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Facts
The assessee, a registered trust running a temple, applied for registration under Section 12AB of the Income Tax Act. The CIT(E) rejected the application for failure to produce a trust deed, despite the trust being formed in 1977 and having a charity registration certificate. The appeal was filed 805 days late.
Held
The Tribunal condoned the delay in filing the appeal, treating it as a bonafide mistake. The Tribunal set aside the CIT(E)'s order and restored the matter for fresh adjudication after finding that the assessee was not given a proper opportunity for hearing and had not been diligent. A cost of Rs. 11,000/- was imposed on the assessee.
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the assessee was given sufficient opportunity by the CIT(E) before rejecting the registration application.
Sections Cited
12AB, 12A(1)(ac), 253(5), 143(3), 11, 270A
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Before: SHRI NARENDER KUMAR CHOUDHRY & SHRI PRABHASH SHANKAR
Appellant by : None Respondent by : Shri B.Pradipta Panda (CIT-DR) Date of Hearing 24.03.2025 Date of Pronouncement 25.03.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal emanates from the order dated 29.09.2022 as passed by the Ld. Commissioner of Income-tax(Exemptions), Mumbai [hereinafter referred to as “CIT(E)”] u/s. 12AB of the Income-tax Act, 1961 [hereinafter referred to as “Act”].
2. The grounds of appeal
are as under:-
1. The order u/s. 12AB(1)(b) of the Act is bad in law. The learned CIT (Exemptions) has erred in law as well as on facts for rejecting the application for registration u/s 12A(1)(ac) of the Act and cancelling A.Y. - NA Shree Jodiya Dariyalal Mandir provisional registration earlier granted by holding that the appellant does not have a trust deed.
Facts in brief are that assessee which is a registered Trust runs one old temple meant for public at large at Jodiya village in Jamnagar, Gujarat, filed application in Form 10AB seeking registration under section 12AB of the Act before the ld.CIT(E).It was already granted Provisional Registration under Section 12AB of the Act in Form 10AC by the CPC on 27.05.2021. As observed by the ld.CIT(E), the sub rule (2) of Rule 17A mandates that the application in Form 10AB is to be accompanied by certain specific documents. However, the assessee merely submitted that the trust was formed in 1977 on the basis of application letter for registration of trust under Bombay Public Trust act 1950, which did not require trust deed as per the law at that time for the registration and had charity registration certificate only. Hence, in response to a notice issued to the applicant requesting to show cause why the application should not be rejected for the above reason, it furnished a copy of the Public Trust Registrar registered under Public Charity Commissioner office, but failed to submit copy of the Trust deed. He further observed that registration under section 12AB is to be granted in terms of the provisions of section 12AB(1)(b) of the Act after being satisfied about the objects of the trust or institution, the genuineness of activities, and the compliance of any other A.Y. - NA Shree Jodiya Dariyalal Mandir law for the time being in force as are material for the purposes of achieving its objects. In the absence of necessary compliance by the Applicant, and in the light of impending statutory limitation of 30.09.2022, he rejected the application of the trust seeking registration under section 12AB of the Act.
It may be stated here that the appeal of the assessee is delayed by 805 days as pointed out by the Registry. None appeared when the case was called for hearing before us. However, it was found that the assessee submitted online a letter alongwith an affidavit explaining the reasons for the delay. It is contented that books of account are duly audited by the Chartered Accountant and the assessee filed audited accounts with the Charity Commissioner also on regular basis. The delay was attributed to seeking guidance from a tax professional which took some time and based on their advice, the appeal was filed, though belatedly. Request has been made to condone the delay and admit the appeal. It is further submitted that delay is not deliberate and the trust is not going to gain any manner by making such delay. A scanned copy of the above letter filed online is reproduced as below which is self-speaking:
P a g e | 4 A.Y. - NA Shree Jodiya Dariyalal Mandir P a g e | 5 A.Y. - NA Shree Jodiya Dariyalal Mandir A.Y. - NA Shree Jodiya Dariyalal Mandir 4.1 On careful consideration of the above submissions, all relevant facts of the case, nature of activity being carried on by the trust which runs a Mandir for the public at large, being in existence for the past several years, we are of the considered opinion that the delay in filing of the appeal at the best could be treated as a bonafide mistake. In terms of provisions of Section 253(5) of the Act, the Tribunal has the power to admit the appeal even after expiry of the period referred to in sub-section (3) and (4) of Section 253 of the Act, if the Tribunal is satisfied that there was sufficient cause for not presenting the appeal within the stipulated period. From the facts of the case stated in the sworn affidavit filed, it appears to us that the delay in filing the appeal is neither intentional nor the assessee is benefitted in any manner whatsoever from the said delayed filing of appeal.
A.Y. - NA Shree Jodiya Dariyalal Mandir We may make reference to the following observations of the Hon'ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji& Others, 1987 AIR 1353:
"1. Ordinarily a litigant does not stand to benefit by lodging an appeal late.
Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this when delay is condoned the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational common sense pragmatic manner.
4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.
5. There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk.
6. It must be grasped that judiciary is respected not on account of its power to legalize injustice on technical grounds but because it is capable of removing injustice and is expected to do so." 4.2 We do not deem it necessary to re-cite or recapitulate the proposition laid down in other decisions. It is suffice to say that the Hon'ble Courts are unanimous in their approach to propound that whenever the reasons assigned by an applicant for explaining the delay, then such reasons are to be construed with a justice oriented approach. Considering these facts and the ratio laid down in the above decisions by the Apex Court, we are of the view that the appeal of the assessee is to be heard and decided on merit in the interest of justice and fair play.
A.Y. - NA Shree Jodiya Dariyalal Mandir Therefore, the delay in filing the appeal is condoned and it is admitted for adjudication.
As regards merits of the case, we find that the ld. CIT(E) has observed that despite notice issued for allowing opportunity of hearing to the assessee during registration proceedings, there was no substantive compliance from it. Prescribed documents and evidences required in connection with its application for registration of the Trust were not filed before him for due consideration of all the relevant objects and other requirements for examining and deciding the merits in the application for registration.
Although the assessee did not appear before us as well when the case was called for hearing, we are of the view taking a lenient view and following the principles of natural justice allow one more opportunity of hearing to the assessee to explain the matter before lower authorities, in the interests of justice and fairplay. During the hearing, the Bench proposed for restoration of the matter to the ld.CIT(E) for a de novo consideration. The ld.DR did not oppose this plea.
However, before parting with the matter, we are of the considered opinion that it is a fundamental duty of the assessee to diligently pursue and comply with the notices and proceedings initiated by the revenue A.Y. - NA Shree Jodiya Dariyalal Mandir authorities. The framework of the Act relies heavily on the cooperation and active participation of the taxpayer. In the present case, the assessee failed to demonstrate even a minimal level of responsibility either in making proper compliance before the ld.CIT(E) or before us as is expected from a diligent and compliant taxpayer which is quite evident from substantial delay in filing appeal before us or making tardy compliance before the ld.CIT(E) as well. The failure of the assessee reflects negligence and an indifference that is unacceptable.
7.1. It is pertinent to note that the principles of natural justice operate both ways—while the revenue authorities are required to provide a reasonable opportunity of being heard, the taxpayer is equally obligated to co-operate with the authorities and utilize the opportunities extended. In the present case, the assessee displayed a casual approach and indifference, which not only delayed the proceedings but also burdened the judicial system. The inability or unwillingness to pursue the matter actively not only disrupts the judicial process but also undermines the efficient functioning of the appellate mechanism.
7.2 In light of the above, we are of the considered view that levy of costs would be fully justified. The cost serves as a necessary deterrent to ensure that taxpayers act with due diligence in pursuing their appeals and respecting the timelines and processes laid down under the law. It also A.Y. - NA Shree Jodiya Dariyalal Mandir emphasizes the principle that while justice must be ensured, the system cannot cater to indolence or negligence on the part of the assessee.
7.3 In view of the above discussion, we set aside the ex-parte order of the CIT(E) and restore the matter to his file for fresh adjudication. He is directed to decide the appeal on merits after providing a reasonable opportunity of being heard to the assessee. Considering assessee’s lack of diligence in pursuing the above proceedings, we impose a cost of Rs.11,000/- on the assessee. The cost shall be deposited to the credit of the Income Tax Department within 15 days of the receipt of this order, and proof of payment shall be submitted before the CIT(E).
In the result, the above appeal is allowed for statistical purposes.
Order pronounced in the open court on 25/03/2025.