2024 (12) TMI 1387 - AT - Income Tax

Rectification of mistake - Denial of benefit of exemption u/s 11 - non-submission of copy of the registration certificate u/s 12AA - HELD THAT - According to Blackstonian theory, it is not the function of the Court to pronounce a new rule but to maintain and expound the old one . In other words, the Judges do not make law; they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make a new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospectively effect, clarifying the legal position which was earlier not correctly understood. In view of the above authoritative pronouncements, we are of the view that the CIT(A) was not correct in dismissing the appeal of assessee. We, therefore, set aside the order of CIT(A) and direct the AO to allow benefit of exemption u/s 11 of the Act. This ground of assessee is allowed.

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered in this judgment are:

Whether the delay of one day in filing the appeal should be condoned in the interest of justice.
Whether a subsequent judgment of the Supreme Court constitutes a "mistake apparent from law" under section 154 of the Income-tax Act, 1961, allowing for rectification of an assessment order.
Whether the appellant is entitled to the benefit of exemption under section 11 of the Act, given the deemed registration under section 12A due to non-disposal of the application within six months.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Condonation of Delay

Relevant Legal Framework and Precedents: Section 253(3) of the Income-tax Act, 1961, governs the time limit for filing an appeal.
Court's Interpretation and Reasoning: The Tribunal noted that the delay was only one day and was due to the office of the counsel being closed on the last day for filing the appeal, which coincided with a public holiday (Rakshabandhan).
Key Evidence and Findings: The appellant provided a reasonable explanation for the delay, which was not disputed by the respondent.
Application of Law to Facts: The Tribunal applied the principle of justice to condone the delay, considering the explanation provided by the appellant as satisfactory.
Treatment of Competing Arguments: The respondent did not oppose the condonation of delay, leaving the decision to the Tribunal's discretion.
Conclusions: The delay of one day was condoned, and the appeal was admitted for hearing.

Issue 2: Mistake Apparent from Law and Deemed Registration

Relevant Legal Framework and Precedents: Section 154 of the Income-tax Act, 1961, allows for rectification of mistakes apparent from the record. The judgment in the case of CIT vs. Society for Promotion of Education, Allahabad, established that if an application for registration under section 12A is not disposed of within six months, it is deemed to be granted.
Court's Interpretation and Reasoning: The Tribunal considered whether the subsequent Supreme Court judgment could be applied retrospectively to rectify the assessment order under section 154.
Key Evidence and Findings: The appellant's application for registration under section 12A was not disposed of within six months, and the subsequent Supreme Court judgment clarified the legal position.
Application of Law to Facts: The Tribunal applied the principle that judicial decisions act retrospectively, as established in the case of Saurashtra Kutch Stock Exchange Ltd., and found that the CIT(A) erred in dismissing the appeal.
Treatment of Competing Arguments: The respondent argued that the Supreme Court's decision should apply prospectively, but the Tribunal relied on established legal principles of retrospective application.
Conclusions: The Tribunal set aside the CIT(A)'s order and directed the Assessing Officer to allow the benefit of exemption under section 11, recognizing the deemed registration under section 12A.

3. SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning: "It is well settled that a judicial decision acts retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a 'new rule' but to maintain and expound the 'old one'."
Core Principles Established: Judicial decisions that clarify the law apply retrospectively, and a subsequent Supreme Court judgment can constitute a "mistake apparent from law" for rectification purposes under section 154.
Final Determinations on Each Issue: The delay in filing the appeal was condoned, and the appellant was granted the benefit of exemption under section 11 due to deemed registration under section 12A.

In conclusion, the Tribunal allowed the appeal, emphasizing the retrospective application of judicial decisions and the importance of rectifying mistakes apparent from the law.

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