COMMISSIONER OF INCOME TAX vs. SHRIMANTA SANKAR ACADEMY

ITA 3/2008 BEFORE THE HON’BLE MR. JUSTICE RANJAN GOGOI THE HON’BLE MR. JUSTICE B.P. KATAKEY [Katakey, J.] This appeal by the revenue under Section 260A of the Income Tax Act, 1961 (in sh ort the Act) is directed against the order dated 22.03.2007 passed by the learne d Appellate Tribunal in ITA No.68(Gau)/2006 allowing the appeal filed by the ass essee, relating to the exemption under Section 10(22)/10(23C) of the Act w.e.f. 01.04.2001 in respect of the assessment years 2002-03. 2. The facts relevant for the purpose of disposal of this appeal may be not iced as under: (i) The respondent assessee, which is a society registered on 19.06. 1992 under the provisions of the Societies Registration Act, is running educatio nal institutions, namely, the schools and the colleges at Guwahati and was treat ed as a society existing solely for educational purposes and hence was granted e xemption under Section 10(22) of the Act, since its inception up to the assessme nt year 1998-99 i.e. till the said provision was omitted from the statute. The r espondent assessee, thereafter, claimed and was allowed exemption under Section 10(23C)(iiiad) of the Act up to the assessment year 2001-02, since the amount of annual receipt of the said society did not exceed Rs.1.00 crore. The respondent assessee, thereafter, filed an application dated 23.03.2004 on 30.03.2004 under Section 12A of the Act before the Commissioner of Income Tax (in short CIT), fo r grant of registration of the society for the assessment years 2002-03 and 2003 -04. The respondent assessee also filed a separate application under Section 10( 23C)(vi) of the Act before the Chief Commissioner of Income Tax (in short CCIT), for according approval as an educational institution, for the purpose of gettin g the exemption under the provisions of the Act. The said applications were file d since the amount of annual receipts of the society exceeded Rs.1.00 crore. (ii) The CIT on receipt of the application filed on 30.03.2004 by the respondent authority under Section 12A of the Act, issued a notice dated 05.04. 2004 to the respondent assessee asking it to explain the delay in submission of the application. The respondent assessee on receipt of such notice, submitted a detailed reply explaining the delay in making such application under Section 12A of the Act, basically contending that the assessee was duly granted exemption u nder Section 10(22) of the Act up to the assessment year 1998-99 and thereafter under Section 10(23C)(iiiad) of the Act up to the assessment year 2001-02, on th e basis of the claim made by it, that, thereafter, since the annual receipts of the assessee for the assessment years 2002-03 and 2003-04 exceeded Rs.1.00 crore , an application under Section 10(23C)(vi) of the Act was filed before the CCIT for grant of approval for the purpose of getting the exemption for the assessmen t years 2002-03 and 2003-04 and though the assessee waited for some time for dis posal of such application, since the same has not been disposed of, it had to fi le the application under Section 12A of the Act on 30.03.2004, which resulted in the delay. (iii) The CIT, however, without considering the claim of the responden t assessee for registration under Section 12A of the Act for the assessment year 2002-03, vide order dated 01.10.2004, registered the assessee under Section 12A A of the Act w.e.f. 01.04.2003 i.e. in respect of the assessment year 2003-04, t hough the assessee pursuant to the notice dated 05.04.2004 issued by the CIT dir ecting to explain the delay caused in filing the application, had explained the delay. (iv) The respondent assessee, thereafter, on 10.01.2006 filed another application for grant of registration for the assessment year 2002-03 enclosing therewith all the relevant informations as was submitted along with the earlier application filed on 30.03.2004. The said application, however, has been reject

ed by the CIT vide order dated 08.05.2006 on the ground that there was no satisf actory reason why such application under Section 12A of the Act could not be fil ed by 31.03.2002 as required under the law and also on the ground that there can not be two orders under Section 12AA of the Act and the CIT cannot revise its ow n earlier order, the same having not suffered from any apparent mistake. (v) The respondent assessee being aggrieved filed an appeal before t he Appellate Tribunal, which has been registered and numbered as ITA No.68(Gau)/ 2006. In the said appeal, there were differences of opinion between the learned Judicial Member and the learned Accountant Member. While the learned Judicial Me mber has allowed the appeal by directing the CIT to grant registration to the re spondent assessee under Section 12A of the Act for the assessment year 2002-03, the learned Accountant Member has remanded the matter to the CIT with a directio n to reconsider the request of the respondent assessee for grant of registration w.e.f. 01.04.2001 and pass necessary order after giving proper opportunity of h earing to the respondent assessee as per law. The appeal was thus referred to th e learned Third Member, who vide order dated 09.02.2007 agreed with the final or der proposed by the learned Judicial Member and allowed the appeal filed by the respondent assessee. Consequential order dated 22.03.2007, was passed by the lea rned Appellate Tribunal allowing the appeal by adopting the majority view. Hence the present appeal. 3. While admitting the appeal for hearing on 04.02.2008, the following subs tantial questions of law were framed:- 1. Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in allowing registration under Section 12AA of the Income Tax Act, 1961 with retrospective effect where the delay in the submis sion of application for registration was not condoned by the concerned Commissio ner of Income Tax? 2. Whether on the facts and in the circumstances of the case, the Commissio ner of Income Tax was competent to entertain a second petition under Section 12A of the Income Tax Act, 1961 when the first order under Section 12AA did not suf fer from any apparent mistake and when the said Commissioner was not in a positi on to release his own earlier order? 3. Whether on the facts and in the circumstances of the case, the Tribunal is justified and correct in law in holding that the respondent is entitled for r egistration under Section 12A of the Income Tax Act, 1961 w.e.f. 1.4.2001? 4. We have heard Mr. U. Bhuyan, the learned counsel appearing for the reven ue and Mr. A.K. Goswami, the learned Sr. counsel appearing on behalf of the resp ondent assessee. 5. It has been contended by the learned counsel appearing for the revenue t hat since under Section 12A of the Act period of limitation has been prescribed for filing an application seeking registration, the learned Appellate Tribunal o ught not to have allowed the appeal preferred by the respondent assessee, as it has failed to satisfactorily explain the delay in filing the application under S ection 12A of the Act for grant of registration in respect of the assessment yea r 2002-03. According to the learned counsel, the application filed on 30.03.2004 being in respect of the assessment year 2003-04, the learned Appellate Tribunal ought not to have held that such application was also in respect of the assessm ent year 2002-03 and hence ought not to have passed the order impugned in the pr esent appeal. 6. Mr. Goswami, the learned Sr. counsel on the other hand, has submitted th at it is apparent from the application filed on 30.03.2004 that the respondent a ssessee by the said application had prayed for grant of registration for two ass essment years, namely, 2002-03 and 2003-04 and the CIT also took cognizance of s

uch fact, by issuing notice dated 05.04.2004 directing the respondent assessee t o explain the delay in filing the application, even though the application for r egistration under Section 12A of the Act in respect of the financial year 2003-0 4 was within the time allowed under Section 12A of the Act. Mr. Goswami, therefo re, submits that the CIT ought to have allowed the prayer for grant of registrat ion in respect of both the assessment years, he having found that the respondent assessee is an existing society solely for educational purposes and not for the purpose of profit. The learned Sr. counsel further submits that the second appl ication filed on 10.01.2006 under Section 12A of the Act was nothing but the rei teration of the earlier application filed on 30.03.2004 and the CIT, therefore, ought not to have rejected such application on the ground that there cannot be t wo orders under Section 12AA of the Act, when there is no bar in the Act for pas sing two separate orders for two assessment years. It has further been submitted that the CIT should have adopted a pragmatic and liberal approach in condoning the delay in filing the application under Section 12A of the Act seeking the reg istration, when the respondent assessee could demonstrate sufficient cause in no t filing such application in time. Mr. Goswami, therefore, submits that the lear ned Appellate Tribunal has rightly allowed the appeal preferred by the responden t assessee and there being no substantial questions of law involved in the prese nt appeal, the same is liable to be dismissed. 7. We have considered the submissions of the learned counsel for the partie s and also perused the materials available on record. 8. The facts narrated above are not in dispute. It is apparent from the app lication filed on 30.03.2004 that the respondent assessee had prayed for registr ation under Section 12A of the Act in respect of two assessment years, namely, 2 002-03 and 2003-04. In respect of the assessment year 2003-04, the said applicat ion having been filed on 30.03.2004, was within the time allowed by Section 12A. The prayer made in the said application for grant of registration under Section 12A in respect of the assessment year 2002-03, however, was barred by time, the same having not been filed by 30.03.2003. The CIT took cognizance of the said f act and hence issued the notice dated 05.04.2004 directing the respondent assess ee to explain the delay in filing such application. The respondent assessee has, thereafter, explained the delay, as noticed above, in filing such belated appli cation. It is evident from the reply filed by the respondent assessee, pursuant to the notice dated 05.04.2004 issued by the CIT, that such application in respe ct of the assessment year 2002-03 could not be filed in time, as the respondent assessee was not in a position to foresee the fate of its earlier application fi led under Rule 2CA in Form No.56D for grant of approval under Section 10(23C)(vi ) of the Act for the assessment years 2002-03 and 2003-04, which application was pending at that point of time. The respondent assessee has also stated in such reply that it was exempted from payment of income tax under Section 10(22) up to the assessment year 1998-99 and thereafter up to 2001-02 under Section 10(23C)( iiiad) of the Act. The respondent assessee, in fact, from the assessment year 20 03-04 has been granted the registration and consequent exemption. 9. The application filed by the respondent assessee on 30.03.2004 along wit h the reply filed by it explaining the delay being for grant of registration und er Section 12A of the Act in respect of the assessment year 2002-03 also, the CI T should have satisfied himself about the grounds given explaining the delay in filing such application and if so satisfied ought to have allowed the prayer for registration under Section 12A, since it is not the case of the revenue that th e respondent assessee is not an existing society for educational purposes only b ut for the purpose of profit also. The learned CIT, however, failed to so act an d no order in respect of the assessment year 2002-03 was passed. The said lacuna in the order dated 01.10.2004 of the CIT was corrected by the learned Tribunal on finding the explanations furnished by the assessee for the delay in filing th e application dated 30.03.2004 for registration in respect of the assessment yea r 2002-03 to be good and cogent.