2006 (5) TMI 422 - AT - Income Tax

Summary

Issues Involved:
1. Delay in filing the application for registration under section 12A of the Income-tax Act.
2. Whether the delay in filing the application for registration can be condoned.
3. Applicability of sections 11 and 12 of the Income-tax Act to the trust.

Issue-wise Detailed Analysis:

1. Delay in filing the application for registration under section 12A of the Income-tax Act:
The appellant filed an application for registration of the trust under section 12A on 9-11-2001, while the trust was created on 21-9-1988. According to section 12A, the application should have been made within one year of inception. The appellant provided reasons for the delay, citing a genuine impression that their institutions were covered under section 10(22) as an Educational Institution, which was omitted with effect from 1-4-1999. They claimed unawareness of this amendment until 2001, leading to the delay.

2. Whether the delay in filing the application for registration can be condoned:
The Commissioner of Income Tax (CIT) did not condone the delay, stating that the explanation must cover the whole period of delay. The CIT cited various cases, including Ram Narain Joshi v. Parmeshwar Navab Mehta, J.B. Advani & Co. (P.) Ltd. v. R.D. Shah, CIT, and M.S. Nulon India Ltd. v. CIT, emphasizing that ignorance of law is not a sufficient reason for condonation. The CIT argued that the trustees, being advocates, should have known the necessity to register in time.

3. Applicability of sections 11 and 12 of the Income-tax Act to the trust:
The Tribunal examined whether the reasons provided by the appellant were sufficient to prevent them from filing the application within the prescribed period. The Tribunal referred to the Madhya Pradesh High Court's decision in Society of Divine Providence v. Union of India, which held that the reasons for not filing within the prescribed period are crucial, not the entire period of delay. The Tribunal also considered the Supreme Court's stance in Motilal Padampat Sugar Mills Co. Ltd. v. State of U.P., which clarified that there is no presumption that everyone knows the law.

The Tribunal concluded that it was not established that the trustees were aware of the provisions of section 12A. The Supreme Court's guidelines in Collector, Land Acquisition v. Mst. Katiji were also considered, emphasizing that the expression 'sufficient cause' should be interpreted liberally to advance substantial justice.

Conclusion:
The Tribunal determined that the CIT should have condoned the delay, as it was not proven that the trustees were aware of the requirement to file under section 12A. The delay was deemed bona fide, and the provisions of sections 11 and 12 were made applicable to the trust from its inception. The appeal was allowed, and the delay was condoned.

In the result, the appeal is allowed.