2010 (8) TMI 377 - HC - Income Tax

Charitable trust Registration Application for registration Delay in filling application Assessee executed trust deed in 2000, starting activities in 2005 Assessee filed application belatedly Delay to be condoned

Summary

Issues Involved:
1. Whether the Income-tax Appellate Tribunal was right in quashing the order of the Commissioner of Income-tax refusing registration under section 12AA of the Income-tax Act, rejecting the petition for condoning the delay of 6 years and 2 months, accepting the plea of ignorance of law on the part of the managing trustee.
2. Whether the Tribunal was right in accepting the reason that the delay was due to the lack of activities of the trust till March 31, 2005, overlooking the statutory provisions prescribing a time limit for filing the application for registration from the date of formation of the trust.
3. Whether the Tribunal was right in holding that the managing trustee could again raise the plea of ignorance of law in 2007, having previously sought condonation of delay for another trust in 1999.

Detailed Analysis:

Issue 1:
The Tribunal quashed the order of the Commissioner of Income-tax, who had refused registration under section 12AA and rejected the petition for condoning the delay of 6 years and 2 months. The Tribunal accepted the plea of ignorance of law on the part of the managing trustee. The Tribunal observed that ignorance of law can be a ground for condonation of delay, considering the materials placed before it, including the letter from the chartered accountant advising the assessee to file the application belatedly due to the lack of activities in the trust until March 31, 2005. The High Court, while agreeing with the Tribunal's decision to condone the delay, clarified that ignorance of law is generally not a valid ground but considered the facts of the case to find "sufficient reason" for the delay.

Issue 2:
The Tribunal accepted the reason given by the assessee that the delay was due to the lack of activities of the trust until March 31, 2005. The Tribunal overlooked the statutory provisions prescribing a time limit for filing the application for registration from the date of formation of the trust. The High Court noted that the assessee started receiving donations only after April 1, 2005, and the chartered accountant advised filing the application belatedly. The Tribunal's finding based on these facts was upheld, as the delay was attributed to the advice of the chartered accountant and the absence of activities in the trust.

Issue 3:
The Tribunal held that the managing trustee could again raise the plea of ignorance of law in 2007, despite having previously sought condonation of delay for another trust in 1999. The High Court found that the assessee was guided by the advice of the chartered accountant, which resulted in the delay. The Tribunal's decision was based on the specific circumstances and materials presented, including affidavits and the chartered accountant's letter. The High Court agreed that the Tribunal's finding was based on sufficient reason, although it reiterated that ignorance of law is not generally a valid ground.

Conclusion:
The High Court dismissed the appeal, upholding the Tribunal's decision to condone the delay and grant registration under section 12AA of the Income-tax Act. The substantial questions of law were answered against the Revenue and in favor of the assessee. The High Court emphasized that each case must be considered on its facts, and in this instance, the Tribunal's decision was supported by the materials on record.