2011 (12) TMI 83 - AT - Income Tax

Delay in filing of application for registration under section 12AA - charitable institution - held that - The assessee society being an artificial juridical person it cannot suo motu think or act. It thinks through its trustees. It is seen from the order of the Commissioner of Income-tax that the secretary of the assessee society himself is a lawyer. It is also seen that the assessee society is availing the services of chartered accountants. When this is the case we are of the view that the theory of ignorance of law propounded by the assessee trust falls down. - the assessee is not entitled for retrospective registration. - Decided against the assessee.

Summary

Issues: Delay in seeking registration under section 12AA of the Income-tax Act, 1961.

Issue Analysis:

1. Delay in seeking registration under section 12AA:
- The appellant, a charitable institution, applied for registration under section 12AA after a delay of 21 years, 9 months, and 7 days. The Commissioner of Income-tax found the delay unexplained and granted registration only from the assessment year 2006-07 onwards.
- The Income-tax Appellate Tribunal, D-Bench, Chennai, in an earlier order, held that the Commissioner did not properly consider the condonation of delay and granting retrospective registration. The matter was remitted back for a fresh decision.
- Upon reconsideration, the Commissioner maintained the decision, stating that the delay was inordinate and unexplained, leading to the rejection of the claim for retrospective registration.
- The appellant argued that the delay was due to oversight, believing that its existing registrations under other laws sufficed for tax exemption. The appellant cited legal precedents supporting the condonation of delay due to ignorance of law.
- However, the Tribunal found that the appellant, being a registered society under other acts and availing professional services, could not claim ignorance of tax laws. The Tribunal deemed the delay a result of carelessness or lethargy, dismissing the appeal for retrospective registration.

2. Appellant's arguments and legal references:
- The appellant contended that the delay was inadvertent, relying on legal principles of condonation for ignorance of law. Citing cases like Collector, Land Acquisition v. Mst. Katiji, Kadayanallur Cholia Brahmana Mahajana Trust v. ITO, and Church Of Our Lady Of Grace v. CIT, the appellant sought registration from the inception.
- Additionally, the appellant referred to Taxmann's Interpretation of Statutes, emphasizing the concept of mistake of law to counterbalance strict adherence to legal rules.

3. Tribunal's decision and reasoning:
- The Tribunal noted that the appellant, being a legally established entity with professional guidance, could not claim ignorance of tax laws. Despite the appellant's argument of oversight, the Tribunal found the delay attributable to the trustees' callousness or lethargy.
- Considering the appellant's management by qualified individuals and engagement of chartered accountants, the Tribunal rejected the contention of ignorance of law. The Tribunal upheld the Commissioner's decision, denying retrospective registration to the appellant.

4. Conclusion:
- Ultimately, the Tribunal dismissed the appeal filed by the appellant, affirming the decision to grant registration only from the assessment year 2006-07 onwards. The judgment underscores the importance of timely compliance and diligence in seeking tax exemptions, even for charitable institutions.

This comprehensive analysis of the legal judgment highlights the key issues, arguments presented, the Tribunal's decision, and the reasoning behind denying retrospective registration to the appellant.