Sikkim Manipal University, Hooghly V. ACIT, Circle - 2, Siliguri, Darjeeling

ITA 356/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54459 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 1998-1999
• Appeal Filed On: 03-03-2011
• Court: TRIBUNAL
• Department Lawyers: D R SINDHAL
• Assessee Lawyers: S K TULSIYAN
• Keywords: Bonafide belief; Reasonable cause; Competent authority; Condonation of delay
• Section: 12AA

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . ! . '# ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE SHR I C. D. RAO, AM] $ $ $ $ /IN I.T.A NOS. 356 TO 360/KOL/201 1 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEARS: 1998-99 TO 2002-03 SIKKIM MANIPAL UNIVERSITY VS. ASSISTANT COMMISSI ONER OF INCOME-TAX, (PAN-AAAJS 1172 K) CIRCLE-2, SILIGURI (*+ /APPELLANT ) (,-*+/ RESPONDENT ) *+ . / ' /FOR THE APPELLANT: SHRI S. K. TULSIYAN ,-*+ . / ' /FOR THE RESPONDENT: SHRI D. R. SINDHAL '0 / ORDER PER BENCH: THESE FIVE APPEALS BY ASSESSEE ARE ARISING OUT OF C OMMON ORDER OF CIT(A), SILIGURI IN APPEAL NO. 07, 08, 09, 10 & 11/CIT(A)/SLG/10-11 DAT ED 31.12.2010. ASSESSMENTS WERE FRAMED BY ACIT, CIRCLE-2, SILIGURI U/S.144/147 OF THE INCO ME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 1998-99 TO 2002-03 VIDE HIS ORDERS DATED 16.03.2006. SINCE FACTS ARE COMMON AND GROUNDS ARE EXACTLY IDENTICALL Y WORDED, FOR THE SAKE OF BREVITY, WE DISPOSE OF ALL THESE APPEALS BY THIS CONSOLIDATED O RDER. THE ASSESSEE SUBMITTED SEPARATE SETS OF REVISED GROUNDS OF APPEAL AND URGED THAT THE SAME M AY BE TAKEN UP FOR DECIDING THE ISSUES. THE LD. CIT-DR HAS NOT OBJECTED TO THE REVISED GROU NDS STATING THAT THERE IS NO ADDITIONAL GROUNDS, HENCE, HE HAS NO OBJECTION IN ADMITTING TH E REVISED GROUNDS. ACCORDINGLY, WE PERMIT THE REVISED GROUND TO BE SUBSTITUTED IN PLACE OF OR IGINAL GROUNDS, 2. FOLLOWING ARE REVISED GROUNDS: 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN NOT CONDONING THE DELAY IN THE SUBMISSION OF THE APPEAL WHICH WAS NEITHER DELIBERATE NOR WITHOUT SUFFICIENT CAUSE. 1(A). THAT, AS THE STAKE IN THE APPEAL WAS VERY HIG H, THE LD. CIT(A) IN ORDER TO ADMINISTER SUBSTANTIAL JUSTICE TO THE APPELLANT, OUGHT TO HAVE CONDONED THE DELAY AND ADMITTED ITS APPEAL FOR DECIDING IT ON MERIT. 2. THAT, AS ALL THE CONDITIONS PRESCRIBED IN SECTIO N 10(22) OF THE I. T. ACT WERE SATISFIED, THE LD. CIT(A) ERRED IN NOT EXEMPTING THE INCOME OF THE APPELLANT IN TERMS OF THE SAID SECTION. 2(A). THAT, ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, AND SPECIALLY IN VIEW OF THE DIRECTION OF THE HONBLE TRIBUNAL TO THE LD. CIT TO GRANT REGISTRATION TO THE APPELLANT U/S. 12AA OF THE I. T. ACT, THE LD. CIT(A) ERRED IN HOLD ING THAT THE APPELLANT-UNIVERSITY DOES NOT EXIST SOLELY FOR EDUCATIONAL PURPOSES BUT FOR M AKING PROFIT. 2 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 2(B). THAT, THE LD. CIT(A) ERRED IN HOLDING THAT TH E APPELLANT UNIVERSITY WAS NOT SUBSTANTIALLY FINANCED BY THE GOVERNMENT. 2(C). THAT, WHILE HOLDING THAT THE APPELLANT WAS NO T SUBSTANTIALLY FINANCED BY THE GOVERNMENT, BOTH THE LD. A.O. AND THE C1T(A) ERRED IN COMPARING EACH YEARS GOVERNMENT GRANT WITH ITS GROSS RECEIPT FROM TUITIO N FEES ETC. INSTEAD OF TAKING INTO ACCOUNT THE TOTAL GOVERNMENT GRANT FROM THE BEGINNI NG TILL DATE. 2(D). THAT, WHILE REJECTING THE APPELLANTS CLAIM O F EXEMPTION OF ITS INCOME, BOTH THE LD. A.O. AND THE CIT(A) ERRED IN IGNORING THE FINDINGS OF THE LD. CCIT, JALPAIGURI THAT THE APPELLANTS CASE IS COVERED BY SECTION 10(23)(IIIAB ) OF THE ACT. 3. THAT, THE LD. CIT(A) ERRED IN SUSTAINING THE LD. A.O.S ARBITRARY ORDER ESTIMATING THE APPELLANTS INCOME IGNORING ITS AUDITED INCOME & EX PENDITURE ACCOUNT AND BALANCE SHEET SHOWING EXCESS OF EXPENDITURE OVER INCOME. 4. THAT, THE APPELLANT CRAVES LEAVE TO ALTER, AMEND , RESCIND AND SUBSTITUTE ANY OF THE ABOVE- MENTIONED GROUNDS AND ADD ANY FURTHER GROUND S BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS ARE THAT ASSESSEE IS KNOWN AS T HE SIKKIM MANIPAL UNIVERSITY OF HEALTH, MEDICAL AND TECHNICAL SCIENCES ACT, 1995, PASSED BY SIKKIM GOVERNMENT. THE ASSESSEE UNIVERSITY WAS CREATED WITH THE OBJECT OF PROVIDING MEDICAL EDUCATION AND TRAINING IN THE STATE OF SIKKIM AND IT STARTED FUNCTIONING W.E.F. 01.04.1 996. THE ASSESSEE DID NOT FILE ITS RETURNS OF INCOME FOR ASSESSMENT YEARS 1998-99 TO 2002-03, AS ITS INCOME WAS EXEMPT U/S. 10(22) OR SECTION 20(23C)(VI) OF THE ACT. THE AO ISSUED NOTIC ES U/S.148 OF THE ACT BUT ASSESSEE DID NOT FILE ITS RETURNS OF INCOME FOR ASSESSMENT YEARS 199 8-99 TO 2001-02 ON THE GROUND THAT ITS INCOME WAS EXEMPT U/S. 10(23C)(VI) OF THE ACT. BUT FOR ASSESSMENT YEAR 2002-03, IT FILED RETURN OF INCOME CLAIMING EXEMPTION U/S. 10(23C)(VI ) OF THE ACT. THE AO PASSED EX PARTE ASSESSMENT ORDERS U/S. 144 OF THE ACT ASSESSING THE INCOME FOR ALL THESE YEARS, AS PER DETAILS GIVEN BELOW. ASSESSMENT YEAR OPERATING DEFICIT AS PER AUDITED INCOME AND EXPENDITURE A/C TOTAL INCOME ASSESSED U/S.144/147 OF THE I.T. ACT TAX DEMAND RAISED AS PER NOTICE U/S. 156 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 (RS. 4,63,130) (RS. 17,85,045) (RS. 1,26,38,419) (RS. 4,37,23,571) (RS.15,95,74,660) RS. 93,90,713 RS.2,04,01,425 RS.3,06,02,137 RS.3,98,60,850 RS.2,10,10,386 TOTAL RS. 65,61,683 RS. 1,38,80,022 RS. 2,10,21,344 RS. 2,50,69,666 RS. 1,13,00,647 RS. 7,78,33,362 3 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 ASSESSMENT ORDERS WERE SERVED UPON ASSESSEE ON 22. 03.06 BUT NO APPEAL WAS FILED BEFORE CIT(A) TILL 31.5.2010. INSTEAD, ASSESSEE FILED WRI T PETITION BEFORE HONBLE SIKKIM HIGH COURT, WHEREBY HONBLE HIGH COURT VIDE INTERIM ORDER DATED 31.12.2006 DIRECTED ALL CONCERNED TO MAINTAIN STATUS QUO. THIS WRIT PETITION WAS FINALLY DISPOSED OF ON 21.5.2009 ADVISING THE ASSESSEE TO APPROACH COMPETENT AUTHORITIES FOR REDR ESSAL OF ITS GRIEVANCES AND ASSESSEE ON ADVICE OF LEGAL ADVISORS, FILED AN APPLICATION IN F ORM NO. 56D BEFORE CCIT, JALPAIGURI FOR APPROVAL IN TERMS OF SEC. 10(23C)(VI) OF THE ACT ON 14.7.2009. SIMULTANEOUSLY, ASSESSEE ALSO FILED REVISION PETITION U/S.264 OF THE ACT TO CIT, SILIGURI AGAINST ASSESSMENT ORDERS, WHICH WERE ALSO WITHDRAWN AND THEREAFTER FILED APPEALS BE FORE CIT(A), SILIGURI ON 31.5.2010. THE ASSESSEE CONTENDED THAT IN VIEW OF THE ABOVE REASON S THE APPEALS THUS DELAYED FOR WHICH CONDONATION PETITIONS WERE FILED BEFORE CIT(A). BUT CIT(A) HAS NOT CONDONED THE DELAY BY GIVING FOLLOWING FINDINGS: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD AR AND ALSO PERUSED VARIOUS DOCUMENTS FILED BY THE ASSESSEE AND THE AR FROM TIM E TO TIME. ACTUALLY, THE ASSESSEE TWISTED THE FACTS FOR DELAY IN FILING THE APPEALS. THEY DID NOT COME CLEAN TO EXPLAIN THE REASON FOR SUCH ABNORMAL DELAY. FROM THE RECORDS, I T IS FOUND THAT IN RESPONSE TO THE NOTICES ISSUED U/S.148 OF THE ACT, THE ASSESSEE DID NOT FILE THEIR RETURNS FOR A YS 1998-99, 1999-2000, 2000-01, 2001-02. AND DURING THE ASSESSM ENT PROCEEDINGS, WITHOUT FURNISHING THE REQUISITE INFORMATION AS CALLED FOR BY THE AO, RAISING QUESTIONS ABOUT THE IMPLEMENTATION OF THE I T ACT, 1961 IN SIKKIM AND C HALLENGING THE JURISDICTION OF THE AO, NO INFORMATION WAS FILED BY THE ASSESSEE AND TAKING SIMILAR OTHER ISSUES, THE ASSESSEE FILED A WRIT PETITION ON 14.03.2006 IN THE HIGH COURT OF SIKKIM AGAINST THE CBDT, CIT AND AO AND FINALLY IN THE PETITION, THE ASSESSEE PRAYED BE FORE THE COURT THE FOLLOWING RELIEF. (A) A WRIT OR AN ORDER DECLARING THAT THE RESPONDE NT NO.1 TO 4 HAVE NO JURISDICTION OVER THE STATE OF SIKKIM AND THEY HAVE NO AUTHORITIES TO ISSUE NOTICES TO THE PETITIONER FOR SUBMITTING INCOME-TAX RETURN OR TO PAY INCOME- TAX FOR THE RELEVANT PERIOD. (B) A WRIT OF MANDAMUS BE ISSUED AGAINST THE RESPON DENT NO.3 DIRECTING HIM NO TO TAKE ANY ACTION AGAINST THE PETITIONER ON THE BASIS OF THE IMPUGNED NOTICES AND THE IMPUGNED SHOW CAUSE NOTICES. (C) A WRIT, ORDER OR A DIRECTION DECLARING THAT THE INCOME TAX ACT, 1961 HAVE NOT BEEN ENFORCED IN THE STATE OF SIKKIM AND THE SI KKIM STATE INCOME TAX MANNUAL, 1948 CONTINUES TO BE THE LAW ON INCOMES SO FAR AS THE STATE OF SIKKIM IS CONCERNED. (D) A WRIT, ORDER OR A DIRECTION DECLARING THAT NOT IFICATION NO. SO. 1028(E) DATED 07.11.1998 AND NO. SO.148(E) DATED 23.02.1989 BY WHICH THE DIRECT TAX LAWS WERE SOUGHT TO BE ENFORCED IN THE STATE OF SIKKIM ARE VOID, NO NEST AND A NUGATORY AS BEING ISSUED IN PURSUANCE OF ARTI CLE 371F (N) OF THE CONSTITUTION OF INDIA WHICH IS BAD FOR BEING ARBITR ARY AND UNCONSTITUTIONAL. 4 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 (E) A WRIT, ORDER OR A DIRECTION DECLARING THAT SEC TION 26 OF THE FINANCE ACT, 1989 IS UNCONSTITUTIONAL AND HAS NO FORCE IN VIEW O F THE FACT THAT THE PARLIAMENT HAS NO JURISDICTION TO PASS THE SAID LAW . (F) A WRIT, ORDER OR A DIRECTION DECLARING THAT EVE N ASSUMING THAT THE INCOME TAX ACT, 1961 AND OTHER DIRECT TAX LAWS HAVE BEEN V ALIDLY EXTENDED AND ENFORCED IN THE STATE OF SIKKIM, THEY HAVE NOT YET BEEN IMPLEMENTED. (G) A WRIT, ORDER OR A DIRECTION DECLARING THAT EVE N IF THE INCOME TAX ACT, 1961 IS BEING IMPLEMENTED, THE MANNER OF IMPLEMENTA TION IS DISCRIMINATORY AND DOES NOT, THEREFORE, AMOUNT TO IMPLEMENTATION A T ALL AND THAT SUCH IMPLEMENTATION HAS CAUSED AND IS LIKELY TO CAUSE HA RDSHIP AND HARASSMENT TO THE ASSESSEES IN SIKKIM. (H) AN APPROPRIATE WRIT OR CERTIORARI AGAINST THE R ESPONDENTS QUASHING AND SETTING ASIDE THE IMPUGNED NOTICES ISSUED BY THE CO NCERNED RESPONDENTS TO THE PETITIONER. (I) AN APPROPRIATE WRIT OR AN ORDER DECLARING THAT THE PETITIONER CANNOT BE A VICTIM OF DOUBLE TAXATION IN RESPECT OF HIS INCOME DURING THE RELEVANT PERIOD. J) AN ORDER OF INJUNCTION BE ISSUED AGAINST THE RES PONDENTS PARTICULARLY AGAINST RESPONDENT NO. 3 FROM TAKING FURTHER ACTION AND GIVING EFFECT TO THE IMPUGNED NOTICES ISSUED UPON THE PETITIONER. (K) AN APPROPRIATE ORDER BE ISSUED FOR STAY OF OPER ATION OF THE IMPUGNED NOTICES ISSUED BY THE RESPONDENT NO.3. (I) INTERIM ORDER / ORDERS IN TERMS OF PRAYERS (B), (I), (K), (M), (N) AND (O) ABOVE. (M) TO ISSUE SUCH OTHER ORDER OR ORDERS AS THE HON BLE COURT MAY DEEM FIT AND PROPER IN THE CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE. IT IS FOUND FROM THE DOCUMENTS FURNISHED BY THE ASS ESSEE THAT EVEN AFTER THE ASSESSMENT ORDERS WERE PASSED, WITHOUT FILING THE APPEAL IN TI ME, THE ASSESSEE TRIED TO AVOID TAXABILITY UNDER THE INDIAN INCOME TAX ACT WHICH IS CLEAR FROM THE WRIT PETITION FILED BY THEM. THE HONBLE SIKKIM HIGH COURT DID NOT ISSUE ANY DIRECTI ON TO THE DEPARTMENT TO ADMIT THERE BELATED APPEAL. RATHER, IT IS FOUND THAT THE ASSESS EE HAS WITHDRAWN THE WRIT PETITION, PERHAPS REALIZING THAT THE HONBLE COURT WILL REJEC T THEIR PRAYER. IN THE INTERIM ORDER DATED 31.03.2006, THE HONBLE SIKKIM HIGH COURT HEL D, .. WE DIRECT THE PARTIES TO MAINTAIN THE STATUS QUO AS ON TODAY WITH REGARD TO THE IMPLEMENTATION OF THE IMPUGNED ASSESSMENT ORDER DATED 16.03.03.2006 AND PAYMENT OF INCOME TAX FOR THE RELATED ASSESSMENT YEAR UNTIL FURTHER ORDER OF THIS COURT. WE MAKE THIS OBSERVATION KEEPING IN VIEW OF THE ASSESSMENT OF THE INCOME TAX FOR THE AS SESSMENT YEAR OF 1998-99 BY THE AUTHORITY AFTER THE LAPSE OF MORE THAN 5(FIVE) YEAR S UNDER THE IMPUGNED ASSESSMENT ORDER AND ALSO PENDING THE DECISION OF THE COMMITTEE CONC ERNED. ORDER DATED 21.05.2009 OF THE HONBLE HIGH COURT RE LATES TO WITHDRAWAL OF THE WRIT PETITION FILED BY THE ASSESSEE. THE RELEVANT PART O F THE ORDER READS AS MR UPDHAYA, LD SENIOR COUNSEL SUBMITS THAT HE MAY BE PERMITTED TO WITHDRAW THIS WRIT PETITION WITH LIBERTY TO APPROAC H THE COMPETENT AUTHORITY / FORUM FOR REDRESSAL FOR MY GRIEVANCE STATED HEREIN. 5 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 PERMISSION STANDS GRANTED. THIS WRIT PETITION STANDS CLOSED. NOTICEABLY, THE HONBLE COURT HAS ACCEPTED THE REQU EST OF THE ASSESSEE FOR FILING OF THE APPEAL BUT NO DIRECTION HAS BEEN GIVEN TO THE DEPAR TMENT TO ADMIT THEIR APPEALS. EVEN AFTER WITHDRAWAL OF THE WRIT PETITION, THE ASSESSEE TOOK FURTHER 375 DAYS TO FILE THE APPEAL AGAINST THE ORDERS OF THE LD. AO. AND FOR THIS PERI OD, THEY HAD NO EXPLANATION AS TO WHY THE APPEALS WERE NOT FILED IMMEDIATELY AFTER THE WR IT PETITION IS WITHDRAWN. THE DECISIONS CITED BY THE LD AR ARE NOT RELEVANT T O THE FACT OF THE CASE. IN VEDABAI ALIAS VAIJAYANATABAI BABURAO PATIL VS SHANTARAM BABURAO P ATIL & OTHERS 253 ITR 798 (SC), THE DELAY WAS ONLY FOR SEVEN DAYS AND THE COURT HEL D THAT THERE WAS SUFFICIENT CAUSE FOR SUCH DELAY. IN COLLECTOR OF LAND ACQUISITION VS MST KATIJI & OTHERS 167 ITR 471 (SC), THE DELAY WAS ONLY FOR FOUR DAYS DUE TO SUFFICIENT CAUS E. IN SUBHASH MALIK VS VIT 33(I) ITCL PAGE 256 (ALL), THE ASSESSEE FILED THE APPEAL ON 28 .11.2003 AGAINST THE ORDER DATED 25.09.2002 AS ONE RECTIFICATION APPLICATION WAS PEN DING IN THEIR CASE. THE COURT HELD THAT THERE WAS SUFFICIENT CAUSE OR SUCH DELAY. IN CIT & ANOTHER VS RAM KISHAN GUPTA 295 ITR 578 (ALL), THE DELAY WAS ONLY FOR FIVE DAYS FOR VAL ID REASON. IN CASE OF THE ASSESSEE, THERE WAS INORDINATE DELAY AND THERE WAS SATISFACTORY EXPLANATION FOR SUCH DELAY. IN VIEW OF THE AFORESAID FACT, I AM OF THE OPINION THAT THE IN ORDINATE DELAY IN FILING THE APPEAL WITHOUT ANY REASONABLE CAUSE C ANNOT BE CONDONED. IT IS THUS, HELD THAT THE APPEALS CANNOT BE ADMITTED FOR DECISION. AGGRIEVED AGAINST THE ORDER OF CIT(A) NOT CONDONING DELAY, ASSESSEE IS IN APPEAL BEFORE TRIBUNAL. 4. BEFORE US LD. COUNSEL FOR THE ASSESSEE SHRI S. K . TULSIYAN STATED FACTS THAT ASSESSEE WAS EXPOSED TO THE CENTRAL INCOME TAX FOR THE FIRST TIM E WHEN ITS ASSESSMENTS UNDER APPEAL WERE RE-OPENED BY A.O. BY ISSUING NOTICES U/S.148 OF THE ACT DATED 31.3.04. THE ASSESSEE HAD THEREFORE, NO PREVIOUS EXPERIENCE IN DEALING WITH I NCOME TAX MATTERS ALTHOUGH SIKKIM MERGED WITH INDIA IN 1975 AND CENTRAL INCOME TAX WAS EXTEN DED TO IT BY THE FINANCE ACT 1989 W.E.F. 1.4.1990. LD. COUNSEL FURTHER STATED THAT SIKKIM LE GISLATIVE ASSEMBLY PASSED A RESOLUTION AGAINST IMPLEMENTATION IN SIKKIM AND ALSO A WRIT PE TITION AGAINST IMPLEMENTATION OF IT WAS FILED BEFORE HONBLE SUPREME COURT BY SIKKIM GOVT. ITSELF. THIS WAS SUBSEQUENTLY WITHDRAWN. FOR IMPLEMENTATION OF CENTRAL INCOME TAX TO SIKKIM, CBDT BY LETTER F. NO.153/85/2002- TPL DATED 19.7.04 CONSTITUTED A COMMITTEE CONSISTIN G OF OFFICERS OF CBDT AND SIKKIM GOVERNMENT AND THIS COMMITTEE HELD SEVERAL MEETINGS ON 20.9.04, 04.03.05 ARID 13.9.05. ACCORDING TO LD. COUNSEL, THESE FACTS SHOW THAT DUR ING THE RELEVANT TIME, THERE WERE UNCERTAINTIES IN THE MATTER OF IMPLEMENTATION OF CE NTRAL INCOME TAX IN SIKKIM. THE ASSESSEE UNIVERSITY WAS CREATED BY AN ACT OF SIKKIM STATE AS SEMBLY AND IT WAS CONTROLLED BY GOVERNING COUNCIL OF GOVERNOR OF SIKKIM, WHO IS ITS CHANCELLOR. MOST OF OTHER MEMBERS OF 6 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 THE GOVERNING COUNCIL WERE ALSO OFFICERS OF SIKKIM STATE GOVERNMENT. THE ASSESSEE WAS, THEREFORE, UNDER SEVERE PRESSURE NOT TO COMPLY WITH THE PROVISIONS OF CENTRAL INCOME TAX BUT FOLLOW THE SIKKIM INCOME TAX MANUAL, 1948 AND TO TH AT EFFECT, EVEN WHEN IT FILED WRIT PETITION AND HONBLE SIKKIM HIGH COURT DIRECTED IT TO PAY T AXES UNDER THE SIKKIM INCOME TAX MANUAL, 1948. THE ASSESSEE ENCLOSED THE COPY OF HIG H COURTS ORDER DATED 31.3.2006 IN ITS PAPER BOOK. THE ASSESSEE, ON RECEIPT OF EX PARTE A SSESSMENT ORDERS, FILED WRIT PETITION BEFORE HONBLE SIKKIM HIGH COURT. BY AN INTERIM INJUNCTION DT.31.3.06, THE HONBLE HIGH COURT DIRECTED ALL CONCERNED TO MAINTAIN STATUS QUO AND T HIS WRIT PETITION WAS FINALLY DISPOSED OF BY AN ORDER DT.21.5.2009. HENCE, ASSESSEE, UPTO THIS D ATE FILED NO APPEAL BEFORE CIT(A). THE ASSESSEE ALSO FILED COPIES OF HIGH COURT ORDERS IN ITS PAPER BOOK. LD. COUNSEL ARGUED THAT, SINCE CENTRAL INCOME TAX WAS NOT APPLICABLE IN SIKK IM, NO SENIOR LEGAL COUNSEL WAS AVAILABLE IN GANGTOK AND ASSESSEE, THEREFORE, WAS D EPRIVED OF EXPERT LEGAL ADVICE IN THE MATTER OF DEALING WITH ITS INCOME TAX MATTERS. HE STATED THAT ON ADVICE OF LEGAL ADVISORS, THE ASSESSEE FILED APPLICATIONS IN FORM NO. 56D PRAYIN G FOR APPROVAL OF CCIT, JALPAIGURI U/S.10(23C)(VI) OF THE ACT, ONCE ON 25.3.2002, AGAI N ON 06.08.02 AND FINALLY ON 14.07.09 I.E. SHORTLY AFTER THE INJUNCTION WAS VACATED BY HONBLE HIGH COURT ON 21.5.09. THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE APPROVAL OF CCIT U/ S. 10(23C)(VI) EXEMPTING ITS INCOME, WOULD BE BINDING ON ACIT, SILIGURI, WHO PASSED THE EX PAR TE ASSESSMENT ORDERS AND RAISED DEMAND ON IT. THIS APPLICATION IN FORM NO. 56D WAS KEPT PENDING AND FINALLY REJECTED BY CCIT ON 12.7.2010. THE ASSESSEE ON ADVICE OF ITS A DVOCATE FILED REVISION PETITIONS U/S.264 OF THE I.T. ACT AGAINST EX PARTE ASSESSMENT ORDERS PAS SED BY ACIT TO CIT, SILIGURI ON 06.05.2010. THESE APPLICATIONS WERE, HOWEVER, WITHD RAWN ON 18.05.2010 AND ASSESSEE FINALLY FILED APPEALS BEFORE CIT(A) ON 31.5.2010. LD. COUN SEL STATED THAT IN VIEW OF THESE REASONS, DELAY HAS OCCURRED AND URGED THE BENCH THAT IN VIEW OF THE ABOVE REASONS THERE IS REASONABLE CAUSE DUE TO WHICH DELAY OCCURRED, WHICH SHOULD BE CONDONED. LD COUNSEL ALSO STATED THAT THE CIT(A) HAS ALSO DECIDED THE ISSUES ON MERITS INSPIT E OF FACTS THAT HE HAS NOT ADMITTED THE APPEALS FOR DECISIONS, WHICH IS CLEAR FROM HIS ORDE R. 5. ON THE OTHER HAND, LD. CIT-DR SHRI D. R. SINDHAL RELIED ON THE ORDER OF CIT(A) AND URGED THAT DELAY IS FOR FOUR YEARS AND ONE MONTH FO R FILING OF THESE APPEALS FROM THE DATE OF SERVICE OF ASSESSMENT ORDERS AND THIS LENGTHY DELAY CANNOT BE CONDONED. 6. WE HAVE RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE ARE OF THE VIEW, IN VIEW OF THE ABOVE FACTS, THAT ASS ESSEE WAS NOT NEGLIGENT BUT AS PER ADVICE OF ITS 7 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 LEGAL ADVISORS, IT WAS PURSUING ALTERNATIVE REMEDIE S BY FILING WRIT PETITIONS / APPLICATIONS IN FORM 56D / REVISION PETITIONS U/S.264 OF THE ACT. W E FIND THAT DELAY IN FILING OF ITS APPEALS WAS THEREFORE, NOT DELIBERATE BUT BECAUSE OF UNCERT AINTIES IN THE MATTER OF IMPLEMENTATION OF CENTRAL INCOME TAX IN SIKKIM, THE INSTRUCTIONS RECE IVED BY ASSESSEE FROM THE SIKKIM STATE GOVERNMENT OFFICERS AND ALSO SIKKIM HIGH COURT FOR COMPLYING ONLY WITH THE SIKKIM INCOME TAX MANUAL 1948, NON- AVAILABILITY OF SENIOR LEGAL COUNSEL IN GANGTOK AND FINALLY BECAUSE OF CONFUSING AND SOMETIMES CONTRADICTORY ADVICES RECEI VED BY IT FROM ITS LEGAL ADVISORS BY WAY OF MAKING APPLICATION REPEATEDLY IN FORM NO. 56D TO CCIT, JALPAIGURI AND THEREAFTER SUBMITTING REVISION PETITIONS BEFORE CIT, SILIGURI, THERE WAS DELAY. WE FIND THAT THESE FACTORS TAKEN TOGETHER CONSTITUTED SUFFICIENT CAUSE WITHI N THE MEANING OF SEC. 249(3) OF THE ACT AND CONSEQUENTLY THE DELAY IN FILING OF APPEALS. EVEN OTHERWISE, WE FIND THAT THE TAX DEMAND INVOLVED IS MORE THAN RS.7 CR. AND RECENTLY HONBLE SUPREME COURT IN THE CASE OF CIT VS. WEST BENGAL INFRASTRUCTURE DEVELOPMENT FINANCE CORP ORATION LTD. (2011) 334 ITR 269 (SC) HAS HELD THAT THE DELAY SHOULD BE CONDONED IN CASE THERE IS HIGH STAKE INVOLVED AND HONBLE SUPREME COURT OBSERVED AS UNDER: LOOKING TO THE AMOUNT OF TAX INVOLVED IN THIS CASE , WE ARE OF THE VIEW THAT THE HIGH COURT OUGHT TO HAVE DECIDED THE MATTER ON THE MERIT S. IN ALL SUCH CASES WHERE THERE IS DELAY ON THE PART OF THE DEPARTMENT, WE REQUEST THE HIGH COURT TO CONSIDER IMPOSING COSTS BUT CERTAINLY IT SHOULD EXAMINE THE CASES ON THE MERITS AND SHOULD NOT DISPOSE OF CASES MERELY ON THE GROUNDS OF DELAY, PARTICULARLY WHEN HUGE STAKES ARE INVOLVED. ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND TH E MATTER IS REMITTED TO THE HIGH COURT TO DECIDE THE CASE DE NOVO IN ACCORDANCE WITH LAW. WE REQUEST THE HIGH COURT TO DISPOSE OF THIS CASE A S EARLY AS POSSIBLE, PREFERABLY WITHIN A PERIOD OF FOUR MONTHS FROM TODAY. FIRST, IN VIEW OF THE JUDGMENT OF HONBLE APEX COUR T IN THE CASE OF WEST BENGAL INFRASTRUCTURE DEVELOPMENT FINANCE CORPORATION LTD. (SUPRA), WE ARE OF THE VIEW THAT THERE IS SUFFICIENT AND REASONABLE CAUSE FOR CONDONATION OF DELAY AS THE STAKES INVOLVED IN THESE APPEALS ARE HIGH AMOUNTING TO MORE THAN RS.7 CR. FU RTHER, ASSESSEE WAS NOT NEGLIGENT AND DELAY IN FILING OF ITS APPEALS WAS NOT DELIBERATE O N HIS PART AS IS EMERGING FROM THE ABOVE FACTS AS THE ASSESSEE WAS PURSUING ALTERNATIVE REMEDIES B EFORE PREFERRING THESE APPEALS BEFORE CIT(A), HENCE THERE WAS SUFFICIENT AND REASONABLE C AUSE FOR DELAY. FURTHER IN RESPECT TO LENGTH OF DELAY, WE ARE GUIDED BY HONBLE APEX COURT IN TH E CASE OF N. BALAKRISHNAN VS. M.KRISHNAMURTHY AIR1998SC3222, WHEREIN IT IS HELD T HAT BARRING CASES WHERE RELEVANT STATUTE SPECIFICALLY PROVIDES THAT THE DISCRETION AS TO CONDONATION OF DELAY IS TO BE EXERCISED ONLY IF THE DELAY IS WITHIN A CERTAIN LIMIT, LENGTH OF DELAY IS NO MATTER, ACCEPTABILITY OF 8 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 EXPLANATION IS THE ONLY CRITERION. SOMETIMES DELAY OF THE SHORTEST RANGE MAY BE UNCONDONABLE DUE TO WANT OF ACCEPTABLE EXPLANATION WHEREAS IN CE RTAIN OTHER CASES DELAY OF VERY LONG RANGE CAN BE CONDONED AS THE EXPLANATION THEREOF IS SATIS FACTORY. IT IS FURTHER HELD BY APEX COURT THAT ONCE THE COURT ACCEPTS THE EXPLANATION AS SUFFICIE NT IT IS THE RESULT OF POSITIVE EXERCISE OF DISCRETION AND NORMALLY SUPERIOR COURT SHOULD NOT D ISTURB SUCH FINDING, MUCH LESS IN REVISIONAL JURISDICTION, UNLESS THE EXERCISE OF DIS CRETION WAS ON WHOLLY UNTENABLE GROUNDS OR ARBITRARY OR PERVERSE. BUT IT IS A DIFFERENT MATTE R WHEN FIRST COURT REFUSES TO CONDONE THE DELAY. IN SUCH CASES, SUPERIOR COURT WOULD BE FREE TO CONS IDER THE CAUSE SHOWN FOR DELAY AFRESH AND IT IS OPEN TO SUCH SUPERIOR COURT TO COME TO ITS OWN F INDING EVEN UNTRAMMELED BY CONCLUSION OF THE LOWER COURT. FURTHER, WE FIND THAT HONBLE APEX COURT IN THE CASE RADHA KRISHNA RAI VS. ALLAHABAD BAN (2000) 9 SCC 733 HAS HELD THAT THOUG H THE PERIOD OF DELAY (1418 DAYS) IS UNDULY LONG FOR CONDONATION OF DELAY IN PREFERRING THE APPEAL, THE CIRCUMSTANCES ARE ALSO VERY UNUSUAL. HONBLE APEX COURT NOTED THAT THE PETITION ER HAS BEEN A VICTIM OF MIS-REPRESENTATION OF FACTS BY HIS OWN ADVOCATE AND WAS KEPT UNDER IMP RESSION THAT APPEAL IS PENDING BEFORE HIGH COURT, WHEREAS NO APPEAL WAS IN FACT, FILED BY THE ADVOCATE AND IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THE APPELLANT HAS NOT BEEN VIGI LANT IN PROSECUTING THE APPEAL. THE CAUSE SHOWN BY THE PETITIONER IS SUFFICIENT TO JUSTIFY IN CONDONING THE DELAY IN FILING THE APPEAL. IN VIEW OF THE ABOVE FACTS AND LEGAL POSITION ENUNC IATED BY HONBLE APEX COURT, IN THE PRESENT CASE BEFORE US, WE CONDONE THE DELAY AND REVERSE TH E FINDINGS OF CIT(A) NOT ADMITTING THESE APPEALS. 7. ONE MORE INTERESTING FEATURE IN THESE APPEALS IS THAT THE CIT(A) DID NOT STOP WITH THE ORDER DECLINING TO CONDONE THE DELAY, BUT CONSIDER ED THE MATTER ON MERITS AND HAD PRACTICALLY TREATED THE APPEAL AS BEING PROPERLY FILED BEFORE IT AND HAD ANSWERED AGAINST THE ASSESSEE THE QUESTIONS BROUGHT BEFORE IT WITH REFERENCE TO MATER IAL PLACED ON RECORD. IN SUCH CIRCUMSTANCES, NOW AS REGARDS TO MERIT OF THE CASE, BEFORE US ASSE SSEE CLAIMED THAT ALL CONDITIONS PRESCRIBED IN SEC.L0(22)/L0(23C)(IIIAB) OF THE ACT WERE SATISFIED AND CIT(A) ERRED IN NOT EXEMPTING ITS INCOME IN TERMS OF SAID SECTION. LD. COUNSEL STATED THAT SINCE ITAT HAS DIRECTED CIT, SILIGURI TO GRANT REGISTRATION TO THE ASSESSEE U/S. 12AA OF THE I.T. ACT, CIT(A) ERRED IN HOLDING THAT THE ASSESSEE UNIVERSITY DOES NOT EXIST SOLELY FOR EDUCA TIONAL PURPOSES BUT FOR MAKING PROFIT. IN COMMON SUPPORTING GROUND NO. 2(B) ITS CONTENTION IS THAT CIT(A) ERRED IN HOLDING THAT ASSESSEE UNIVERSITY WAS NOT SUBSTANTIALLY FINANCED BY GOVERNMENT. IN THE COMMON REVISED GROUND NO.2(C) ASSESSEE CLAIMED THAT CIT(A) ERRED I N COMPARING EACH YEARS GOVERNMENT 9 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 GRANT WITH ITS GROSS RECEIPT FROM TUITION FEES ETC. INSTEAD OF TAKING INTO ACCOUNT THE TOTAL GOVERNMENT GRANT FROM THE BEGINNING TILL DATE. IN T HE COMMON REVISED GROUND NO. 2(D), ASSESSEES ARGUMENT IS THAT CIT(A) ERRED IN IGNORIN G FINDINGS OF CCIT JALPAIGURI TO THE EFFECT THAT THE ASSESSEES CASE WAS COVERED BY SEC.10(23C) (IIIAB) OF THE ACT. WE FIND THAT CIT, SILIGURI VIDE HIS ORDER DT.29.1.L0, REJECTED ASSESS EES APPLICATION FOR REGISTRATION U/S.12AA OF THE ACT AND AGAINST THE ORDER OF CIT, TRIBUNAL BY I TS ORDER IN ITA NO.633/KOL/2010 DT.20.08.20L0 [COPY ENCLOSED BY ASSESSEE IN THE PAP ER BOOK] DIRECTING CIT, SILIGURI TO GRANT REGISTRATION U/S.12AA OF THE ACT, BY OBSERVING AS F OLLOWS: REGARDING THE OTHER OBSERVATION RAISED BY THE LD. C IT JUSTIFYING HIS ACTION OF REJECTING THE APPLICATION FOR REGISTRATION IS THAT THE FEES C HARGED ARE VERY HIGH AND EXORBITANT AND ACCESSIBLE TO THOSE WHO CAN AFFORD THE EXISTING FEES WHICH GOES TO PROVE THAT THE EDUCATIONAL FACILITIES ARE LIMITED TO A PRIVILEGED FEW AND NOT TO THE PEOPLE AT LARGE . IT IS AN ADMITTED FACT THAT FOR RUNNING AN INS TITUTION, A REASONABLE REVENUE GENERATION BY IT FOR THE PURPOSE OF DEVELOPMENT OF EDUCATION AND EXPANSION OF THE INSTITUTION DOES NOT MEAN AGAINST ITS CHARITABLE CH ARACTER. THE FEE STRUCTURE MUST TAKE INTO CONSIDERATION THE NEED TO GENERATE FUNDS TO BE UTILIZED FOR THE SURVIVAL AND GROWTH OF THE EDUCATIONAL INSTITUTION, THE BETTERMENT OF E DUCATION IN THAT INSTITUTION AND TO PROVIDE FACILITY NECESSARY FOR THE BENEFIT OF STUDE NTS THEREFORE, THERE CANNOT BE ANY LIMIT ON THE FEES CHARGED IN ORDER TO FULFILL SUCH OBJECT. THEREFORE, THE SCALE OF FEES PROVIDED WAS IN CONSONANCE WITH THE CLASS OF EDUCAT ION BEING IMPARTED TAKING INTO CONSIDERATION THE HIGH EXPENSES INCURRED FOR CONDUC TING AND BETTERMENT OF MEDICAL AND TECHNOLOGICAL EDUCATION AND RESEARCH. IN VIEW OF THE ABOVE, WE FIND THAT THE ASSESSEE IS A UNIVERSITY, GOVERNED BY GOVERNING COUNCIL CONSISTING OF 10 MEMBERS INCLUDING THE CHA NCELLOR, WHO IS THE GOVERNOR OF THE STATE OF SIKKIM. A MAJORITY OF OTHER MEMBERS ARE ALSO OFF ICERS OF SIKKIM GOVERNMENT REPRESENTING ITS VARIOUS DEPTTS. FROM CLAUSES 23(2) & (3) AND 25 (2) OF THE SIKKIM MANIPAL UNIVERSITY OF HEALTH, MEDICAL AND TECHNOLOGICAL SCIENCES ACT 1995 (COPY FILED BY ASSESSEE IN ITS PAPER BOOK), IT IS SEEN THAT THE ACCOUNTS OF THE UNIVERSI TY ARE REQUIRED TO BE AUDITED BY AUDITORS APPOINTED BY THE EXECUTIVE COMMITTEE. BUT THE STATE GOVERNMENT SHALL HAVE POWERS TO DIRECT, WHENEVER CONSIDERED NECESSARY, AN AUDIT OF THE ACCO UNTS OF THE UNIVERSITY INCLUDING THE INSTITUTIONS MANAGED BY IT BY SUCH AUDITORS AS IT M AY SPECIFY. THE ACCOUNTS WHEN AUDITED SHALL BE PUBLISHED BY THE EXECUTIVE COMMITTEE AND A COPY OF THE ACCOUNTS TOGETHER WITH THE AUDIT REPORT SHALL BE PLACED BEFORE THE GOVERNING COUNCIL AND ALSO TO THE STATE GOVERNMENT. COPIES OF ANNUAL REPORT ALONG WITH THE RESOLUTION O F THE GOVERNING COUNCIL THEREON SHALL ALSO BE SUBMITTED TO THE STATE GOVERNMENT. THE STATE GOV ERNMENT SHALL LAY THE SAME BEFORE THE STATE LEGISLATURE FOR THEIR NEXT EARLIER SESSIONS. THESE PROVISIONS IN THE ACT CLEARLY SHOW THAT 10 ITA NOS.356-360/K/2011 SIKKIM MANIPAL UNIVERSITY. AY 98-99 TO 02-03 THE STATE GOVERNMENT HAS SUFFICIENT CONTROL OVER T HE RECEIPT AND EXPENDITURE OF THE UNIVERSITY. 8. FROM THE ABOVE ON MERITS, WE ARE OF THE VIEW THA T THE TRIBUNAL VIDE ITS ORDER IN ITA NO. 633/K/2010 DATED 20.08.2010 HAS DIRECTED CIT, SILIG URI TO GRANT REGISTRATION U/S. 12AA TO ASSESSEE AND ALSO IN VIEW OF THE ABOVE FACTS THAT I T IS A UNIVERSITY GOVERNED BY GOVERNING COUNCIL OF GOVERNOR OF STATE OF SIKKIM, WE SET ASID E THE ISSUE TO THE FILE OF THE AO, IN VIEW OF NEW FACTS AND CIRCUMSTANCES AS EMERGED ABOVE, INSTE AD OF REFERRING THE MATTER BACK TO CIT(A) FOR ADJUDICATION. THE AO WITHOUT INFLUENCED BY THE DECISION OF CIT(A) ON MERITS AND WITHOUT INFLUENCED BY OUR OBSERVATIONS ABOVE IN PARA 7, WIL L DECIDE THE ISSUE INDEPENDENTLY AS PER THE PROVISIONS OF THE ACT AFTER AFFORDING REASONABLE OP PORTUNITY OF BEING HEARD TO ASSESSEE. ACCORDINGLY, THESE APPEALS OF THE ASSESSEE ARE SET ASIDE TO THE FILE OF AO ON MERITS AND ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED FOR STATISTICAL PURPOSES. 10. ORDER IS PRONOUNCED IN THE OPEN COURT. SD/- SD/- . ! . '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 16 TH AUGUST, 2011 12 %34 5 JD.(SR.P.S.) '0 . ,6 7'6'8- COPY OF THE ORDER FORWARDED TO: 1 . ( *+ /APPELLANT ) SIKKIM MANIPAL UNIVERSITY, C/O SHRI SOMNATH GHOSH , SEVEN BROTHERS LODGE, P.O. BUROSHIBTALA, P.S. CHINS URAH, DIST. HOOGHLY, PIN 712 105 2 ,-*+ / RESPONDENT, ACIT, CIRCLE-2, SILIGURI 3 . 0% ( )/ THE CIT(A), SILIGURI 4. 0% / CIT, SILIGURI 5 . ?@ ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, '0%A/ BY ORDER, 4 /ASSESSMENT REGISTRAR .