2018 (9) TMI 1413 - HC - Income Tax

Rejection of application for Registration u/s 12A - Condonation of delay - delay is more than 18 years and it is inordinate and unexplained - Held that - The reason, which was stated by the Assessee, is that the Founder Trustee is an elderly person suffering from several ailments and they were under the impression that the Trust has been registered under the Act, the failure to file the application for registration was not wilful, but due to genuine mistake. Ignorance of law is no excuse. The provision of Section 12A, being a beneficial provision to the Assessee, requires strict interpretation. Therefore, the Assessee should have been in a position to explain the delay, which is more than 18 years in the instant case. As rightly pointed out by the Commissioner, the reasons assigned by the Assessee for the delay are clearly inadequate and not sufficient. Unless and until the Assessee has shown sufficient cause for condonation of delay, the question of condoning the delay does not arise. In the facts and circumstances of the case, the nature of relief sought by the Assessee does not warrant an liberal approach. Commissioner has pointed out that despite opportunity being granted to the assessee, they did not appear. Power to review an order passed under Section 12A and power to cancel or recall an order was introduced only with effect from 01.10.2004 - Learned counsel for the Assessee would contend that what they seek for is not a review, but rectification. This contention does not merit acceptance for the reasons assigned by us earlier - the effective date, having been fixed as 01.04.2007, is attempted to be pushed back by more than 18 years. This would amount to review of the order dated 06.11.2007, which is impermissible. Proviso to Section 12A as introduced with effect from 01.06.2007 and on the date, when the Commissioner passed the order on 06.11.2007, he had no jurisdiction to pass such an order - Held that - It is to be pointed that in the instant case, the application was filed on 30.05.2007. Therefore, it is not the date of order, which is relevant, but the date of application. In any event, need to consider such an issue does not arise in this case, as we are fully satisfied that the Commissioner had rightly allowed the registration with effect from 01.04.2007 and the reasons assigned by the Commissioner in the order dated 14.12.2007 declining to condone the inordinate delay is also just and proper. Hence, in the facts and circumstances of the case, the Tribunal committed an error in remanding the matter for fresh consideration. An order for reconsidering the issue already decided cannot be mechanically passed, unless and until, the superior authority or the Court is convinced that the exercise of discretion either improper or illegal. As pointed out earlier, personal opinion has no room in such matters. Thus, the Tribunal ought not to have remanded the matter for fresh consideration and the order of remand deserves to be set aside. - decided in favour of revenue

Summary

Issues:
1. Entertaining an appeal against an order rejecting review of the original order under Section 12AA of the Income Tax Act.
2. Directing the Commissioner of Income Tax to reconsider the issue and grant registration with retrospective effect from 1988 when the application was filed in 2007.

Analysis:
Issue 1:
The Assessee filed an application for registration of trust under Section 12AA of the Income Tax Act in 2007, 18 years after the creation of the trust in 1988. The Commissioner granted registration with prospective effect from 2007, which was not challenged by the Assessee. Subsequently, the Assessee filed a petition for review, citing reasons for the delay, which the Commissioner rejected. The Tribunal, without providing specific reasons, set aside the Commissioner's order and remanded the matter for fresh consideration. The High Court held that the Tribunal erred in not justifying the remand order, emphasizing the need for sufficient reasons to set aside an order and remand for fresh consideration. The Assessee's argument that it was not a review but a rectification petition was rejected, as no error apparent from the record was pointed out. The High Court concluded that the Tribunal should not have entertained the appeal against the rejection order.

Issue 2:
Regarding the direction to reconsider registration with retrospective effect from 1988, the High Court emphasized the inordinate and unexplained delay of over 18 years in filing the registration application. The reasons provided by the Assessee for the delay were deemed inadequate, with ignorance of the law not being a valid excuse. The High Court concurred with the Commissioner's decision not to condone the delay, stating that the relief sought did not warrant a lenient approach. Additionally, the High Court noted that there was no power to review an order under Section 12A, and pushing back the effective date by over 18 years would amount to impermissible review. The High Court upheld the Commissioner's decision to allow registration from 2007 and found the Tribunal's remand for fresh consideration to be erroneous.

In conclusion, the High Court allowed the appeal filed by the Revenue, setting aside the Tribunal's order and restoring the Commissioner's decisions. The substantial question of law regarding the remand for fresh consideration was answered in favor of the Revenue. The High Court did not find it necessary to address the first substantial question of law, leaving it open for future consideration.