Bai Navazbai Faramroze D Mehta Charity Blocks, Navsari V. Commissioner of Income Tax, Exemption, Ahmedabad

ITA 442/SRT/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1872 (ITAT-SURAT)
• Duration Of Justice: 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-05-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-05-2024
• Assessment Year: 2020-2021
• Appeal Filed On: 02-07-2023
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Charitable institution; Opportunity of being heard; Reasonable cause; Benefit of exemption; Condonation of delay
• Section: 12; 11; 12A; 13

Judgement Text

आयकर अपीलीय अिधकरण, सुरत Ɋायपीठ, सुरत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आ.अ.सं./ITA No.442 & 443/SRT/2023 (Hearing in Physical Court) Bai Navazbai Faramroze D Mehta Charity Blocks, C/o Jayraj Naik & Co. 401, Millionaires Avenue, Joggers Park Road, Science Centre Lane, Surat-395007 [PAN No. AAATB 2606 F] Vs Commissioner of Income Tax(Exemption) Ahmedabad Room # 609, Floor-6, Aaykar Bhawan (Vejalpur), Nr. Sachin Tower, 100 Foot Road, Anandnagar-Prahladnagar Road, Ahmedabad-380015 अपीलाथŎ/Appellant ŮȑथŎ /Respondent िनधाŊįरती की ओर से /Assessee by Shri Darshit J Naik, CA राजˢ की ओर से /Revenue by Shri S.M. Keshkamat, CIT-DR सुनवाई की तारीख/Date of hearing 30.05.2024 उद्घोषणा की तारीख/Date of pronouncement 31.05.2024 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals by assessee are directed against the separate orders of Ld. Commissioner of Income-Tax (Exemption, Ahmedabad [for short to as “Ld. CIT(E)”] in rejecting application for registration for approval of funds under section 1A/12AB of Income Tax Act, 1961 (‘the Act’) in ITA No.442/SRT/2023 on 18.09.2020 and in ITA No.443/SRT/2023 on 29.11.2022 respectively. 2. At the outset of hearing, Ld. Authorized Representative (Ld.AR) for the assessee submits in both the appeal the assessee has sought same relief, thus, he has not pressing his appeal in ITA No.442/SRT/2023. Considering the submission of Ld.AR of the assessee, the appeal of assessee in ITA No.442/SRT/2023 is dismissed as “not pressed”. ITA No.442-443/SRT/2023 Bai Navazbai Faramroze D Mehta Charity Blocks 2 3. So far as appeal in ITA No.443/SRT/2023 is concerned, we find that there is delay of 146 days in filing appeal before Tribunal. The Ld. AR of the assessee submits that assessee has filed affidavit of one of the trustee, namely, Dara K Deboo. The Ld.AR of the assessee submits that assessee-trust has appointed a firm of Chartered Accountants “M/s Thacker Butala Desai, CA” for various compliance and income tax matters. The said CA firm filed an application Form- 10AB for registration of assessee-trust under section 12A/12AB, which was rejected by Ld.CIT(E) on 18.09.2020. The said CA firm again file similar application afresh 07.05.2022 for registration of assessee-trust under section 12A/12AB, the second application was rejected on 29.11.2022 but said CA has not informed the trustee of the assessee-trust till May-2023. The trustee of assessee was informed only on 22 nd May 2023. The trustee of assessee on coming to know about such dismissal of rejection of their application, approached present Authorized Representative (AR), Shri Darshit J Naik, who has filed appeal before Tribunal immediately in first week of July, 2023. The Ld.AR of the assessee submits that delay in filing appeal was neither intentional nor deliberate but due to laps on the part of their previous CA. The assessee is a very old trust established in 1953 and registered with Charity Commissioner, Navsari. The trustees of assessee-trust are law binding person. There was no malafide intention in filing appeal belatedly, the assessee is not going to be benefited by filing appeal belatedly, rather there is chance of adverse orders. The Ld.AR submits that assessee is engaged in the charitable activities and good case on merit and is likely to success if their appeal is considered on merit. The assessee should not be penalized due to the mistake of their previous CA ITA No.442-443/SRT/2023 Bai Navazbai Faramroze D Mehta Charity Blocks 3 firm. The Ld. AR for the assesse also prayer that technical consideration should not come in the way of justice. The assessee has filed detailed affidavit of one of the trustee of assesse-trust in explaining the delay. 4. On merits of the appeal, the Ld. AR of assessee submits that assessee-trust is a very old trust and was established in 1953 i.e., prior to coming of Income-tax Act, 1961 in force. The assessee is registered with Charity Commissioner as well as having registration under section 12A of the Income-tax Act (Act). By introduction of new Scheme of Registration of provisions under section 10(23)/12A/80G by way of Finance Act-2021, assessee applied for provisional registration. The provisional registration was allowed to assessee. The assessee applied for regular registration under section 12AB in Form-10AB initially 25.01.2020 and again second time on 17.05.2020. The Ld.CIT(E) issued a show caused notice in second application on 17.10.2022 sent through ITBA e-portal on e-mail i.e. given by applicant/assessee in their on-line application to furnish detailed activities actually carried out by assessee-trust. In response to said show cause notice, assessee furnished requisite details of activities. The Ld.CIT(E) on examination details, of object / certified copy of Public Trust Registrar (in short, ‘PTR’) noted that object of assessee-trust are restricted to a particular community “Parsi Zoroastrian”. The Ld.CIT(E) was of the view that assessee-trust is established for the benefit of a particular community and not for general public and thus, the provisions of under Section 13(1)(b) are applicable. The Ld. CIT(E) further held that provisions of Section 11 and 12 will not apply to a trust created for any particular religious’ community. The Ld.CIT(E) thus held that the provisions of Section 13(1)(b) is applicable only in ITA No.442-443/SRT/2023 Bai Navazbai Faramroze D Mehta Charity Blocks 4 case of charitable institution created or established after commencement of this Act, if the trust is created or established for the benefit of particular religious’ community or cast. The Ld.CIT(E) also held that similar application of assesse was rejected on 18.09.2020. 5. The Ld.AR of the assessee submits that assessee has filed appeal in ITA No442/Srt/2023 against the order dated 18.09.2020. Since common relief in both the appeals, therefore, he has not pressed the ground of appeal raised in ITA No.442/SRT/2023. The Ld.AR of the assessee submits that there is no bar for applying afresh for registration under section 12AB. The Ld.AR of the assessee submitted that assessee was a trust set-up much prior to commencement of Income-tax Act,1961. Thus, the embargo of provisions under section 13(1)(b) is not applicable against the assessee and the assessee- trust qualified for benefit of exemption provisions being a “charitable trust”. To support his submissions, the ld. AR of the assessee relied upon the decision of Hon’ble Andhra Pradesh High Court in the case of CIT vs. Arya Vysya Kalyana Nilaya Sangam [1986] 159 ITR 324 (AP)/[1986] 54 CTR 155 (AP) [13.12.1984] and decision of Hon’ble Madhya Pradesh High Court in the case of CIT vs. Maheshwari Agarwal Marwari Panchayat [1982] 10 Taxman 183 (MP)/[1982] 136 ITR 556 (MP)[26.06.1981].The Ld. AR of the assessee submits that assessee fulfilled all the conditions and appeal of assessee may be allowed. 6. On the other hand, ld. CIT-DR for the Revenue on the plea of condonation of delay submits that the assesse has not explained the delay properly. No reasonable cause is shown by the assessee. On merits the ld CIT-DR for the revenue supported the order of Ld.CIT(E). The Ld.CIT-DR for the Revenue ITA No.442-443/SRT/2023 Bai Navazbai Faramroze D Mehta Charity Blocks 5 submits that in para-9 of the impugned order, the Ld.CIT(E) clearly held that provisions of Section 13(1)(b) is applicable in case of assessee would not be eligible for exemption under sectin11 of the Act. The assesse is not a religious trust rather it is a charitable trust. 7. We have considered the rival submission of both the parties and perused record carefully. We have also deliberated on various case laws relied by Ld. AR of the assessee. Firstly, we are considering the plea of assessee on condonation of delay in filing appeal. We find that Ld.CIT(E) rejected the application of assesse on 29.11.2022 and the present appeal is filed on 03.07.2023. The Ld.AR of the assessee vehemently submitted that at the time of registration, the applicant/trust has given e-mail address of their earlier CA, namely, Thacker Butala Desai, who has not informed the assessee about rejection of their application. The Ld. AR of the assessee also argued that similar application of assessee was rejected earlier which was also not intimated to assessee. We find that in the ITBA portal, e-mail address is mentioned as “[e-mail]”. Considering the submissions of ld AR for the assessee that the assessee is an old charitable trust much indulging in charitable activities, and was dependent of the services of CA who was engaged for tax compliance and for registration under section 12A/12AB who had not informed the assessee in time to take resource of law for filing appeal. The Ld.AR for the assessee while making his submission, raised the plea that assessee relied on the ill-advice of their previous tax consultant and could not file appeal within due time. The Ld. AR for the assesse also prayer that technical consideration should not come in the way of justice. We find that on advice of ITA No.442-443/SRT/2023 Bai Navazbai Faramroze D Mehta Charity Blocks 6 present Ld. AR for the assessee, the assessee filed present appeal. On considering the totality of facts and circumstances, we find that there is no gross or negligence or mala fide intention in filing appeal belated. 8. We find that The Hon'ble Jurisdictional High Court in Jayvantsinh Vagehela Vs ITO (2013) 40 taxmann.com 491 (Guj) held that unless there is a gross negligence or malafide intention, delay in filing appeal to be condoned. Further, the Hon'ble Apex Court in the case of Concord of India Insurance Co. Ltd. Vs Smt. Nirmala Devi AIR 1979 SC 1666 held that legal advice tendered by a professional and the litigant acting upon it one way or the other could be a sufficient cause to seek condonation of delay and coupled with the other circumstances and factors for applying liberal principles and then said delay can be condoned. It was further held that an overall view in the larger interest of justice has to be taken. None should be deprived of an adjudication on merits unless the Court of law or the Tribunal/Appellate Authority finds that the litigant has deliberately and intentionally delayed in filing of the appeal. Thus, we find that there was a reasonable cause for condonation of delay in filing appeal before Tribunal and we condone the delay. Now adverting to merit of the case. 9. We find that Ld.CIT(E) rejected the second application of assessee for registration under section 12A/12AB on two counts – (i) on similar application was dismissed on 18.09.2020 and that the provisions of undersection 13(1)(b) are applicable in case of assessee. We find that against the rejection order dated 18.,09.2020, the assessee filed appeal in ITA No.442/SRT/2023, which we have dismissed as “not press” on the basis of statement of ld AR for the assessee. We further note that there is no bar in filing fresh application. So far ITA No.442-443/SRT/2023 Bai Navazbai Faramroze D Mehta Charity Blocks 7 as registration under section 12A/12AB are concerned while examining the application for registration Ld.CIT(E) is required to examine the object and activities raised by assessee-trust and there is no such order on merit of the case. So far as other objection of rejection is concerned about applicability of Section 13(1)(b), we find that assessee-trust was established much prior to commencement of Income-tax Act, 1961. The assessee-trust was set-up in 1953, which is evident form the copy of trust deed registered with Charity Commissioner, filed at pages 2 to 13 of paper book. 10. We find that Hon’ble Andhra Pradesh High Court in the case of Arya Vysya Kalyana Nilaya Sangam (supra) held that when the trust was in existence prior to commencement of Income-tax Act, 1961, the provisions of Section 13(1)(b) had no application and qualify of exemption being a “charitable trust”. Further, the Hon’ble Madhya Pradesh High Court in the case of Maheshwari Agarwal Marwari Panchayat (supra) also held that Section 13(1)(b) of the Act apply only to such charitable trust which are created or established after the commencement of the 1961 Act. The bar under section 13(1)(b) has no application to a charitable trust which was created or established prior to commencement of Income-tax Act 1961, as the said trust was found that it existed before coming into force, the bar under section 13(1)(b) will not apply and entire income would be entitled for exemption under section 11. Thus, in view of aforesaid factual and legal position, when assessee was in existence much prior to commencement of Income-tax Act,1961, the embargo of Section 13(1)(b) has no application. However, we find that ld. CIT(E) before rejecting the application under section 12A/12AB has not examined the activities of the ITA No.442-443/SRT/2023 Bai Navazbai Faramroze D Mehta Charity Blocks 8 assessee-trust. Therefore, the matter is restored back to the file of Ld.CIT(E) to reconsider the application of assessee on merit and pass order in accordance with law. Needless to direct that before passing the order afresh, the Ld.CIT(E) shall grant reasonable opportunity of being heard to the assessee. The assessee is also given liberty to file written submission and evidence as and when called for. The ld CIT(E) is directed to consider all such evidences, if so filed by the assessee. The assessee is also further directed to be more vigilant and to make compliance in time as and when called for by ld. CIT(E). In the result, the grounds of appeal raised by the assessee are allowed for statistical purpose. 11. In the result, appeal of the assessee is allowed for statistical purposes. 12. Registry is directed to place one copy of this order in all appeals folder / case file(s). Order pronounced in the open court on 31/05/2024. Sd/- Sd/- (BIJAYANANDA PRUSETH) (PAWAN SINGH) [लेखा सद˟/ACCOUNTANT MEMBER] [Ɋाियक सद˟ JUDICIAL MEMBER] Surat, Dated: 31/05/2024 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT(A)- 4. CIT 5. DR 6. Guard File True copy/ By order Sr. Private Secretary /Private Secretary /Assistant Registrar, ITAT, Surat