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Income Tax Appellate Tribunal, DIVISION BENCH, AMRITSAR
Before: SMT.ANNAPURNA GUPTA & SHRI R.L. NEGI
आदेश/ORDER
Per Annapurna Gupta, Accountant Member:
This appeal filed by the assessee is directed against the order dated 30.07.2018 of the Commissioner of Income Tax(Exemptions),(in short CIT(E), Chandigarh, passed u/s 10(23C)(vi) of the Income Tax Act, 1961 (hereinafter referred to as Act).
2. There is a delay of 471 days in filing the appeal. An application dated 07-02-2020 has been filed before us by the Ld.Counsel for the assessee seeking condonation of the delay. The contents of the same read as under:
“Sub: Application for Condonation of delay Asst. Year 2017-18 Most Respectfully it is submitted as under:
1. 1. That the order dated 30.07.2018 u/s 10(23(vi) was received by the assessee on 28.06.2018. 2.
2. That appeal against the order was due to be filed on or before 27.10.2018 which has been filed now on 07.02.2020 with a delay of 468 days.
3. That the appellant received the order in his favour approving the exemption u/s 10(23C)(vi) but failed to realize that the application was made for Asst. year 2017-18 on 15.07.2017 but the order passed after 1 year by CIT(Exemption) allowing the exemption from Asst. Year 2018-19. 4.
4. That after the completion of assessment for Asst.Year 2017-18 it was pointed out by the ITO that the exemption is from Asst .year 2018-19 and he denied the exemption for Asst. Year 2017-18. Thus the matter came into the knowledge of the assessee in the last week of January 2020 and immediately the assessee filed a rectification application before CIT(Exemptions) and also an appeal before the Hon’ble Bench.
5. Since the delay of 468 days is bonafide it is respectfully prayed that the same may kindly be condoned.”
3. Referring to the same, Ld.Counsel for the assessee contended that the order appealed against related to grant of approval by the Ld.CIT(E) for exemption of its income u/s 10(23C)(vi) of the Act and the solitary challenge was against not having been granted approval from the assessment year sought by it. He contended that the delay in filing appeal was because it became aware of the said fact of not having been granted approval from the assessment year sought by it, only subsequently. Narrating the events leading to the same, Ld.Counsel for the assessee contended that the assessee had filed an application for seeking the aforesaid approval in the prescribed form 56D specifically stating therein the grant of exemption from financial year 2016-17, relating to A.Y. 2017-18.He pointed out that the exemption was granted by the Ld.CIT(E) in normal course ,but the year from which it was granted was mentioned as A.Y 2018-19 and not A.Y 2017-18 from which the assessee had sought exemption. Ld.Counsel pointed out from the order, that no reason was assigned by the Ld.CIT(E) for digressing from the year in which exemption was sought. He contended that having obtained the order granting exemption in normal course with no discussion in the order over change of year from which it was sought by the assessee, the assessee failed to read the fine print and innocently harbored the belief that exemption had been granted from the year it was sought i.e. A.Y. 2017-18. That it was only subsequently when the intimation for the A.Y. 2017-18 was made u/s 143(1) of the Act ,denying exemption from tax to the assessee and as a consequence raising demand of Rs.55,64,399/- that the assessee was apprised by the ITO of the fact that it had been not been granted exemption for A.Y 2017-18. Ld.Counsel for the assessee pointed out that the Ld.CIT(E) had passed the order on 30- 07-2018,but the asseesee became aware of the aberration only in the last week of January 2020 when the intimation u/s 143(1) was made on 03.09.2019 on the assessee and he had approached the AO for rectification of the same. That immediately thereafter the assessee filed appeal before us against the order of the Ld.CIT(E) and hence the delay of 468 days. Ld.Counsel for the assessee contended that there were bonafide reasons for the delay and the same therefore be condoned. Our attention was drawn to the order of the Ld.CIT(E) and copy of Form No.56D filed before us bringing out the aforementioned facts.
Ld.DR vehemently objected to the same pointing out that the delay was not small but showed inaction on the part of the assessee for a period exceeding a year without any sufficient cause and the same therefore should not be deprecated/condoned.
We have heard both the parties and have also perused the material before us. We find that the assessee has been able to demonstrate reasonable cause for the delay in filing the present appeal. Undoubtedly the Ld.CIT(E) had accepted the assessees application for grant of approval for exemption u/s 10(23C)(vi) of the Act, but while doing so had mentioned the A.Y from which the approval was granted as A.Y 2018- 19, as opposed to the assessee seeking it from A.Y. 2017-18.
No reason for the deviation finds mention in the order. In such circumstances, with the assessee’s application seeking approval having been accepted by the Ld.CIT(E) and there being no discussion regarding deviation of the year from which it was sought by the assessee, in our view, the assessee harboring the mistaken belief of his application having been accepted completely, i.e. even for A.Y. 2017-18, is not grossly improbable. That subsequently an intimation made u/s 143(1) of the Act in September 2019 raising huge demand on the applicant assessee, for the year which was not granted approval, i.e. A.Y 2017-18, acted as a trigger for the assessee to look into the matter as a result of which he became aware of the fact of denial of approval for A.Y. 2017- 18,leading to the filing of the present appeal before us, is in our view a fairly bonafide reason for the delay in filing the appeal. In our considered view the delay in filing appeal was not deliberate but for bonafide reasons. The assessee surely does not stand to benefit by resorting to delay, And no prejudice is caused to Revenue by condoning the delay. It is a fit case, therefore, we hold, for condoning the delay.
In the light of the above therefore, we condone the delay. The order was pronounced in the open court at the time of hearing on 11.0.2021.
On merits the Ld.Counsel for the assessee contended that since it had applied for grant of approval of registration w.e.f. A.Y. 2017-18, and the Ld.CIT(E) had granted the same w.e.f. assessment year 2018-19, without assigning any reason, it was palpably by oversight. The Ld.Counsel for the assessee contended that the assessees claim was tenable in law.
At this juncture, it was stated at Bar to the parties that since the Ld.CIT(E) had specifically mentioned A.Y 2018-19 in his order, but at the same time assigned no reasons for not granting the same from A.Y. 2017-18 as asked for by the assessee, it would be in the fitness of matter to restore the issue back to the Ld.CIT(E) to reconsider this aspect .
Both the parties had no objection to the same.
After the conclusion of hearing on 11.02.2021, and while dictating the order it was noticed that the applicant assessee had filed the application seeking approval in Form 56D on 15.07.2017, i.e. in F.Y. 2017-18 relating to A.Y. 2018-19 which accordingly had been granted by the Ld.CIT(E) from A.Y 208-19. Considering the fact that the applicant had not even applied for approval in the Financial Year from which it sought the exemption i.e. F.Y. 2016-17, a clarification was sought as to how it was eligible in law for grant of approval from F.Y. 2016-17. Accordingly the case was fixed for seeking the aforesaid clarification on 23.02.2021. On the said date a submission in writing was filed by the Ld.Counsel for the assessee explaining its eligibility for seeking approval from F.Y 2016-17, as per law.
The contents of the same are as under: “Sub: Submissions on clarification sought by the Bench Most respectfully submitted as under:
That the abovesaid appeal was heard by Hon'ble Bench on 11.02.2021 and now Bench has sought a clarification as to how approval u/s 10(23C)(vi) was to be granted for Asst year 2016-17 as sought by the assessee against the approval granted by the CIT(E) for Financial Year 2017-18.
In this regard it is respectfully submitted that the assessee made an application for grant of exemption u/s 10(23C)(vi) in Form No. 56D(copy on the file) for Financial Year 2016-17 as per the provisions of the Income Tax Act. In this regard your kind attention is drawn towards the xvi proviso of section 10(23C) which is reproduced as under:
"Provided also that in case the fund or trust or institution or any university or other educational institution or any hospital or other medical institution referred to in the first proviso makes an application on or after the 1st day of June, 2006 for the purposes of grant of exemption or continuance thereof, such application shall be made on or before the 30th day of September of the relevant assessment year from which the exemption is sought."
This proviso was omitted by the Finance Act 2020 w.e.f. 01.06,2020.
Under this proviso the application in Form No. 56D could only be made till 30.09.2017 for Financial Year 2016-17 i.e. six months from 31.03.2017 which the appellant duly made on 15.07.2017 received by the CIT(E)on 17.07.2017 which is admitted by him in his order granting approval. The application for Financial Year 2017-18 could only be made after the end of 31.03.2018 and upto 30.09.2018 as per the provision of the Act stated above.
That in view of the above it is respectfully clarified that the exemption was sought by the assessee u/s 10(23C)(vi) w.e.f. Financial Year 2016-17.”
Referring to the same Ld.Counsel for the assessee contended that the law provided the applications to be filed upto the 30th of September of the relevant assessment year from which exemption was sought. That since the assessee in the present case had filed its application in July 2017,i.e before 30th September 2017, it was eligible and had rightfully sought exemption from A.Y. 2017-18, and the Ld.CIT(E) had not granted approval from the said A.Y., without assigning any reasons for the same.
The Ld.CIT(DR) fairly agreed with the contention of the Ld.Counsel for the assessee that by virtue of the 16 th proviso to section 10(23C), the applicant assessee was well within its rights to be granted approval from A.Y. 2017-18.
Considering the above ,since the applicant assessee has prima facie demonstrated to us its eligibility to claim grant of approval for exemption u/s 10(23C)(vi) of the Act from A.Y 2017-18, which the Ld.DR has also agreed to, but the Ld.CIT(E) has , for reasons best known to him, granted approval from the succeeding year only, i.e. A.Y. 2018-19, we are of the view that the matter needs reconsideration at the end of the Ld.CIT(E).We therefore restore the issue to the Ld.CIT(E) with the limited direction to reconsider the issue of assessment year from which exemption is to be granted, considering the specific proviso to section 10(23C) of the Act, referred to before us by the Ld.Counsel for the assessee. Needless to add the assessee be given due opportunity of hearing . The Ld.CIT(E) is directed to arrive at his findings in accordance with law giving due reasons for digression if any from the year in which exemption has been sought for by the assessee. The Ld. CIT(E) is directed to decide the issue within four months of passing of this order.
In the result, the appeal of the assessee is, therefore, allowed for statistical purposes.
Order pronounced on 24.02.2021.