2019 (3) TMI 1207 - HC - Income Tax

Condonation of delay - Tribunal refusing to condone the delay caused in filing the Appeal before the Tribunal - whether sufficient cause is made out or not? - possible fallout of the Appeal not being entertained by the Tribunal on merits - cancellation of registration granted under Section 12A - HELD THAT - Assessee has filed an Affidavit suggesting that the earlier Chartered Accountant had given an opinion that no Appeal was needed to be filed. It was upon being correctly advised later on by the new Chartered Accountant that the Assessee decided to file Appeal before the Tribunal. Additionally we notice that cancellation of registration granted under Section 12A of the Act would deprive the Assessee of the benefits under Section 11 of the Act for all times to come. When the Assessee filed a fresh application for registration under Section 12A of the Act the Commissioner rejected the same by an order dated 28/02/2014 on the ground that once the registration is cancelled there is no provision under the Act enabling the Assessee to file fresh application for registration. What would therefore emerge is that by virtue of the order of a Director of Income Tax cancelling the registration of the Assessee the Assessee would not be entitled to the benefits under Section 11 for all times to come. Thus taking a liberal view of the delay the delay not condoned in filing the Appeal before the Tribunal is ordered to be condoned. The Assessee shall deposit a sum of 50, 000/( Rupees Fifty Thousand Only) by way of costs with the High Court Legal Aid Services within two weeks from today. - Decided in favour of assessee

Summary

Issues:
Delay in filing appeal before the Tribunal, Condonation of delay, Registration under Section 12A of the Income Tax Act, 1961, Benefits under Section 11 of the Act, Charitable trust activities, Legal precedent for condonation of delay.

Analysis:
The judgment by the High Court of Bombay dealt with the substantial question of law regarding the delay in filing an appeal before the Income Tax Appellate Tribunal. The appellant, a registered trust, had its registration under Section 12A of the Income Tax Act cancelled by the Director of Income Tax. The appellant challenged this cancellation before the Tribunal, but there was a delay of 618 days in filing the appeal. The Tribunal rejected the application for condonation of delay, stating that sufficient cause was not shown. The appellant then appealed this decision before the High Court. The appellant's counsel argued that the trust, engaged in charitable activities, was wrongly advised by the earlier Chartered Accountant not to challenge the Director's order. It was only after seeking a second opinion that the trust realized the impact of the registration cancellation on their benefits under Section 11 of the Act. The counsel relied on legal precedents to support the argument for condonation of delay.

The Department's counsel opposed the appeal, stating that the appellant failed to provide sufficient cause for the lengthy delay. The High Court, while acknowledging the considerable delay, considered the implications of not entertaining the appeal on its merits. The appellant submitted an affidavit stating that the earlier Chartered Accountant advised against filing an appeal, which was later corrected by a new Chartered Accountant. The High Court noted that the cancellation of registration would permanently deprive the appellant of benefits under Section 11. Given these circumstances, the High Court took a liberal view of the delay and ordered it to be condoned. The appellant was directed to deposit a sum as costs, and the Tribunal was instructed to decide the appeal on its merits. The decision of the Tribunal was reversed in favor of the appellant, and the appeal was disposed of accordingly.

In conclusion, the High Court's judgment emphasized the importance of considering the implications of not condoning a delay in filing an appeal, especially when it could result in the permanent loss of benefits for the appellant. The Court's decision to condone the delay and allow the appeal to be heard on its merits was based on a holistic view of the circumstances and the potential long-term consequences for the appellant.