9911796707
TMI Blog2006 (1) TMI 215X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration under section 12A of the Income-tax Act on 4-11-1993. A similar application was also filed for grant of recognition under section 80G of the Income-tax Act. The learned counsel submitted that the Commissioner of Income-tax by an order dated 4-9-2002 rejected the application of the assessee. The learned counsel submitted that the assessee filed an application on 20-9-2002 before the Commissioner of Income-tax saying that the assessee's representative met with an accident and hence he could not appear before the Commissioner of Income-tax on the date of hearing. Therefore, the assessee requested to reconsider the order passed by the Commissioner of Income-tax on 4-9-2002. The assessee's application was rejected on 25-10-2002. Thereafter the assessee filed another application for registration on 9-12-2002. The very same Commissioner of Income-tax granted registration under section 12A with effect from 1-4-1997. According to the learned counsel for the assessee, the Commissioner of Income-tax observed that the application was filed belatedly by 12 years, 7 months and 18 days. According to the learned counsel, the application was filed on 4-11-1993. Therefore, grantin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and also perused the material available on record. Admittedly, the application under section 12A(a) and under section 80G for registration was filed on 4-11-1993. This was rejected only on 4-9-2002. The assessee admittedly filed an application to reconsider the order of the Commissioner of Income-tax dated 4-9-2002 on the ground that they could not be represented due to the accident of the representative of the assessee. Another application was also filed for registration. The Commissioner of Income-tax granted registration with effect from 1-4-1997. The Commissioner of Income-tax has noted in his order dated 19-5-2003 that there was a delay of 12 years, 7 months and 18 days in filing the application. The fact remains that the assessee's application dated 4-11-1993 was kept unattended till 2002. Therefore, we find no justification in the order of the Commissioner of Income-tax dated 4-9-2002 stating that there was a delay of 12 years, 7 months and 18 days in filing the application for registration. The assessee also filed an application on 18-6-2004 to review its earlier order. A similar application was also filed by the assessee on 20-9-2002 also. By taking into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e one year period provided the assessee was prevented from making an application before the expiry of the period for sufficient reasons. If the Commissioner is not satisfied about the reason for not filing the application within the expiry of one year period, then the Commissioner shall grant registration from the first day of financial year in which the application was made. In this case, the application was made on 4-11-1993, therefore, if at all there is a delay and the Commissioner is not satisfied with the reason, he ought to have granted registration at least from 1-4-1993. The second condition provided under the provisions of section 12A is that the assessee has to keep the accounts in a particular manner and the accounts should be audited. In this case, admittedly the assessee is maintaining proper accounts in a particular manner and it was also audited. The learned counsel further submitted that beyond the above-said two conditions, the Commissioner cannot make any enquiry at all. Therefore, the reasons for rejecting the application by the Commissioner that there was a violation of section 11 is beyond the jurisdiction of the Commissioner. 6. On the contrary, Mr. K Ananga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the operation of law in sub-section (1A) of section 12AA, the application shall stand transferred to Commissioner of Income-tax on 1-6-1999. Therefore, the Commissioner ought to have disposed of the application on or before 31-12-1999. In view of the above, the contention of the assessee is that the application of the assessee is deemed to be allowed by granting registration under section 12A. 9. We have also carefully gone through the order of the Commissioner of Income-tax dated 4-9-2002. The application of the assessee was rejected only on the ground that the income was more than the expenditure. Section 12A provides for two conditions for grant of registration. The first condition is that the assessee has to file an application; the second condition is that the assessee has to maintain the accounts in a prescribed manner. There is no scope for the Commissioner of Income-tax to go beyond these two conditions. Whether there was a violation of section 11 or not is not a condition precedent for grant of registration under section 12A. We find that the Madras High Court in the case of New Life In Christ Evangelistic Association v. CIT [2000] 246 ITR 532 had an occasion to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xamine the application of the provisions of sections 11,12 and 80G in the light of judgment of the Madras High Court in the case of New Life In Christ Evangelistic Association. 12. In the result, I.T.A. Nos. 1757 and 1758(Mds.)/2004 are allowed. 13. Now let us take I.T.A. Nos. 1759, 1760 and 1761(Mds.)/2004. The Assessing Officer assessed the income since the application of the assessee under sections 12A and 80G was rejected. Now we have directed the Commissioner of Income-tax to grant registration under sections 12A and 80G of the Income-tax Act with effect from 1-4-1993. Therefore, the application of sections 11,12 and 80G has to be independently examined in respect of the source of income received by the assessee as contemplated in the respective provisions of law. Therefore, we set aside the order of the lower authorities and remand back the issue to the file of the Assessing Officer. The Assessing Officer shall reconsider the whole issue afresh and find out whether the assessee is entitled for 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. 14. In the result, all the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision of the order of rejection of section 12A registration passed on 4-9-2002. The review petition was posted for hearing on 4-10-2002 vide CIT, Madurai letter No. 464/110/93-94/CIT-I dated 23-9-2002 and heard on 4-10-2002 and same was rejected by CIT on 25-10-2002. The assessee again moved a fresh application for registration under section 12A vide letter dated nil which was filed with CIT on 29-11-2002. For this letter, the CIT asked for various clarifications vide letter No. C. No. 464/114/2002-03/CIT-I/MDUD dated 9-12 2002. Subsequently the CIT has granted section 12A registration w.e.f. 1-4-1997 vide order C. No. 464/114/2002-03/CIT-I dated 19-5-2003 on the basis of amended Memorandum of association which was registered with Registrar of Societies, Madurai, in consonance with the provisions of sections 11 to 13 of Income-tax Act, 1961. 17. In the meanwhile vide assessment orders dated 17-3-2003 the assessments were framed for assessment years 1993-94, 1995-96 and 1997-98 under section 144 read with section 164 of the Income-tax Act and thereby created demand of Rs. 1,07,720, Rs. 3,02,610 and Rs. 6,51,930 for the respective assessment years. 18. The assessee preferred appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ejecting the registration under section 12A, the assessee filed a review petition before the CIT. The Assessee explained in his letter dated 20-9-2002 that the representative met with an accident and hence could not be represented on the hearing date and sought for review of the order passed on 4-9-2002. This review petition was rejected on 25-10-2002. Thereafter, the Assessee filed a fresh application for registration under section 12A on 9-12-2002. The authorities took this on record, called for various details and after perusing the papers filed, an order was passed on 19-5-2003 by the CIT. In this order, the CIT observed that the assessee had filed the application belatedly by 12 years, 7 months and 18 days and that the delay was not explained with sufficient reasons. In any case, no opportunity was afforded to the assessee to explain the delay. Here as, the assessee had applied for registration as early as 4-11-1993. The CIT in his order allowed registration under section 12A with effect from 1-4-1997 and not from the date of inception as prayed for in the petition. The assessee has filed a review petition against this order of the CIT on 18-6-2004. In the meantime, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this office letter dated 10-7-1994, you have not filed any reply. 3. In your letter cited, you have stated that a copy of order of registration with the Ministry of Home Affairs for receipt of foreign contributions under MCRA, 1976 has been enclosed. No such copy has been received in this office. Please send a copy of the same. 4. Your request for registration under section 12A and recognition under section 80G of the Income-tax Act will be considered on receipt of reply from your end." 25. It is seen from the above letter that the assessee filed application for registration under section 12A and under section 80G of the Act and the Income-tax Department has asked for certain clarifications vide letter dated 20-7-1994 and the Assessee filed another letter in the office of CIT, Madurai on 6-2-1998 and in reference to Assessee's letter, the CIT has asked for clarification vide above letter. Subsequently, also the CIT, Madurai, asked for certain clarification with regard to grant of registration vide letter No. 464/110/93-94 dated 10-8-1999 which reads as under:- "Sub: Registration under section 12AA and recognition under section 80G of the Income-tax Act - reg. Ref:(i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (Rs.) Excess (Rs.) 1993-94 2,04,049 96,331 1,07,781 1995-96 5,94,833 2,92,224 3,02,609 1997-98 12,36,236 5,84,307 6,51,929 It was also reported that the society had not filed any returns of income in time. As this was in violation of the provisions of section 11 of the Income-tax Act, 1961, a notice was issued to the society on 12-8-2002 to explain why the request for registration of the society under section 12A of the Act cannot be rejected. The society was allowed time till 16-8-2002 to file its objections in this regard. On 13-8-2002 a letter was received from Rodriguez & Co., Chartered Accountants, Madurai requesting postponement of the hearing to another date, as the authorized representative of the society met with an accident on 7-8-2002. The case was therefore reposted for hearing on 3-9-2002 and this letter was served on the society on 19-8-2002. However, on the date of hearing there was no response. 2. In spite of the opportunities given to the society, the required information has not been furnished. In the above circumstances I have no other option except to hold that the facts set out above are not substantiated and reject the applicant's reques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s or negligence and does not take appropriate steps to peruse its remedy till about the close of the period prescribed for filing of appeal, it must be prepared to have its remedy barred without expecting condonation. Still it is for the party concerned to explain the reasons for delay and it is not the function of concerned authorities to find the cause for delay. The Appellate authority has to examine whether the sufficient cause has been shown by the party for condoning the delay and whether such cause is acceptable or not. In the present case in hand the assessee could not show any reasons for not filing of appeal within due time allowed under the provisions of the Act. In this case the order rejecting the application for grant of registration under sections 12A and 80G was passed on 4-9-2002 and appeal was filed on 12-7-2004 when Assessing Officer raised huge demand against the assessee and appeals were rejected by the CIT(A). In between this period, the assessee has not explained the reason for delay. However, the assessee was pursuing the remedies before the same authority by filing review petitions and fresh application, although it was represented by well qualified firm of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r advice was not readily available. I fail to understand why the assessee could not file its appeal in time. The Tribunal has no power to extend the period of limitation on equitable grounds and it is well established principle that the Court helps the vigilant and not indolent and in the case before us, the assessee has not been vigilant and the Tribunal cannot find ways and means to give relief and in this case the delay is inordinate and calls for more cautious approach and there is no question of exercising liberal approach with the intention of advancing justice. Accordingly, the delay is not condoned and the appeal cannot be admitted. However, without prejudice to the above findings, even on merit, the assessee has no case. As per conditions stipulated in section 12A(b) of the Income-tax Act, the assessee is bound to file a return of income for the relevant assessment year along with audit report in the prescribed form duly signed and verified by the Chartered Accountant when the total income of the Trust computed under the Act without giving effect to the provisions of sections 11 & 12 exceeds Rs. 25,000 in any previous year. 30. In the present case, as seen from records, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13-11-2002. The Registration was granted with effect from 1-4-1997 instead of 1-4-1993. The CIT has noted in the Registration Certificate that there was a delay of 12 years, 7 months and 18 days in making the application for registration under section 12A of the Act. There was no sufficient cause for this inordinate delay in filing the application under section 12A of the Act. The CIT gave enough opportunity to explain the delay vide letter dated 9-12-2002. However, the assessee has not made use of this opportunity. The application made on 29-11-2002 for registration was independent application. The CIT has considered only this application on merit and granted registration with effect from 1-4-1997. The earlier application dated 4-11-1993 cannot be mixed with this application. Hence, the CIT(A) is justified in granting registration with effect from 1-4-1997 and the abnormal delay of 12 years, 7 months and 18 days was not satisfactorily explained. On this account itself, the appeal deserves to be dismissed. 33. As far as the argument regarding applicability of section 12AA sub-section (2) of the Act, I am of the opinion that this section has no application as I am not inclined to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be taken? 3. Whether the Commissioner has exceeded his jurisdiction in making an investigation beyond the condition prescribed under section 12A?" 2. Question No. 2 relates to the condonation of delay. As such it is to be decided first. 3. I have heard the rival submissions in the light of material placed before me and precedents relied upon. 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 under section 12A of the Income-tax Act, 1961 (hereinafter called as 'the Act') 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 Commissioner of Income-tax. This review petition was rejected on 25-10-2002. Thereafter the assessee filed another application on 9-12-2002. CIT granted registration under section 12A with effect from 1-4-1997. Assessee was aggrieved against the grant of registration with effect from 1-4-1997. It was alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pertinent to note that an order passed by the CIT under section 12AA granting or refusing registration to the trust was made appealable under section 253(1)(c) by the Finance Act, 1999 w.e.f. 1-6-1999. Prior to that right to appeal was not available in this regard. The delay was caused due to ignorance of law. The dictum of common law ignorantia legis non excusat, prescribes that ignorance of law is no excuse. Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326,339 has held: "... it must be rememberd that there is no presumption that every person knows the law. It is often said that every one is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law." Over a hundred and thirty years ago, Maula, J. pointed out in Martindale v. Falkner (1846) 2 CB 706: "There is no presumption in this country that every person knows the law: it would be contrary to commons sense and reason it if were so." Scrutton L.J. also once said: "It is impossible to know all the statutory law, and not very possible to know all the common law." But it was Lord Atkin who, as in so many other s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the Commissioner is not so satisfied," The aforesaid proviso to section 12A was substituted by the Finance (No. 2) Act, 1991 with effect from 1-10-1991. This provides that where an application for registration of the trust or institution is made belatedly, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution from the date of the creation of the trust or the establishment of the institution if the Commissioner, for reasons to be recorded in writing, is satisfied that the person in receipt of the income was prevented from making the application within time for sufficient reasons. However, if CIT is not so satisfied about the reasons for filing the belated application, registration shall be granted from the first day of the financial year in which the application is made. 10. In the present case the CIT was not satisfied with the reasons adduced by the assessee fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee 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. In view of the aforesaid precedents, I am inclined to agree with the view taken by the learned Judicial Member on this aspect. 15. The matter will now go back to the regular Bench for deciding the appeal in accordance with the majority. ORDER Per Shri N.R.S. Ganesan, Judicial Member. 1. On a difference of opinion, the matter was referred to the Hon'ble Vice President as a Third Member. The Hon'ble Vice President agreed with the view expressed by the Judicial Member for all the questions. The appeal is posted today for passing conformity order as per the majority opinion. 2. We heard the learned counsel for the assessee and the learned Departmental Representative (D.R.). In conformity with the majority opinion, the delay of 617 days in ITA No. 1757 (Mds.)/2004 and 359 days in ITA No. 1758(Mds.)/2004 are condoned and the appeals are admitted. 3. In conformity with the majority opinion, we set aside the order of the Commissioner of Income Tax dated 4-9-2002 and 19-5-2003 and direct the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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