SHRI HARBADEVI GRAMDEVI MANDIR TRUST MADH,MADH MALAD WEST V. CIT EXEMPTIONS, CUMBALLA HILL MUMBAI

ITA 347/MUM/2025

AI Insights

The case involves the Shri Harbadevi Gramdevi Mandir Trust appealing against the decision of the Commissioner of Income Tax (Exemptions), which rejected their application for registration under section 12AB of the Income-tax Act, 1961. The Trust argued that the rejection was based on erroneous claims and incomplete considerations of their application. The Tribunal found that while the Trust had been non-compliant and non-cooperative, the CIT(E) had also not adjudicated the issues on merits but solely on the ground of non-prosecution. The Tribunal decided to remand the case for a fresh hearing, emphasizing the need for adherence to the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396577 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2022-2023
• Other Referred Cases: Collector, Land Acquisition v Mst. Katiji And Others- 167 ITR 471 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. SRINIVASU
• Assessee Lawyers: ASHWIN CHHAG
• Keywords: Condonation of delay; Set aside; Opportunity of being heard; Period of limitation; Principle of natural justice; Bonafide mistake; Time period of passing order
• Section: 154; 12AA

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.347/MUM/2025 (A.Y. 2022-23) Shri Harbadevi Gramdevi Mandir Trust, Madh, Madh Koliwada, Near Airforce Station, Malad(W), Madh B.O. Mumbai, Versova S.O. - 400 061, Maharashtra v/s. बनाम Commissioner of Income Tax(Exemptions), 601, 6th Floor, Cumballa Hill, MTNL Telephone Exchange Building, Peddar Road, Dr. Gopalrao Deshmukh Marg, Cumballa Hill, Mumbai - 400026, Maharashtra स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AANTS0574J Appellant/अपीलार्थी .. Respondent/प्रतिवादी Appellant by : Shri Ashwin Chhag,AR Respondent by : Shri S. Srinivasu (CIT DR) Date of Hearing 15.05.2025 Date of Pronouncement 26.05.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal is filed by the assessee against the order passed by the Learned Commissioner of Income-tax (Exemptions), Mumbai [hereinafter referred to as “CIT(E)”] pertaining to the order passed u/s. 12AA of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for the Assessment Year [A.Y.] 2022-23. P a g e | 2 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai 2. The grounds of appeal are as under:- 1. Ld.CIT(E) erred to reject the application seeking the registration under erroneous claim, contrary to the facts on record; (a) That the application made is incomplete. (b) That appellant failed to respond to the notice vide dated 20.09.2022. 2. Ld. CIT(E) grossly erred to state that, “in absence of necessary compliance by the applicant, I am unable to arrive at a satisfaction on these parameters”, as it is evident that mandatory satisfaction is totally missing. 3. Ld. CIT(E) erred to take the plea of limitation period, while initiating the proceeding at the fag end to the application made on 31.03.2022, without appreciating the hardship the trust will suffer for the gross negligence committed by the ld. CIT(E) upon a trust which is age old existed since 10.08.1981. 3. At the outset, it may be stated here that as per the information of the Registry, the present appeal is substantially delayed. In this regard, the ld.AR has filed a condonation application alongwith an affidavit of Sri Mahesh Balkrishna Patil, Chairman and Trustee of the Mandir Trust requesting for condonation of delay and give one more opportunity for the hearing to regularize the registration of the Trust. It is submitted that the Trust is about 45 years old and has filed its ROI regularly. It is provisionally registered itself vide dated 10.03.2022 for the period 2022- 2025. It filed the Form 10AB on 31.03.2022 with the necessary attachment as required therein to be enclosed with it, which was rejected as per order dated 25.09.2022, stating erroneously, contrary to the facts on record and hence, petition u/s.154 was filed within the limitation period of therein, on P a g e | 3 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai 15.08.2024 stating that the notice giving opportunity dated 20.09.2022 was not in accordance of section 282 of the Act and hence, there is gross violation of s.12AB(1)(b) of the Act. The trust approached, suo motu the CIT(E), Mumbai for the follow up but the rectification filed has remained without process and hence, assessee has filed the appeal before this Tribunal vide dated 17.01.2025 which registry of this Tribunal has found belated by 779 days. Meanwhile the Trust filed another application, in fiduciary capacity, as directed by its Chartered Accountant Shri Vijay Kumar Prajapati, dated 12.01.2024 which was rejected and then 3rd application vide dated 29.06.2024 which got rejected vide order dated 20.12.2024. Thus, the assessee trust was vigilant over its rights and duty to register itself in the manner prescribed under the Act. There is huge gap between the 1strejection order dated 25.09.2022 and then 2ndapplication dated 12.01.2024 or petition u/s.154 of the Act dated 15.08.2024 this is because following the rejection order and then assessment order dated 28.03.2024 raising demand of Rs. 16.05,710/-, the relation of the management of the Trust and its aforesaid Chartered Accountant Shri Vijay Kumar Prajapati had entered into rough patch as later was found the reason for not handling the matter carefully besides, there were some quarrel among the trustees as well and such bad patch ended on filing rectification u/s.154 stating that there was no notice was issued as required P a g e | 4 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai by section 282 of the Act and all the necessary papers required by the law were enclosed with the application, thus, there was no wrong committed at the end of the Trust. 3.1 In view of the above, it is submitted that there is sufficient cause for the delay in filing the appeal before the Hon'ble ITAT, Mumbai. Besides, the order in Form 10AB is unconstitutional being bad in law as without giving proper opportunity of being heard and without prejudice to this, it was erroneous to claim that assessee did not furnish the details as required in the application form and hence, it is prayed to condone the delay and admit the appeal, ignoring the technicality of long delay of 779 days as delay would not cause any prejudice to the respondent and urged to consider the substantial justice as the delay has not caused by any negligence but caused by the circumstances beyond the control of the appellant. 4. The ld.CIT(DR) objected to the condonation petition pleading that the same deserved to be rejected or in the alternative appropriate cost needs to be imposed on it. We have carefully considered the condonation petition and the reasons stated therein. We find that the reasons stated for the delay are not very convincing as the assessee sought recourse to alternative remedy u/s 154 of the Act rather than filing appeal before ITAT P a g e | 5 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai in time. However, it is also a fact that there is no malafide and deliberate intention to delay the proceedings at our end. Such a bonafide mistake needs to be condoned. In this connection, reliance could be placed on the landmark decision of hon’ble Supreme Court which inter alia held in Collector, Land Acquisition v Mst. Katiji And Others- 167 ITR 471 (SC) that “ordinarily, a litigant does not stand to benefit by lodging an appeal late……..Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated….Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period…. A litigant does not stand to benefit by resorting to delay. In fact, he runs serious risk.”Accordingly, we condone the delay. 4.1 However, it is equally true that it is the fundamental duty of the assessee to diligently pursue its case and comply with the notices and proceedings initiated by the Revenue authorities. The framework of the Act rely heavily on the co-operation and active participation of the taxpayer. Despite the notices issued by the CIT(E), no substantive explanation was submitted. The failure of the assessee to make any P a g e | 6 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai response before him reflects gross negligence and an indifference that is unacceptable. The principles of natural justice operate both ways, while the Revenue authorities are required to provide a reasonable opportunity of being heard, the taxpayer is equally obligated to co-operate with the authorities and utilize the opportunities extended. In the present case, despite receiving adequate opportunities, the assessee displayed a casual approach and indifference. Such conduct cannot be condoned. 4.2 In light of the non-compliant attitude of the assessee, levy of cost needs to be evaluated in this case as cost serves as a necessary deterrent to ensure that taxpayers act with due diligence in pursuing their cases in future and respecting the timelines and processes laid down under the law. It also emphasizes the principle that while justice must be ensured, the system cannot cater to indolence or negligence on the part of the assessee. Accordingly, considering assessee’s non-compliant attitude and lack of diligence in pursuing the appeal, we impose a cost of Rs.25,000/- on it. The cost shall be deposited to the credit of the Income Tax Department within 15 days of the receipt of this order and proof of payment shall be submitted before the ld.CIT(E). 5. Briefly stated facts of the case are that the applicant Trust filed an application in Form 10AB seeking registration under section 12AB of the Act. Form 10AC in this case had been issued by the CPC granting P a g e | 7 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai provisional registration under section 12AB of the Act. It was stated by the ld.CIT(E) that the relevant procedural mandate is governed by the provisions of Rule 17A of the IT Rules, and the sub rule (2) of Rule 17A mandates that the application in Form 10AB is to be accompanied by certain specific documents i.e. where the applicant is created, or established, under an instrument, self-certified copy of such instrument creating or establishing the applicant; where the applicant is created, or established, otherwise than under an instrument, self-certified copy of the document evidencing the creation or establishment of the applicant; Self- certified copy of registration with Registrar of Companies or Registrar of Firms and Societies or Registrar of Public Trusts, as the case may be: Self- certified copy of registration under Foreign Contribution (Regulation) Act, 2010 (42 of 2010), if the applicant is registered under such Act etc. However, on verification of the application in Form 10AB filed by the assessee, it was found that the application was not complete, and all the documents required to be accompanying the application were not furnished. Hence, a notice was issued to it requesting the assessee to furnish the complete set of documents mentioned in Rule 17A(2). It was also requested to show cause why the application should not be rejected for the want of the essential documents. The Applicant did not make any compliance to the terms of the above notice. In the absence of necessary P a g e | 8 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai compliance and in view of the statutory limitation to decide on the application on or before time barring date, he rejected the application seeking registration under section 12AB of the Act. 6. Before us, it was argued on behalf of the assessee that the Ld. CIT(E) proceeded to pass ex parte order without giving effective opportunity of hearing to the assessee and as such it was prevented from presenting its case before him. Therefore, the impugned order suffers from illegality and liable to be set aside. The Ld. DR on the other hand supported the order of the Ld. CIT(E) stating that there is no merit in the appeal and same is liable to be dismissed. 7. We have carefully considered rival submissions. We feel that the hearing to be given is not a formality but effective hearing is sine qua non for the purpose of upholding the principal of natural justice. However, it is equally true and duly reflected from the records that the assessee is also non-compliant and non-cooperative in its attitude before the authorities during relevant proceedings. It is observed that the ld.CIT(E) rejected the application solely on the ground of non-prosecution. He failed to adjudicate the issues without deciding the application on merits which is contrary to the principles of natural justice. P a g e | 9 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai 8. Considering all the relevant facts of the case, we are of the view that following the principles of natural justice, it would be fair and judicious to allow a last opportunity of hearing to the assessee to explain the matter before authority concerned in the interest of justice. During the hearing, the Bench proposed for restoration of the matter to the ld.CIT(E) for a de novo consideration. The Revenue did not vehemently oppose this plea. Thus, in the in the interest of justice, we deem it appropriate to send back the issue before him for fresh consideration. The ld. CIT(E) shall give proper and adequate opportunity of being heard to the assessee in accordance with principles of natural justice. Needless to state, the assessee will comply with notices and make available any details as deemed fit and sought by the authority concerned 9. Before parting with the subject, we would like to make it clear that setting aside the appeal for de novo consideration by us, should not be construed in any manner affecting the merits of the case for which the ld.CIT(E) is duly empowered to take an independent decision in accordance with the provisions of law. P a g e | 10 ITA No. 347/Mum/2025 A.Y. 2022-23 Shri Harbadevi Gramdevi Mandir Trust, Madh, Mumbai 10. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 26.05.2025. Sd/- Sd/- SANDEEP GOSAIN PRABHASH SHANKAR (न्याययक सदस्य /JUDICIAL MEMBER) (लेखाकार सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai ददनाुंक /Date 26.05.2025 Lubhna Shaikh / Steno आदेश की प्रयियलयि अग्रेयिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER, उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अयिकरण/ ITAT, Bench, Mumbai. "