2006 (1) TMI 215 - AT - Income Tax

Appellate Tribunal - application for grant of registration u/s 12A and recognition u/s 80G - condonation of delay - Jurisdiction Of CIT, in making an investigation beyond the condition prescribed u/s 12A - Whether the registration u/s 12A is to be granted with effect from 1-4-1993 instead of 1-4-1997? - difference of opinion between l'd members - Third Member Order. HELD THAT- Assessee was stated to be prosecuting bona fide remedy though under a wrong belief. As such delay was caused in filing the appeals. This according to learned counsel constitutes a sufficient cause for condonation of delay. In explaining the factual details it was submitted that an application for registration u/s 12A, was submitted on 4-11-1993. It was rejected on 4-9-2002. Against the said rejection assessee filed a review petition on 20-9-2002 before the CIT. This review petition was rejected on 25-10-2002. Thereafter the assessee filed another application on 9-12-2002. CIT granted registration u/s 12A with effect from 1-4-1997. Assessee was aggrieved against the grant of registration with effect from 1-4-1997. It was alleged that since the application was filed on 4-11-1993 registration should be granted with effect from 1-4-1997 (sic). Petition for the review of the order was filed on 18-6-2004 before the CIT. Meanwhile, Assessee received order of the first appellate authority on 26-6-2004 for the assessment years 1993-94, 1995-96 and 1997-98. During the course of the preparation of appeals assessee was advised that the proper remedy against the refusal of registration was appeal before the Tribunal and not review petition before the CIT. Accordingly, assessee did prefer appeal before the Tribunal. It was submitted that on this factual backdrop delay was caused of 617 days in filing appeal before Tribunal and 359 days in filing the appeal. Delay was unintentional and resulted due to wrong advice. It is, therefore, not possible to presume, that assessee had full knowledge as to the remedy available. Various applications made before the CIT proves this fact. Assessee was prosecuting remedies under a wrong belief. This as per the decision of the jurisdictional High Court in the case of CIT v. K.S.P. Shanmughavel Nadar 1984 (4) TMI 24 - MADRAS HIGH COURT constitutes a sufficient cause for filing the belated appeal. In view of this, there existed a reasonable cause in filing the belated appeal. I concur with the decision of the learned Judicial Member that in such circumstances to meet the ends of justice delay should be condoned. CIT was not satisfied with the reasons adduced by the assessee for making the belated application. As such the case of the assessee falls within the ambit of section 12A(a)(ii) of the Act. Ex consequent it was obligatory on the part of the CIT to grant registration from 1-4-1993 whereas the CIT granted registration w.e.f. 1-4-1997. In my opinion, the order of the CIT is not in consonance with the tenet of law. The application for registration was pending before the Chief Commissioner since 4-11-1993. On 1-6-1999 it stood transferred to CIT by virtue of clause (1A) of section 12AA of the Act. Section (1A) was inserted by Finance Act, 1999 w.e.f. 1-6-1999. As per the mandate of section 12AA(2) every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) of section 12A. This was not done. CIT decided the issue of registration on 4-9-2002. As such it is beyond time. I have perused the reasonings adduced by the learned Judicial Member in this regard. In my opinion, he took a correct view in the matter. I agree with his decision on this count. Whether CIT exceeded his jurisdiction in making an investigation beyond the condition prescribed u/s 12A - Delhi Bench of the Tribunal in the case of Asstt. CIT v. Peare Lal Sharma Memorial Trust Society 2000 (3) TMI 175 - ITAT DELHI-A has held that at the stage of filing an application for registration u/s 12A CIT is not supposed to examine the application of income aspect. All that he may examine is whether the application is made in accordance with the requirements of section 12A read with rule 17A and whether Form No. 10A has been properly filled up. He may also see whether the objects of the trust are charitable or not. At this stage, it is not a sine qua non to examine the application aspect of income. No contrary decision was brought before me. Thus precedents, I am inclined to agree with the view taken by the learned Judicial Member on this aspect. In conformity with the majority opinion, we set aside the order of the CIT dated 4-9-2002 and 19-5-2003 and direct the Commissioner to grant registration u/s 12A(a) and u/s 80G with effect from 1-4-1993. In conformity with the majority opinion, we set aside the orders of the lower authorities and remand back the issue to the file of the Assessing Officer. The Assessing Officer shall examine the whole issue afresh and find out whether the assessee is entitled to exemption under sections 11,12 and 80G in respect of income received by them as a society registered under sections 12A and 80G of the Income-tax Act. In the result, all the appeals stand allowed.

Summary

Issues Involved:
1. Delay in filing appeals for registration under section 12A of the Income-tax Act.
2. Grant of registration under section 12A from the date of application.
3. Jurisdiction of the Commissioner of Income-tax in making investigations beyond the conditions prescribed under section 12A.
4. Entitlement for exemption under sections 11, 12, and 80G of the Income-tax Act.

Detailed Analysis:

1. Delay in Filing Appeals:
The assessee filed appeals with significant delays (617 days for ITA No. 1757 and 359 days for ITA No. 1758). The reasons cited included pursuing wrong remedies, such as review petitions, due to incorrect legal advice. The Tribunal considered the principle of substantial justice over technicalities and condoned the delay, emphasizing that the delay was neither willful nor wanton but due to circumstances beyond the control of the assessee. The Tribunal referenced the Supreme Court's decision in *Collector, Land Acquisition v. Mst. Katiji* and the jurisdictional High Court's decision in *CIT v. K.S.P. Shanmugavel Nadar* to support a liberal approach towards condonation of delay.

2. Grant of Registration under Section 12A:
The assessee initially applied for registration on 4-11-1993, which was rejected by the Commissioner on 4-9-2002. The Tribunal found that the application should be considered from the date it was filed, i.e., 4-11-1993, and not from a later date. The Tribunal directed the Commissioner to grant registration with effect from 1-4-1993, as the application was pending for an extended period without action from the Department. The Tribunal emphasized that the delay in processing the application was not attributable to the assessee.

3. Jurisdiction of the Commissioner:
The Tribunal held that the Commissioner exceeded his jurisdiction by investigating beyond the conditions prescribed under section 12A. The Tribunal referred to the Madras High Court's decision in *New Life In Christ Evangelistic Association v. CIT*, which stated that the Commissioner's enquiry should be limited to whether the application was made in time and whether the accounts were maintained as required. The Tribunal found that the Commissioner's rejection based on the income exceeding expenditure was beyond the scope of section 12A.

4. Entitlement for Exemption under Sections 11, 12, and 80G:
The Tribunal set aside the orders of the lower authorities and remanded the matter to the Assessing Officer to reconsider the assessee's entitlement for exemption under sections 11, 12, and 80G. The Tribunal directed the Assessing Officer to examine the application of these provisions independently, considering the society's registration under sections 12A and 80G.

Separate Judgments:
The Judicial Member and the Accountant Member had differing opinions on the issues, leading to a reference to the Third Member. The Third Member agreed with the Judicial Member's view, leading to the final decision to condone the delay, grant registration from 1-4-1993, and remand the exemption issue to the Assessing Officer.

Conclusion:
The Tribunal's decision emphasized substantial justice over technicalities, granted registration from the original application date, limited the Commissioner's jurisdiction to the prescribed conditions under section 12A, and remanded the exemption entitlement issue for fresh consideration.