M/s Baba Gandha Singh Education Trust, Barnala V. CIT, Patiala

ITA 707/CHANDI/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51522 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-10-2011
• Assessment Year: 1999-2000
• Appeal Filed On: 27-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JYOTI KUMARI
• Assessee Lawyers: H R SALDI
• Keywords: Opportunity of being heard; Bonafide belief; Reasonable cause; Condonation of delay; Ignorance of law
• Section: 12A; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NOS. 707 & 698/CHD/2011 ( U/S 12 A ) BABA GANDHA SINGH EDUCATIONAL TRUST, VS. THE CIT, BARNALA PATIALA PAN NO. AAATB 7399 D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI H.R, SALDI RESPONDENT BY : SMT. JYOTI KUMARI DATE OF HEARING : 20.10.2011 DATE OF PRONOUNCEMENT : 20.10.2011 ORDER PER H.L.KARWA, VP THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE ORDER OF CIT, PATIALA DATED 28.4.2011. 2. THE COMMON GROUND NO.1 OF THE APPEALS READS AS U NDER:- 1. THAT THE LD. CIT, PATIALA HAS ARBITRARILY REFUSED T O CONDONE THE DELAY AND REJECTED THE APPLICATION FOR CONDONATION OF DELAY WITHOUT APPRECIATING THE SUBMISSION MADE AND MATERIAL PRODUCED BEFORE HIM. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED AN APPLICATION FOR REGISTRATION U/S 12A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) ON 11.4.2007. THE ASSESSEES SOCIETY WA S CREATED ON 1.02.1999. 2 THUS THE APPLICATION FOR REGISTRATION U/S 12A WAS F ILED AFTER ABOUT SEVEN YEARS OF ITS CREATION. THE LD. COMMISSIONER HAS GR ANTED THE REGISTRATION TO THE ASSESSEES TRUST W.E.F. 1.4.2007 I.E. FROM T HE FINANCIAL YEAR IN WHICH THE APPLICATION FOR REGISTRATION U/S 12A WAS RECEIV ED. THE ASSESSEE FILED AN APPEAL BEFORE THE TRIBUNAL ON THE GROUND THAT AP PLICATION FILED BY THE ASSESSEE FOR CONDONATION OF DELAY WAS NOT DECIDED B Y THE CIT(A). THE TRIBUNAL VIDE ITS ORDER DATED 27.12.2007, RESTORED THE MATTER TO THE FILE OF CIT FOR FRESH ADJUDICATION AFTER GRANTING DUE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. THE CIT(A) VIDE HIS ORDER DATED 8 TH JUNE, 2009 REJECTED THE PLEA OF THE ASSESSEE FOR CONDONATION OF DELAY. THE ASSESSEE CHALLENGED THE ORDER OF CIT DATED 8.6.2009 BEFORE THE TRIBUNAL AN D THE TRIBUNAL VIDE ITS ORDER DATED 29.09.2010 AGAIN RESTORED THE ISSUE OF CONDONATION OF DELAY FOR RE-ADJUDICATION BY HOLDING THAT THE OPPORTUNITY ALLOWED BY THE COMMISSIONER TO THE ASSESSEE TO APPEAR BEFORE THE A SSESSING OFFICER DOES NOT TANTAMOUNT TO AFFORDING AN OPPORTUNITY BY THE C OMMISSIONER HIMSELF. THE CIT AGAIN REFUSED TO CONDONE THE DELAY IN FILIN G THE APPLICATION FOR REGISTRATION MAINLY RELYING ON THE ORDER OF HIS PRE DECESSOR DATED 8 TH JUNE, 2009 WHICH IS MENTIONED IN PARA 6 OF THE ORDER. T HE CIT CONCLUDED THAT THE REASONS GIVEN BY THE ASSESSEE FOR FILING THE BE LATED APPLICATION U/S 12A WERE NOT PERSUASIVE FOR CONDONATION OF DELAY IN FIL ING THE SAID APPLICATION, HE THEREFORE, REJECTED THE APPLICATION FOR CONDONAT ION OF DELAY IN FILING THE APPLICATION FOR REGISTRATION BELATEDLY. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AGAINST THE ORDER OF CIT DATED 28.4.2011. 5. BEFORE US, SHRI H.R. SALDI, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT HAS NOT GIVEN ANY REASON FOR AGREEING WITH THE OPINION OF HIS 3 PREDECESSOR, BUT FOLLOWED THE SAME WITHOUT APPLYIN G HIS OWN MIND AND IGNORED THE MATERIALS / SUBMISSIONS MADE BEFORE HIM . LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE CIT, PATIALA HAS ARBITR ARILY REJECTED THE SUBMISSIONS OF THE ASSESSEE THAT THE ASSESSEE WAS U NDER BONAFIDE BELIEF THAT REGISTRATION BEFORE THE REGISTRAR OF SOCIETY I S ONLY THE REGISTRATION REQUIRED BY THE ASSESSEE TO GET EXEMPTION U/S 10(23 C) OF THE ACT. THEIR BELIEF WAS FORMED FROM THE SCHOOLS RUN BY THE OTHER TRUSTS IN THE NEAR VICINITY. THEY ARE ALSO NOT REGISTERED WITH THE CI T, PATIALA. OUR TRUSTEES COULD NOT DIFFERENTIATE THAT THE OTHER SCHOOLS IN T HE NEAR VICINITY ARE NOT REGISTERED WITH THE CIT BECAUSE THEY HAVE RECEIPT L ESS THAN A CRORE BUT THE RECEIPT OF THE PETITIONER HAD EXCEEDED BY TWO LACS APPROXIMATELY. AS AND WHEN IT CAME TO THE NOTICE OF THE ASSESSEE, THE ASS ESSEE IMMEDIATELY FILED BELATED APPLICATION FOR REGISTRATION. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN THE APPLICATION FOR CONDONATION O F DELAY THE ASSESSEE SOCIETY SUBMITTED THAT THE APPLICATION FOR REGISTRA TION WITHIN ONE YEAR OF REGISTRATION OF SOCIETY COULD NOT BE FILED BECAUSE THE ASSESSEE WAS NOT AWARE OF THE REQUIREMENTS OF INCOME TAX ACT, 1961 A ND NONE OF ITS MEMBERS HAVE ANY KNOWLEDGE ABOUT THE SAME. THE TRU ST, THEREFORE, REQUESTED THE COMMISSIONER TO CONDONE THE DELAY AND GRANT THE REGISTRATION U/S 12A OF THE ACT. LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE DELAY IN THIS CASE WAS DUE TO A REASONABLE CAUSE AND THEREFORE, CIT MAY BE DIRECTED TO GRANT REGISTRATION FROM 1.4. 2006 INSTEAD OF 1.4.2007. LD. COUNSEL FOR THE ASSESSEE RELIED ON THE FOLLOWING DECISIONS:- I) SHRI HARIDEVJI GAUSHALA TRUST V CIT (2008) 119 TTJ (AGRA) 981 II) CIT VS. VILLAGE LIFE IMPROVEMENT FOUNDATION [2010] 320 ITR 188 (P&H) 4 III) KADUR VIDHYA PRATISHTANA VS. CIT (2007) 15 SOT 75 (BANG) 6. SMT. JYOTI KUMAR, LD. DR FOR THE REVENUE HEAVIL Y RELIED UPON THE ORDER OF CIT, PATIALA DATED 28.4.2011. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO CAREFU LLY PERUSED THE APPLICATION FOR CONDONATION OF DELAY WHEREIN IGNORA NCE OF INCOME TAX PROVISIONS HAS BEEN PLEADED AS REASONS FOR THE DELA Y. BEFORE US, LD. COUNSEL FOR THE ASSESSEE PLEADED THAT DELAY IN THIS CASE WAS DUE TO A REASONABLE CAUSE. IN THE INSTANT CASE, THERE IS NO DOUBT THAT THE ACTIVITIES OF THE ASSESSEE TRUST ARE GENUINE. AS REGARDS THE CONDONATION OF DELAY IN FILING THE APPLICATION FOR REGISTRATION U/S 12A, WE ARE OF THE VIEW, THAT THE PLEA OF THE ASSESSEE REGARDING IGNORANCE OF LAW OF INCOME TAX CAN BE TAKEN AS A REASONABLE EXCUSE. IN THE CASE OF SHRI HARIDEVJI GAUSHALA TRUST VS. CIT (SUPRA), THE ITAT, AGRA BENCH HELD THAT THE ASSESSEE HAVING PLEADED IGNORANCE OF LAW OF INCOME TAX, SAME CONSTI TUTED REASONABLE CAUSE FOR DELAY IN MAKING APPLICATION FOR GRANT OF REGISTRATION. IN OUR VIEW THE DECISION OF THE AGRA BENCH (SUPRA) OF THE TRIBU NAL IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE AND, TH EREFORE, WE HOLD THAT IGNORANCE OF LAW CAN BE TAKEN AS A REASONABLE EXCUS E. 8. IN THE CASE OF CIT V VILLAGE LIFE IMPROVEMENT FO UNDATION (SUPRA), THE JURISDICTIONAL HIGH COURT, WHILE DISMISSING THE APPEAL OF THE REVENUE HELD THAT THE COMMISSIONER OF INCOME TAX HAD POWER TO CONDONE A DELAY IN APPLICATION FOR REGISTRATION OF A TRUST. THE TR IBUNAL HAD FOUND ON THE FACTS THAT THERE WAS SUFFICIENT CAUSE FOR CONDONATI ON OF DELAY AND THE 5 ASSESSEE WAS A GENUINE TRUST, DELAY IN APPLICATION WAS RIGHTLY CONDONED BY THE TRIBUNAL. IN THE ABOVE CASE, THE ASSESSEE WAS TRUST WHICH WAS CREATED ON FEBRUARY 26, 2002 AND WAS REGISTERED WITH THE SU B REGISTRAR, CHANDIGARH. THE APPLICATION U/S 12A OF THE ACT WAS MADE ON 29.5.2007, WHICH WAS BEYOND THE STIPULATED TIME. THE ASSESSEE FILED APPLICATION FOR CONDONATION OF DELAY, WHICH WAS DECLINED BY THE COM MISSIONER, HOWEVER, ON APPEAL, THE TRIBUNAL HELD THAT THERE WAS SUFFICI ENT CAUSE FOR CONDONATION OF DELAY AND THE ASSESSEE WAS A GENUINE TRUST. THE TRIBUNAL HELD THAT DELAY IN MAKING THE APPLICATION WAS ON AC COUNT OF LACK OF AWARENESS OF THE PROCEDURAL PROVISIONS. IN THE AB OVE CASE, TWO OF THE TRUSTEES WERE NRIS AND THREE OF THE TRUSTEES WERE I AS OFFICERS. IN THE ABOVE CASE THE JURISDICTIONAL HIGH COURT CONCLUDED THAT THE COURT SHOULD HAVE PRAGMATIC AND LIBERAL APPROACH AND CASE OF SUB STANTIAL JUSTICE HAS TO BE PREFERRED TO TECHNICALITY. WHERE THERE IS A POW ER OF CONDONATION OF DELAY, QUESTION, WHETHER THERE IS A SUFFICIENT CASE FOR CONDONATION OF DELAY IS TO BE EXAMINED FROM CASE TO CASE. 9. IN THE CASE OF PADUR VIDHYA PRATISHTANA V CIT (S UPRA), ITAT BANGLORE BENCH HELD THAT IF THE ASSESSEE IS ABLE TO SHOW THAT THERE WAS SUFFICIENT REASONS FOR NOT FILING THE APPLICATION F OR REGISTRATION U/S 12A IN TIME, THE DELAY IS TO BE CONDONED; SINCE IT HAS NOT BEEN ESTABLISHED AS A MATTER OF FACT THAT THE TRUSTEES / PERSONS WHO ARE MANAGING THE AFFAIRS OF THE ASSESSEE SOCIETY WERE AWARE OF THE PROVISIONS R ELATING TO FILING OF APPLICATION U/S 12A, THE PLEA OF THE ASSESSEE THAT INITIALLY IT WAS IGNORANT OF THE PROVISIONS OF SECTION 12A CANNOT BE REJECTED AND THEREFORE, THE DELAY IN FILING THE APPLICATION U/S 12A IS TO BE CO NDONED. 6 10. THE HON'BLE SUPREME COURT IN THE CASE OF MOTILA L PADAMPAT SUGAR MILLS COMPANY. LTD VS. STATE OF U.P. & ORS (1979) 118 ITR 326 (SC) HELD THAT IGNORANCE OF LAW CAN BE TAKEN AS REASONAB LE EXCUSE. 11. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT I GNORANCE OF LAW CAN BE TAKEN AS A REASONABLE EXCUSE IN FILING THE APPLI CATION FOR REGISTRATION BELATEDLY. HOWEVER, WE FIND THAT THE ENTIRE RELEVA NT FACTS AND EVIDENCE RELATING TO GENUINENESS OF ACTIVITIES OF THE TRUST ARE NOT ON RECORD. EVEN THE AIMS AND OBJECTIVES OF THE TRUST ARE NOT ON REC ORD. IN THE ABSENCE OF ABOVE EVIDENCE, THE ISSUE OF GRANTING REGISTRATION TO THE ASSESSEES TRUST COULD NOT BE DECIDED AT OUR LEVEL. EVEN WE COULD N OT DECIDE THE ISSUE WHETHER THE TRUST IS GENUINE OR NOT PARTICULARLY IN THE ABSENCE OF RELEVANT EVIDENCE. CONSIDERING THE ENTIRE FACTS AND CIRCUM STANCES OF THE PRESENT CASE, WE CONDONE THE DELAY IN FILING THE APPLICATIO N FOR REGISTRATION BELATEDLY. AS REGARDS THE GRANT OF REGISTRATION W .E.F. 1.4.2006, AS PRAYED FOR BY SHRI H.R. SALDI, LD. COUNSEL FOR THE ASSESSE E, WE DIRECT THE CIT TO CONSIDER AND DECIDE THE ISSUE OF GRANTING REGISTRAT ION TO THE ASSESSEES TRUST BY FOLLOWING THE PROCEDURE FOR REGISTRATION A S PRESCRIBED IN SECTION 12AA(1) OF THE INCOME TAX ACT, 1961. THE LD. CIT( A) IS ALSO DIRECTED TO GIVE AN OPPORTUNITY OF BEING HEARD TO THE ASSESS EE BEFORE DECIDING THE ISSUE OF GRANTING REGISTRATION TO THE ASSESSEES TR UST W.E.F. 1.4.2006. 12. AT THE TIME OF HEARING, SHRI H.R. SALDI, LD. CO UNSEL FOR THE ASSESSEE DID NOT PRESS THE APPEAL I.E. ITA NO. 707/CHD/2011 AND THEREFORE, WE DISMISS THE SAME AS NOT PRESSED. 7 13. FOR STATISTICAL PURPOSES, ITA NO. 698/CHD/2011 IS ALLOWED WHILE ITA NO. 707/CHD/2011 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 20 TH DAY OF OCTOBER, 2011. SD/- SD/- (MEHAR SINGH) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 20 TH OCTOBER, 2011 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR