IMMEDIATELY ON RECOMMEN DATION OF A LEGAL COUNSEL, THE APPEAL AGAINST THE ABOVE SAID OR DER WAS FILED BEFORE THE HONBLE ITAT AS ON 30 TH MARCH, 2009. 10. THAT THE DUE DATE FOR FILING THE APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL AGAINST THE SAID ORDER WAS 5 TH OCTOBER, 2007. 11. THAT AS SUCH THERE IS A DELAY OF ABOUT 17 MONTHS 25 DAY IN FILING THE SAID APPEAL. 12. THAT THE DELAY IN FILING THE APPEAL AS STATED ABOVE WAS ON ACCOUNT OF BONAFIDE REASONS AND CIRCUMSTANCES BEYOND THE CONTR OL OF THE UNDERSIGNED. 13. THAT THE UNDERSIGNED IS SERIOUSLY INTERESTED IN PUR SUING THE APPEAL AND UNDERTAKES TO ATTEND AND PROVIDE ALL INFORMATIO N AS MAY BE REQUIRED FOR THE DISPOSAL OF THE SAME. 14. THAT IN THE ABOVE CIRCUMSTANCES THE DELAY IN FI LING THE APPEAL MAY KINDLY BE CONDONED AND APPEAL BE DECIDED ON MERIT. 4. WE HAVE HEARD BOTH THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. 5. IN THIS CASE, THE ASSESSEE TRUST WAS CREATED ON AND FROM 31.11.2006. THE ASSESSEE SUBMITTED TWO APPLICATIONS ON 05.01.2007 F OR SEEKING REGISTRATION U/S ITA NO. 1235/DEL/2009 3 12A AND APPROVAL U/S 80G OF THE ACT. THE DIT(E), D ELHI VIDE ORDER DATED 31.07.2007 REJECTED THE ASSESSEES APPLICATION BY O BSERVING AS UNDER:- THE REPLY REGARDING PURCHASE OF LAND FOR ESTABLISH ING EDUCATIONAL INSTITUTION IS NOT SUPPORTED BY ANY DOCUMENTARY EVI DENCE. NO EVIDENCE SUCH AS CORRESPONDENCE WITH THE CONCERNED AUTHORITI ES SUCH AS THE STATE GOVT., ANY UNIVERSITY/ BOARD OR ACITE ETC. WAS FILE D IN SUPPORT OF THE ABOVE REPLY. THEREFORE, IN THE ABSENCE OF ANY EVID ENCE, IT CANNOT BE SAID THAT THE APPLICATION HAS COMMENCED ITS ACTIVITIES A S PER ITS OBJECTS. 4. IN ORDER TO BE ELIGIBLE FOR REGISTRATION U/S 12A A OF THE I.T. ACT, 1961 THE FOLLOWING CONDITIONS MUST BE SATISFIED: (I) THE OBJECTS OF THE TRUST SHOULD BE OF CHARITABLE IN NATURE. (II) THE ACTIVITIES OF THE TRUST SHOULD BE GENUINE. IN THE ABSENCE OF THE EVIDENCE AS DISCUSSED ABOVE, THE GENUINENESS OF THE ACTIVITIES COULD NOT BE ESTABLISHED. IN VIEW OF TH E ABOVE, ONE OF THE CONDITIONS FOR GRANTING REGISTRATION U/S 12AA IS NO T SATISFIED. ACCORDINGLY, THE APPLICATION FILED BY THE APPLICANT FOR GRANT OF REGISTRATION U/S 12AA IS REJECTED. 5. SINCE, THE APPLICANT IS NOT REGISTERED U/S 12AA OF THE INCOME TAX ACT, THE APPLICATION FILED IN FORM NO. 10G IS ALSO REJECTED. 6. THEREAFTER, THE ASSESSEE MADE ANOTHER APPLICATIO N ON 14.11.2008 SEEKING REGISTRATION U/S 12A OF THE ACT AND APPROVAL U/S 80 G OF THE ACT. AFTER CONSIDERING THE DEED OF TRUST DATED 30.11.2006 INDI CATING THE OBJECT OF THE TRUST, THE DIT(E) WAS SATISFIED THAT THE INSTRUMENT DOES N OT CONTAIN ANY NON-CHARITABLE OBJECT AND HE WAS SATISFIED ABOUT THE GENUINENESS O F ITS CHARITABLE ACTIVITIES CARRIED ON. THE DIT(E), THEREFORE, GRANTED REGISTR ATION U/S 12AA FROM THE ASSESSMENT YEAR 2009-10 SUBJECT TO THE CERTAIN COND ITIONS MENTIONED IN HIS ORDER. THE DIT(E) ALSO GRANTED APPROVAL U/S 80G FOR THE PE RIOD FROM ASSESSMENT YEAR 2009-10 TO 2010-11 SUBJECT TO THE CONDITIONS MENTIO NED IN HIS ORDER. IT IS, THUS, CLEAR THAT THE ASSESSEES TRUST WAS ULTIMATELY GRAN TED REGISTRATION AS PER THE OBJECT MENTIONED IN THE DEED OF TRUST DATED 30.11.2006. ITA NO. 1235/DEL/2009 4 7. AT THIS STAGE, IT IS PERTINENT TO NOTE THAT THE POWER OF THE DIT(E) TO ALLOW REGISTRATION OF THE TRUST FROM THE DATE OF THE CREA TION OF THE TRUST IF HE IS, FOR THE REASONS TO BE RECORDED IN WRITING, SATISFIED THAT T HE PERSON CONCERNED WAS PREVENTED FROM MAKING THE APPLICATION BEFORE THE EX PIRY OF SPECIFIED PERIOD FOR SUFFICIENT REASONS, HAS BEEN TAKEN AWAY BY THE AMEN DMENT MADE BY THE FINANCE ACT, 2007 WITH EFFECT FROM 01.06.2007 IN RESPECT OF THE APPLICATION FOR REGISTRATION MADE ON OR AFTER THE FIRST DAY OF JUNE , 2007. THEREFORE, IN RESPECT OF THE APPLICATION FILED BY THE ASSESSEE FOR THE SECON D TIME ON 14.11.2008, THE DIT(E) IS EMPOWERED TO GRANT REGISTRATION ONLY FROM THE FIRST DAY OF FINANCIAL YEAR 2008-09, IN WHICH THE APPLICATION DATED 14.11. 2008 WAS MADE. THE DIT(E), THEREFORE, GRANTED THE REGISTRATION FROM THE ASSESS MENT YEAR 2009-10 PERTAINING TO THE FINANCIAL YEAR 2008-09. 8. THE ASSESSEES FIRST APPLICATION WAS FILED ON 04 .01.2007, WHICH WAS REJECTED BY THE DIT(E) VIDE ORDER DATED 31.07.2007. AGAINST THIS ORDER, THE ASSESSEE SHOULD HAVE FILED APPEAL BEFORE THE TRIBUN AL WITHIN 60 DAYS FROM THE DATE OF RECEIPT OF THIS ORDER. IT IS NOT IN DISPUT E THAT THE ORDER WAS RECEIVED BY THE TRUST ON 06.08.2007 AND THE DUE DATE FOR FILING THE APPEAL BEFORE THE TRIBUNAL WAS, THUS, 05.10.2007. AFTER RECEIVING THIS ORDER ON 06 .08.2007, INSPITE OF FILING THE APPEAL BY 05.10.2007 BEFORE THE TRIBUNAL, THE ASSES SEE FILED FRESH APPLICATION BEFORE THE DIT(E) ON 14.11.2008. THE ASSESSEES CO NDUCT OF FILING SECOND APPLICATION FOR REGISTRATION ON 14.11.2008 INDICATE S THAT THE ASSESSEE WAS SINCERE AND INTERESTED IN PURSUING THE MATTER OF GETTING RE GISTRATION U/S 12AA OF THE ACT. ITA NO. 1235/DEL/2009 5 THE AMENDMENT PROHIBITING THE DIT(E) FROM GRANTING THE REGISTRATION FROM THE DATE OF CREATION OF THE TRUST IF HE IS SATISFIED, F OR THE REASONS RECORDED IN WRITING, THAT THE PERSON CONCERNED WAS PREVENTED FROM MAKING THE APPLICATION BEFORE THE EXPIRY OF THE PERIOD FOR SUFFICIENT REASONS HAS BEE N TAKEN AWAY WITH EFFECT FROM 01.06.2007. IN OTHER WORDS, THIS WAS A RECENT AMEND MENT MADE IN THE ACT TAKING AWAY THE POWER TO THE AUTHORITY CONCERNED TO GRANT REGISTRATION FROM THE DATE OF CREATION OF THE TRUST IF THE CONCERNED AUTHORITY IS SO SATISFIED AS DISCUSSED. THE ASSESSEE HAS SUBMITTED THAT DUE TO THE ILLNESS OF I TS PRESIDENT, THE ASSESSEE COULD NOT BE ABLE TO TAKE HELP OF ANY LEGAL ADVISOR AT TH AT POINT OF TIME. IN SUPPORT OF THE FACT THAT THE ASSESSEE PRESIDENT WAS SUFFERING FROM ILLNESS AND A CRISIS WAS PREVAILING DURING THAT PERIOD, THE ASSESSEE PRODUCE D THE MEDICAL PAPERS INDICATING THAT THE ASSESSEE WAS TAKING EXTENSIVE TREATMENT FR OM THE MONTH OF JUNE, 2007 TO AUGUST, 2007. THE ASSESSEES PRESIDENT IS AGED ABOU T 60 YEARS AS MENTIONED IN THE MEDICAL PAPERS. THERE IS NO DISPUTE TO THE FAC T THAT THERE IS AN INORDINATE DELAY OF ABOUT 543 DAYS IN FILING THIS APPEAL, WHIC H HAS BEEN FILED IN THE MONTH OF MARCH, 2009 AND SUCH INORDINATE DELAY IS NOT, IN NO RMAL CIRCUMSTANCES, FIT TO BE CONDONED. HOWEVER, HAVING REGARD TO THE REASONS SH OWN BY THE ASSESSEE AND MERIT OF THE ISSUE AND IN THE LIGHT OF PECULIAR FAC TS OF THE CASE THAT SAME DIT(E), WHO REFUSED EARLIER THE REGISTRATION, HAS GRANTED R EGISTRATION TO THE ASSESSEE ON THE BASIS OF VERY SAME DEED OF TRUST EXECUTED ON 30.11. 2006 FROM THE ASSESSMENT YEAR 2009-10, WE ARE INCLINED TO ADOPT A LIBERAL AN D PRAGMATIC APPROACH IN CONDONING THE DELAY IN FILING THIS APPEAL SO THAT I N RESPECT OF THE SAME TRUST BASED ITA NO. 1235/DEL/2009 6 ON SAME SET OF FACTS AND SAME DEED OF TRUST DATED 3 0.11.2006, NO CONFLICTING STAND IS APPLIED WHILE ASSESSING THE TOTAL INCOME OF THE TRUST AND AS TO THE STATUS UNDER WHICH IT IS TO BE ASSESSED. WE, THEREFORE, CONDONE THE DELAY AND ADMIT THIS APPEAL FOR DISPOSAL ON MERIT. BEFORE PARTING WITH T HE ISSUE ABOUT THE CONDONATION OF THE DELAY, WE MAY OBSERVE THAT THE DECISION OF H ONBLE BOMBAY HIGH COURT IN THE CASE OF ORNATE TRADERS PVT. LTD VS. ITO (209) 3 12 ITR 193 (BOM.) AND THE DECISION OF ITAT, CHANDIGARH BENCH IN THE CASE OF A CIT VS. RANBIR CHEMICAL INDUSTRIES P. LTD. REPORTED IN (2008) 301 ITR (AT) 104 (CH.) ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE INASMUCH AS IN THE CA SE BEFORE HONBLE HIGH COURT, THE HONBLE HIGH COURT HAS CLEARLY STATED THAT THER E WAS NO PROPER EXPLANATION AND NO SUFFICIENT CAUSE WAS SHOWN FOR CONDONATION O F DELAY AND THERE WAS APPARENT NEGLIGENCE AND CALLOUSNESS ON THE PART OF THE OFFICER/ OFFICIALS OF THE DEPARTMENT TO THE EXTENT THAT EVEN CORRECT STATEMEN TS HAD NOT BEEN MADE. IN THE CASE BEFORE HONBLE HIGH COURT, THE REASON WAS GIVE N THAT THE OFFICER WAS BUSY IN TIME-BARRING CASES THOUGH THE TIME- BARRING CASE S WERE COMPLETED ON 31 ST MARCH, WHILE THE CASE BEFORE THE HONBLE BOMBAY HIG H COURT WAS RELATED TO THE PERIOD SUBSEQUENT TO MARCH OF THE RESPECTIVE ASSESS MENT YEAR. THE HONBLE HIGH COURT ALSO OBSERVED THAT THERE WAS NO SPECIFIC AVER MENT IN REGARD TO TIME-BARRING CASES WITH ANY DATE IN THE AFFIDAVIT FILED IN SUPPO RT OF THE NOTICE OF MOTION. THEREFORE, IN THE LIGHT OF THE FACTS OF THAT CASE, AND IN THE ABSENCE OF ANY SATISFACTORY EXPLANATION,, THE DELAY BEYOND ONE YEA R AND UP TO 1474 DAYS WAS NOT CONDONED. SIMILARLY, IN THE CASE BEFORE THE ITAT, CHANDIGARH BENCH, THE DELAY ITA NO. 1235/DEL/2009 7 OCCURRED IN FILING THE APPEAL FILED BY THE DEPARTME NT WAS OF 8 YEARS 47 DAYS, AND FOR SUCH A LONG PERIOD, THE DEPARTMENT COULD NOT CL AIM THE COMMUNICATION GAP AS THE MAIN REASON FOR FILING THE APPEAL BELATEDLY. T HEREFORE, THESE TWO DECISIONS CITED BY THE LD. D.R. ARE OF NO HELP TO THE REVENUE . 9. COMING TO THE MERIT WHETHER THE ASSESSEE IS ENTI TLED FOR REGISTRATION U/S 12A WITH REFERENCE TO THE ASSESSEES APPLICATION DA TED 04.01.2007, WE RESTORE THE MATTER BACK TO THE FILE OF THE DIT(E) FOR HIS FRESH EXAMINATION AND CONSIDERATION IN THE LIGHT OF HIS SUBSEQUENT ORDER AND THE OTHER ACTIVITIES OF THE TRUST. THE DIT(E) SHALL PROVIDE REASONABLE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 10. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSE E IS TREATED TO BE ALLOWED FOR A STATISTICAL PURPOSE. 11. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 17TH DECEMBER, 2009. (A.K. GARODIA) ACCOUNTANT MEMBER (C.L. SETHI) JUDICIAL MEMBER DATED: 17TH DECEMBER, 2009. MAMTA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. BY ORDER DEPUTY REGISTRAR