CIT -II CHANDIGARH vs. M/S MARKET COMMITTEE, CHANDIGARH

To be referred to the Reporters or not?

Whether the judgment should be reported in the Digest? M.M. KUMAR, J. The instant appeal filed under Section 260-A of the Income-tax Act, 1961 (for brevity, ‘the Act’), challenges order dated 31.3.2009, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (for brevity, ‘the Tribunal’), in I.T.A. No. 1009/CHANDI/2008, in respect of Assessment Years 2003-04 to 2005-06, condoning the delay and directing the Commissioner of Income Tax to grant registration certificate to the assessee- respondent Market Committee, Grain Market, Sector 26, Chandigarh.

The facts are undisputed. The income of the assessee-respondent was exempt under Section 10(20) of the Act before amendment by the Finance Act, 2002, which came into force from 1.4.2003. The Market Committees were excluded from the purview of Section 10(20) of the Act with effect from the assessment year 2003-04. Accordingly, the assessee-respondent filed an application dated 14.3.2006 for registration under Section 12A of the Act w.e.f. 1.4.2002 to get its income exempt. The Commissioner held that the assessee- respondent Market Committee had reasonable cause for making delayed application under Section 12A of the Act and the registration was granted with effect from 1.4.2005 i.e. the first day of financial year in which the application was made (A-1). However, registration with effect from 1.4.2002 was declined.

The assessee-respondent aggrieved by the order of the Commissioner filed an appeal before the Tribunal. The Tribunal vide order dated 16.11.2007, restored the matter back on the file of the Commissioner of Income Tax for reconsideration of the assessee-respondent’s request for grant of registration from the earlier date after granting a reasonable opportunity of being heard (A-2). The Commissioner after affording opportunity of hearing again rejected the request of the assessee-respondent for condonation of delay and grant of registration under Section 12A with effect from 1.4.2002 (A-3).

Again the assessee-respondent filed an appeal before the Tribunal. The Tribunal vide order dated 22.5.2008 remitted the matter back to the file of the Commissioner of Income Tax for reconsideration of the case in the light of the decision of the Chandigarh and Delhi Benches of the Tribunal and also the decision of the juri ictional High Court in this regard. Again the request of the assessee-respondent for condonation of delay and grant of registration under Section 12A of the Act with effect from 1.4.2002 was rejected (A-5). Once again the assessee-respondent approached the Tribunal and vide the impugned order dated 31.3.2009 (A-6), the Tribunal has condoned the delay and directed the Commissioner of Income Tax to grant registration under Section 12A of the Act to the assessee-respondent with effect from 1.4.2002. 5. The view of the Tribunal is discernible from the last para of its order. It has been observed that had the assessee-respondent been a party to the proceedings before the Delhi Bench where 251 Market Committees of Punjab and Haryana were parties, then the question of seeking condonation of delay would not have arisen. It is pertinent to mention that the Delhi Bench of the Tribunal had condoned the delay in its order dated 14.3.2005, which is now reported as Market Committee Sullar Gharat and others v. CIT, (2005) 94 TTJ (Del) 692. Against the aforesaid view of the Delhi Bench even the Special Leave Petition, has been dismissed. The assessee-respondent had also filed an application, which was delayed by about three years, and sought condonation of delay. The prayer for condoning the delay and registration with effect from 1.4.2002 was based on the facts that all other Market Committees have been granted registration with effect from 1.4.2002, therefore, prayer for condonation of delay was claimed to be justified.. The Tribunal is also influenced by the fact that the assessee-respondent is a Government organisation and no prejudice would be caused if registration is granted with retrospective date.

The Tribunal has further found that the assessee-respondent was under a reasonable belief that the Punjab State Agricultural Marketing Board had been granted registration after condonation of delay vide order dated 24.10.2008, which benefit would automatically enure to the assessee-Market Committee. The Tribunal found the explanation plausible and the Chandigarh Bench of the Tribunal vide order dated 14.3.2005 held the Punjab State Agricultural Marketing Board entitled to registration under Section 12AA of the Act holding that their activities are charitable in nature. Even the assessee- respondent was granted registration under Section 12AA with effect from 1.4.2005 and charitable nature of the assessee has not been disputed.

Having heard learned counsel we are of the considered view that once on the basis of numerous factors the Tribunal has condoned the delay and has directed registration of the assessee-respondent with effect from 1.4.2002 then the discretion exercised by the Tribunal would not be open to interference merely because the department is holding a contrary view or another view is possible. The Punjab State Agricultural Market Board has already been granted exemption and registration vide order dated 14.3.2005. Moreover, there was a bona fide belief with the assessee-respondent that the benefit of registration would enure to it as well. The charitable nature of the assessee-respondent is undisputed as registration has in any case granted w.e.f. 1.4.2005. Therefore, we are not inclined to entertain the appeal because no question of law much less a substantive question of law would arise for determination of this Court. Accordingly, the appeal is dismissed. (M.M. KUMAR) JUDGE (JITENDRA CHAUHAN) April 29, 2010 JUDGE Pkapoor 4