2024 (5) TMI 1077 - AT - Income Tax

Delay in filing of appeal against order denying grant of registration u/s 12A and 80G - Exemption u/s 11 - Delay in filing of appeal by approximately 4 years - HELD THAT - From the contents of the Affidavit filed by the accountant, it is seen that the assessee was operating in remote part of the village with only one accountant, who was working on a part time basis. In the case of Collector Land Acquisition, Anantnag vs. MST Katiji and others 1987 (2) TMI 61 - SUPREME COURT held that it is well established that rules of procedure are handmaid of justice. When substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred. Accordingly, there is no mala fide intention in filing appeal against the order denying grant of registration u/s 12AA r.w.s. 80G of the Act. Accordingly, in the interest of justice, we are hereby condoning the delay. Non-granting of registration u/s 12A and 80G - CIT observed that though the assessee is an educational trust, but it is collecting substantial amounts from it s students towards meal and hostel fees, registration fees, admission fees etc, thus the assessee is primarily running a profitable business and not doing any charitable activity - HELD THAT - On going through the facts of the instant case, considering the model of education, being residential boarding and hostel facility, followed by the assessee / applicant trust, the fact that on identical set of facts the assessee / applicant trust has also been granted provisional registration from A.Y. 2022-23 to A.Y. 2024-25, we are of the considered view that it is a fit case where the matter should be restored to the file of Ld. CIT for de-novo consideration of assessee s claim for registration u/s 12A/80G of the Act, after giving due opportunity of hearing to the assessee. Accordingly, in the interest of justice, looking into the facts of the instant case, we are hereby restoring the matter to the file of Ld. CIT for de-novo consideration and to pass appropriate orders, in accordance with law, after giving due opportunity of hearing to the assessee to present it s case on merits. Denial of exemption u/s 11 as assessee did not have the requisite registration under Section 12A - HELD THAT - Since we have already restored the issue regarding grant of registration under Section 12A of the Act to the file of CIT for de-novo consideration, accordingly, the present issue also is directed being restored to the file of Assessing Officer with a direction to pass appropriate orders in light of disposal of application of the assessee for grant of registration under Section 12A of the Act, in the set-aside proceedings.

Summary

Issues Involved:
1. Non-granting of registration under Section 12A of the Act.
2. Non-grant of registration under Section 80G of the Act.
3. Quantum addition made by the Assessing Officer on account of denial of exemption under Section 11 of the Act.

Issue-wise Detailed Analysis:

1. Non-granting of registration under Section 12A of the Act:
- The assessee's appeal (ITA No. 2311/Ahd/2017) pertains to the denial of registration under Section 12AA of the Act. The appeal was time-barred by approximately 4 1/2 years. The delay was attributed to the accountant's failure to inform the assessee about the denial of registration.
- The Tribunal observed that the assessee is a Trust operating educational activities in a remote village with only a part-time accountant. The Supreme Court's ruling in Collector Land Acquisition, Anantnag vs. MST Katiji emphasized that procedural rules should not hinder substantial justice.
- The Tribunal condoned the delay, noting no mala fide intention in the late filing. The assessee's appeal was allowed for statistical purposes and remanded to the CIT for de-novo consideration after giving due opportunity of hearing.

2. Non-grant of registration under Section 80G of the Act:
- The assessee's appeal (ITA No. 2310/Ahd/2017) pertains to the denial of registration under Section 80G of the Act. The delay in filing the appeal was condoned.
- The CIT had dismissed the application for registration under Section 80G on the ground that the trust was not registered under Section 12A, a prerequisite for Section 80G registration.
- The Tribunal restored the matter to the CIT for de-novo consideration in light of the remand of the Section 12A registration issue.

3. Quantum addition made by the Assessing Officer on account of denial of exemption under Section 11 of the Act:
- The assessee's appeal (ITA No. 2349/Ahd/2017) pertains to the disallowance of Rs. 33,84,990/- claimed under Section 11 of the Act. The CIT(A) had confirmed the disallowance due to the assessee's inability to provide details of registration under Section 12A/12AA.
- The Tribunal restored the issue to the Assessing Officer for appropriate orders based on the outcome of the Section 12A registration proceedings.

Combined Result:
- All appeals filed by the assessee are allowed for statistical purposes. The matters are remanded to the respective authorities for de-novo consideration and appropriate orders in accordance with the law after giving due opportunity of hearing.

Pronouncement:
- This Order pronounced in Open Court on 20/05/2024.