Anjana Patel Seva Sangha, V. CIT,

ITA 1616/BANG/2013

• Counselvise Citation: 161621114 RSA 2013
• Duration Of Justice: 1 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-09-2015
• Assessment Year: misc
• Appeal Filed On: 25-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y RAJENDRA
• Assessee Lawyers: H N KHINCHA
• Keywords: Charitable institution; Opportunity of being heard; Reasonable cause; Condonation of delay
• Section: 80G; 12AA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NOS.1615 & 1616/BANG/2013 ASSESSMENT YEARS : N.A. ANJANA PATEL SEVA SANGHA, CHOUDHARY BUILDING, BUTTER MARKET, HUBLI. PAN : AAGTS 1959T VS. THE COMMISSIONER OF INCOME TAX, HUBLI. APPELLANT RESPONDENT APPELLANT BY : SHRI H.N. KHINCHA, CA RESPONDENT BY : SHRI Y. RAJENDRA, CIT(DR) DATE OF HEARING : 01.09.2015 DATE OF PRONOUNCEMENT : 04.09.2015 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AGAI NST THE SEPARATE ORDERS, BOTH DATED 20.09.2011 OF THE COMMISSIONER O F INCOME-TAX, HUBLI. ITA 1615/B/13 IS AN APPEAL AGAINST THE ORDER WITHDR AWING THE REGISTRATION GRANTED U/S. 12AA OF THE INCOME-TAX ACT, 1961 [THE ACT] . ITA 1616/B/13 IS AN APPEAL AGAINST THE ORDER DERECOGNIZING APPROV AL GRANTED U/S. 80G(5) OF THE ACT. ITA NOS. 1615 & 1616/BANG/2013 PAGE 2 OF 9 2. THERE IS A DELAY OF ABOUT 730 DAYS IN FILING THE SE APPEALS BY THE ASSESSEE. THE ASSESSEE HAS FILED AN APPLICATION FO R CONDONATION OF DELAY IN WHICH SECRETARY OF THE ASSESSEE HAS STATED THAT THE IMPUGNED ORDERS PASSED BY THE CIT, HUBLI WERE SERVED ON THE ASSESSE E ON 27.9.2011 AND THAT THE APPEALS BEFORE THE TRIBUNAL OUGHT TO HAVE BEEN FILED ON OR BEFORE 20.11.2011, BUT WERE HOWEVER FILED ONLY ON 25.11.20 13. THEREFORE A DELAY OF 730 DAYS OCCURRED IN FILING THE APPEALS BEFORE T HE TRIBUNAL. IT HAS FURTHER BEEN STATED IN THE PETITION FOR CONDONATION OF DELAY THAT AFTER THE RECEIPT OF THE IMPUGNED ORDERS, THE ASSESSEE MET TA X CONSULTANT AT BANGALORE, WHO ADVISED THE ASSESSEE TO FILE APPEALS BEFORE THE TRIBUNAL. THE APPEAL MEMO WAS DRAFTED BY THE TAX CONSULTANT A ND SENT TO THE ASSESSEE FOR SIGNATURE AND ONWARD FILING OF APPEALS BEFORE THE ITAT. IT HAS FURTHER BEEN STATED THAT THE DOCKET CONTAINING THE APPEAL PAPERS WERE RECEIVED BY THE EARLIER ACCOUNTANT OF THE ASSESSEE, WHO LEFT THE JOB WITHOUT ANY PRIOR NOTICE. THE EARLIER ACCOUNTANT ALSO DID NOT INTIMATE THE ASSESSEE REGARDING RECEIPT OF THE AFORESAID DOCKET. THE TAX CONSULTANT OF THE ASSESSEE AT BANGALORE WAS UNDER THE BELIEF THAT THE ASSESSEE HAD SIGNED THE APPEAL PAPERS AND FILED IT BEFORE THE TRIBUNAL. IT APPEARS THAT THE SECRETARY OF THE ASSESSEE MET THE TAX CONSULTANT AT BANGALORE FOR SEEKING LEGAL ADVICE ON SOME OTHER ISSUE, WHEN THE TAX CONS ULTANT ENQUIRED HIM ABOUT ANY HEARING NOTICE HAVING BEEN RECEIVED BY TH E ASSESSEE FROM THE TRIBUNAL. THEREUPON, THE SECRETARY OF THE ASSESSEE MADE ENQUIRIES IN HIS OFFICE AND FOUND THAT THE SEALED COVER SENT BY THE TAX CONSULTANT TO THE ITA NOS. 1615 & 1616/BANG/2013 PAGE 3 OF 9 ASSESSEE CONTAINING THE APPEAL MEMO WAS LYING IN TH E ACCOUNTANTS DRAWER. THEREAFTER, THE PETITIONER REVERTED TO THE TAX CONSULTANT AND FILED THE PRESENT APPEALS. THE FACTS STATED IN THE PETIT ION FOR CONDONATION OF DELAY HAVE BEEN VERIFIED BY SHRI KANGARAM CHOUDHARY , SECRETARY OF THE ASSESSEE. 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFOR E US THAT THE REASONS GIVEN BY THE ASSESSEE ARE BONA FIDE AND THAT THERE WAS NO MALA FIDE ON THE PART OF THE ASSESSEE IN FILING THE APPEALS BELATEDLY. HE FURTHER SUBMITTED THAT THE NUMBER OF DAYS OF DELAY SHOULD H AVE ANY BEARING IN THE MATTER OF CONDONATION OF DELAY, WHEN THE REASONS GI VEN FOR THE DELAY ARE FOUND TO BE GENUINE. HE PLACED RELIANCE ON THE FOL LOWING DECISIONS IN SUPPORT OF HIS SUBMISSIONS:- 1. ANGELA J. KAZI V/S. INCOME-TAX OFFICER [2006] 10 SOT 1 39(MUM) 2. PAY AND ACCOUNTS OFFICER V/S. INCOME-TAX OFFICE R, TDS-III [2010 190 TAXMAN 396 (MAD.) 3. RAGHUBAR AUTOMOBILE & GENERAL FINANCE (P) LTD. V/S. CIT [2013] 35 TAXMANN.COM 520 (ALLAHABAD) / [2013] 218 TAXMAN 39 (ALLAHABAD) (MAG.) 4. SREENIVAS CHARITABLE TRUST V/S. DCIT [2006] 154 TAXMAN 377 (MAD.) 4. THE LD. DR, HOWEVER, OPPOSED THE PRAYER FOR COND ONATION OF DELAY AND SUBMITTED THAT ASSESSEE HAS BEEN NEGLIGENT AND THE DELAY SHOULD NOT BE CONDONED. ITA NOS. 1615 & 1616/BANG/2013 PAGE 4 OF 9 5. WE HAVE GIVEN A VERY CAREFUL CONSIDERATION TO TH E RIVAL SUBMISSIONS. WE ARE SATISFIED THAT THE DELAY IN FILING THE APPEA LS HAS OCCASIONED ON ACCOUNT OF REASONABLE CAUSE. IN THIS REGARD, WE FI ND THAT IN RAGHAVENDRA CONSTRUCTIONS V. ITO, ITA NO.425/BANG/2012, ORDER D ATED 14.12.2012 , THIS TRIBUNAL HELD AS FOLLOWS:- 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A T THE OUTSET, WE OBSERVE THAT THE HONBLE SUPREME COURT, IN THE C ASE OF MST. KATIJI (SUPRA), HAS EXPLAINED THE PRINCIPLES THAT NEED TO BE KEPT IN MIND WHILE CONSIDERING AN APPLICATION FOR CONDONATI ON OF DELAY. THE HONBLE APEX COURT HAS EMPHASIZED THAT SUBSTANT IAL JUSTICE SHOULD PREVAIL OVER TECHNICAL CONSIDERATIONS. THE COURT HAS ALSO EXPLAINED THAT A LITIGANT DOES NOT STAND TO BENEFIT BY LODGING THE APPEAL LATE. THE COURT HAS ALSO EXPLAINED THAT EVE RY DAYS DELAY MUST BE EXPLAINED DOES NOT MEAN THAT A PEDANTIC APP ROACH SHOULD BE TAKEN. THE DOCTRINE MUST BE APPLIED IN A RATION AL COMMON SENSE AND PRAGMATIC MANNER. IN THE CASE OF SHAKUNTALA HEGDE, L/R OF R.K. HEGDE V. ACIT, ITA NO.2785/BANG/2004 FO R THE A.Y. 1993-94 , THE HONBLE TRIBUNAL CONDONED THE DELAY OF ABOUT 1331 DAYS IN FILING THE APPEAL WHEREIN THE PL EA OF DELAY IN FILING APPEAL DUE TO ADVICE GIVEN BY A NEW COUNSEL WAS ACCEPTED AS SUFFICIENT. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT V. ISRO SATELLITE CENTRE, ITA NO. 532/2008 DATE D 28.10.2011 HAS CONDONED THE DELAY OF FIVE YEARS IN FILING APPE AL BEFORE THEM WHICH WAS EXPLAINED DUE TO DELAY IN GET TING LEGAL ADVICE FROM ITS LEGAL ADVISORS AND GETTING APPROVAL FROM DEPARTMENT OF SCIENCE AND PMO. IN THE AFORESAID DE CISION, THE HONBLE COURT FOUND THAT THE VERY LIABILITY OF THE ASSESSEE WAS NON-EXISTENT AND THEREFORE CONDONED THE DELAY IN FI LING APPEAL. 14. KEEPING IN MIND THE AFORESAID PRINCIPLES, WE SHALL CONSIDER THE CLAIM OF THE ASSESSEE IN THE PRESENT C ASE. ADMITTEDLY THE ADVICE WAS GIVEN BY THE COUNSEL WHO APPEARED ON BEHALF OF THE ASSESSEE BEFORE THE HONBLE HIGH COURT. THE DE CISION OF THE HONBLE HIGH COURT WAS RENDERED ON 28.2.2012. THE APPEAL HAS BEEN FILED BY THE ASSESSEE BEFORE THE TRIBUNAL ON 2 6.3.2012. HENCE, WE FIND THAT THERE HAS BEEN NO WILLFUL NEGLE CT ON THE PART ITA NOS. 1615 & 1616/BANG/2013 PAGE 5 OF 9 OF THE ASSESSEE. IN SUCH MATTERS THE ADVICE OF THE PROFESSIONAL WOULD BE THE POINT OF TIME AT WHICH THE ASSESSEE WO ULD BEGIN TO EXPLORE THE OPTION OF EXHAUSTING ALL LEGAL REMEDIES . WE ARE ALSO OF THE VIEW THAT BY CONDONATION OF DELAY THERE IS N O LOSS TO THE REVENUE AS LEGITIMATE TAXES PAYABLE IN ACCORDANCE W ITH LAW ALONE WOULD BE COLLECTED. WE THEREFORE ACCEPT THE REASON GIVEN FOR CONDONATION OF DELAY IN FILING THE APPEAL. THE DEL AY IN FILING THE APPEAL IS ACCORDINGLY CONDONED. 6. KEEPING IN MIND THE PRINCIPLE LAID DOWN IN THE A FORESAID DECISION, WE WILL EXAMINE THE PRESENT CASE. IT MAY BE TRUE THAT THE REASONS GIVEN FOR THE DELAY ARE SELF-SERVING, BUT THERE IS NO REASON FOR THE ASSESSEE DELAYING THE FILING OF APPEALS BEFORE THE TRIBUNAL. IN THE CIRC UMSTANCES, WE ACCEPT THE REASONS GIVEN BY THE ASSESSEE FOR DELAY IN FILING T HE APPEALS. ACCORDINGLY, THE DELAY IN FLING THE APPEALS IS CONDONED. 7. AS FAR AS MERITS OF THE APPEALS ARE CONCERNED, T HE FACTUAL BACKGROUND OF THE CASE NEEDS TO BE HIGHLIGHTED. TH E ASSESSEE ENJOYED THE BENEFIT OF REGISTRATION U/S. 12AA OF THE ACT BY VIRTUE OF AN ORDER DATED 15.7.2007. THE ASSESSEE ALSO ENJOYED THE BENEFIT O F RECOGNITION U/S. 80G VIDE ORDER DATED 28.11.2007 OF THE CIT, HUBLI. REC OGNITION U/.S 80G OF THE ACT WAS VALID FROM 15.11.2007 TO 31.3.2010. 8. AS PER CIRCULAR OF THE CBDT NO.5/2010 DATED 3.6. 2010 (PARA 29.5), APPROVAL ONCE GRANTED WILL CONTINUE TO BE VALID IN PERPETUITY. PRIOR TO THIS CIRCULAR, PROVISO TO SECTION 80G(5)(VI) PROVIDED TH AT APPROVAL GRANTED SHALL BE IN EFFECT FOR SUCH ASSESSMENT YEAR OR YEARS, NOT EXCEEDING FIVE ASSESSMENT YEARS, AS MAY BE SPECIFIED IN THE APPROV AL. THIS PROVISO WAS ITA NOS. 1615 & 1616/BANG/2013 PAGE 6 OF 9 OMITTED BY THE FINANCE ACT, 2009 AND THEREFORE THE APPROVAL ONCE GRANTED SHALL CONTINUE TO BE VALID IN PERPETUITY. 9. IT CAN BE SEEN FROM THE AFORESAID CIRCULAR AND T HE STATUTORY AMENDMENT THAT THERE WAS NO NECESSITY FOR THE ASSES SEE TO MAKE ANY APPLICATION FOR CONTINUATION OF RECOGNITION GRANTED U/S. 80G OF THE ACT. THE ASSESSEE, HOWEVER, IN TOTAL IGNORANCE OF THE AFORES AID STATUTORY AMENDMENT, FILED AN APPLICATION IN FORM 10G ON 17.1 1.2011 REQUESTING FOR CONTINUANCE OF RECOGNITION GRANTED U/S. 80G. CONSE QUENT TO THIS APPLICATION, THE CIT, HUBLI CALLED FOR A REPORT FRO M THE AO OF THE ASSESSEE. IN THE REPORT SUBMITTED BY THE AO BEFORE THE CIT, T HE AO OPINED THAT ASSESSEE HAS FAILED TO PRODUCE THE DETAILS OF GENUI NENESS OF THE CHARITABLE ACTIVITIES CARRIED OUT AND PROOF OF THE SAME. THE A O OPINED THAT REQUEST FOR CONTINUANCE OF RECOGNITION U/S. 80G SHOULD BE REJEC TED. THE CIT THEREFORE CALLED UPON THE ASSESSEE TO PRODUCE BOOKS OF ACCOUN TS AND LIST OF ADDRESSES OF DONORS AND PROVIDE PROOF FOR HAVING CO NDUCTED CHARITABLE ACTIVITIES. ACCORDING TO THE CIT, THE ASSESSEE FAI LED TO PRODUCE THE REQUIRED INFORMATION. THEREAFTER, THE CIT OBSERVED AS FOLLOWS:- THE DETAILS ON RECORD AND THE REPORT OF THE AO WER E PERUSED. IT IS OBSERVED ON VERIFICATION OF THE BALANCE SHEET AS ON 31.03.2010 THAT THE ABOVE INSTITUTION HAD PURCHASED AN AGRICUL TURAL LAND ON 05.05.2007 FOR RUPEES 7,32,000 AFTER OBTAINING THE PERMISSION FROM REFORMS ACT ON 05.02.2007. THE ORDER PASSED CL EARLY MENTIONS THAT THE LAND TO BE USED IS FOR RELIGIOUS PURPOSES. DURING THE COURSE OF THE PROCEEDINGS IT IS OBSERVED THAT T HE ASSESSEE HAS NOT PRODUCED A COPY OF THE REGISTERED TRUST DEED. T HE AR OR THE TRUSTEES / PRESIDENT FAILED TO EXPLAIN CLEARLY THE OBJECTS OF THE TRUST ITA NOS. 1615 & 1616/BANG/2013 PAGE 7 OF 9 AND THE DETAILS OF THE ACTIVITIES CONDUCTED AND ALS O FAILED TO EXPLAIN AS TO WHETHER THE ACTIVITIES ARE IN ACCORDA NCE WITH THE OBJECTS AND ALSO WHETHER THE SAME ARE CHARITABLE IN NATURE. THEREFORE, IT CANNOT BE ASCERTAINED THAT THE ACTIV ITIES COME UNDER THE DEFINITION OF CHARITABLE PURPOSES AS PER SEC 2(15) OF THE INCOME-TAX ACT 1961. UNDER THE CIRCUMSTANCES, THE T RUST CANNOT BE SAID TO HAVE SATISFIED THE CONDITIONS REQUIRED T O BE ELIGIBLE FOR CONTINUATION OF REGISTRATION U/S 12AA. THEREFORE, T HE REGISTRATION GRANTED U/S 12AA IS WITHDRAWN W.E.F 01.04.2009 VIDE THIS OFFICE ORDER DATED 19.09.2011. IN VIEW OF THIS THE GRANT O F RECOGNITION U/S 80G OF THE IT ACT 1961 IS ALSO DE RECOGNIZED HE REWITH. 10. THE CIT ALSO ACCORDINGLY CANCELLED THE REGISTRA TION GRANTED U/S. 12AA FOR THE VERY SAME REASONS AS WERE GIVEN FOR NO T EXTENDING THE REGISTRATION U/S. 80G(5) OF THE ACT. 11. AGGRIEVED BY THE AFORESAID ORDERS OF THE CIT, T HE ASSESSEE HAS PREFERRED THE PRESENT APPEALS BEFORE THE TRIBUNAL. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE HAVE A LREADY SEEN THAT THERE WAS NO REQUIREMENT OF MAKING AN APPLICATION F OR RENEWAL OF RECOGNITION GRANTED U/S. 80G OF THE ACT, AS THE REC OGNITION GRANTED TO THE ASSESSEE WILL HOLD GOOD IN PERPETUITY. IN SUCH CIR CUMSTANCES, THE PROPER COURSE TO HAVE BEEN ADOPTED BY THE CIT WAS TO HAVE FILED THE APPLICATION OF THE ASSESSEE SEEKING EXTENSION OF RECOGNITION U/S. 80G(5) OF THE ACT. THE ACTION OF THE CIT IN FURTHER WITHDRAWING REGISTRATI ON ALREADY GRANTED TO THE ASSESSEE U/S. 12AA OF THE ACT IS ALSO NOT PROPER. REGISTRATION GRANTED U/S. 12AA OF THE ACT CAN ONLY BE CANCELLED ONLY IN THE C IRCUMSTANCES SPECIFIED IN SECTION 12AA(3) OF THE ACT, WHICH READS AS UNDER :- ITA NOS. 1615 & 1616/BANG/2013 PAGE 8 OF 9 (3) WHERE A TRUST OR AN INSTITUTION HAS BEEN GRAN TED REGISTRATION UNDER CLAUSE (B) OF SUB-SECTION (1) AND SUBSEQUENTL Y THE COMMISSIONER IS SATISFIED THAT THE ACTIVITIES OF SU CH TRUST OR INSTITUTION ARE NOT GENUINE OR ARE NOT BEING CARRIE D OUT IN ACCORDANCE WITH THE OBJECTS OF THE TRUST OR INSTITU TION, AS THE CASE MAY BE, HE SHALL PASS AN ORDER IN WRITING CANCELLIN G THE REGISTRATION OF SUCH TRUST OR INSTITUTION. PROVIDED THAT NO ORDER UNDER THIS SUB-SECTION SHALL BE PASSED UNLESS SUCH TRUST OR INSTITUTION HAS BEEN GIVEN A R EASONABLE OPPORTUNITY OF BEING HEARD. 13. IT APPEARS TO US THAT THE LD. CIT HAS PROCEEDED ON THE BASIS OF AN INCORRECT APPRECIATION OF FACTS INASMUCH AS, HE HAS PRESUMED THAT THE ASSESSEE EXISTED FOR RELIGIOUS PURPOSE AND NOT FOR CHARITABLE PURPOSE. IT APPEARS THAT THE ASSESSEE HAS ALSO NOT EXPLAINED TH E POSITION PROPERLY IN THE PROCEEDINGS BEFORE THE CIT, AS TO THE TRUE NATU RE OF THE USE OF LAND. WE ARE THEREFORE OF THE VIEW THAT IT WOULD BE JUST AND PROPER TO SET ASIDE THE ORDERS OF THE CIT AND REMAND THE ISSUE OF WITHD RAWING RECOGNITION U/S. 12AA OF THE ACT FOR FRESH CONSIDERATION BY THE CIT. AS FAR AS RECOGNITION U/S. 80G(5) OF THE ACT IS CONCERNED, WE HOLD THAT T HE RECOGNITION ALREADY GRANTED WILL CONTINUE TO OPERATE AND THE ORDER PASS ED BY THE CIT PROVIDED THE REGISTRATION U/S.12AA OF THE ACT CONTINUES. IN SOFAR AS ORDER PASSED U/S. 12AA(3) IS CONCERNED, THE ISSUE WILL BE CONSIDERED AFRESH BY THE CIT AFTER AFFORDING THE ASSESSEE OPPORTUNITY OF BEING HEARD. WE MAY ALSO CLARIFY THAT IN THE EVENT OF REGISTRATION U/S. 12AA OF THE ACT BEING WITHDRAWN, THE CIT IS AT LIBERTY TO TAKE APPROPRIATE ACTION FOR WI THDRAWING RECOGNITION GRANTED U/S. 80G OF THE ACT TO THE ASSESSEE. ITA NOS. 1615 & 1616/BANG/2013 PAGE 9 OF 9 14. IN THE RESULT, ITA NO.1615/B/13 IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES AND ITA NO.1616/B/13 IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF SEPTEMBER, 2015. SD/- SD/- ( S. RIFAUR RAHMAN ) ( N.V. VASUD EVAN ) ACCOUNTANT MEMBER JUDICIAL M EMBER BANGALORE, DATED, THE 4 TH SEPTEMBER, 2015. /D S/ COPY TO: 1. APPELLANT 2. RESPONDENTS 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT, BANGALORE.