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Facts
The assessee's application for registration under section 12A(1)(ac)(iii) was rejected by the CIT(Exemption) due to non-compliance and lack of verification of its activities. The appeal was filed with a significant delay of 533 days, attributed to the negligence of the former tax advisor.
Held
The Tribunal condoned the delay, noting that the non-compliance was due to communication issues with the former counsel. The matter was restored to the CIT(Exemption) to provide the assessee an opportunity to present its case and evidence.
Key Issues
Whether the delay in filing the appeal should be condoned on account of the former counsel's negligence, and whether the CIT(Exemption)'s order rejecting registration without a proper hearing was justified.
Sections Cited
12A(1)(ac)(iii), 12A
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW ‘B’ BENCH, LUCKNOW
O R D E R PER NIKHIL CHOUDHARY, A.M.: [ This is an appeal filed by the assessee against the orders of the ld. CIT (Exemption), Lucknow denying the registration of the assessee under section 12A(1)(ac)(iii) of the Income Tax Act, 1961. The grounds of appeal
1. 1. are as under:- “1. The learned Commissioner of Income Tax (Exemptions) Lucknow has erred in rejecting the grant of registration u/s 12A of the Income Tax Act, 1961 to the assessee with total disregard to the facts and circumstances of the case.
2. The assessee reserves its right to add, amend, alter or delete any ground of appeal at the time of hearing of appeal.”
2. At the very outset, it is seen that the appeal is delayed by 533 days’. A condonation petition has been filed by the assessee in which it was submitted that the notices were sent to the email ID of the assessee’s former tax advisor Sh. Prabhjot Singh, who had not checked his emails and did not inform the assessee regarding the receipt of notices. Furthermore, even after informing the assessee, the said practitioner was of the view that the said order was rectifiable and would be recalled. It was only after the assessee changed its tax advisor that it was advised M/s Radhe Shyam Shri Krishan Education Samiti to file the appeal and therefore it filed an appeal with a delay of 533 days’. It was prayed that the assessee may not be made to suffer on account of the negligence of its counsel and reliance was placed on various court decisions to this effect. i. Jaysukh Savji Vaid vs. ITO 30((1)(5), Mumbai ii. Shakeel M. Shareef vs. ITO 19(1)(4), Mumbai iii. Nawany Corporation (I) Pvt. Ltd. Mumbai vs. DCIT 13(1)(1) ITA No. 539/MUM/2022 iv. APMG India Certifications Pvt. Ltd. vs. DCIT (TDS) ITA No. 3143/BANG/2018 v. Midas Polymer Compounds Pvt. Ltd. vs. ACIT Kottayam ITA No. 288/COCH/2017 and relying on such judgments prayed that the delay on the part of the assessee may kindly be condoned as the assessee did not stand to gain in any manner from the delay and the delay could not be held to be on account of negligence or designed by the assessee. Sh. Neeraj Kumar, CIT DR (hereinafter referred to as the ld. DR) opposed the admission of the case and submitted that the assessee had not furnished any evidence to suggest what it was submitting was true and, in the circumstances, the delay of 533 days’ should not be condoned.
We have duly considered the facts of the case. We note that in the case of Jaysukh Savji Vaid vs. ITO (supra), the Hon’ble ITAT held that because communications were made on the email ID / address of the earlier Chartered Accountant, which was not received by the assessee, there was no proper communication to the assessee during the assessment proceedings. In the case of Shakeel M. Shareef vs. ITO (supra), we find that the assessee was an illiterate person, who did not have knowledge of assessment and appeal proceedings and was totally dependent on the Chartered Accountant, who had confessed that he had withheld the files on account of non-payment of fees and for this reason the assessee could not be represented before the lower authorities. In the case of Nawany Corporation (I) Pvt. Ltd. Mumbai vs. DCIT, the Hon’ble ITAT had condoned M/s Radhe Shyam Shri Krishan Education Samiti a delay of 944 days’ on account of wrong opinion given by the then Chartered Accountant / Tax Consultant of the assessee. Similar view had been taken in the case of APMG India Certifications Pvt. Ltd. vs. DCIT (TDS) (supra). What emerges from all the judgments is that if the delay is caused due to improper communication to the assessee or incorrect advice of the counsel, it constitutes a sufficient cause for condoning the delay. We note that the assessee does not stand to gain in any way from delaying the appeal and therefore, after considering the petition, we admit the appeal for adjudication.
The facts of the case are that the assessee had filed an application on 15.04.2022 for registration under section 12A(1)(ac)(iii) of the Income Tax Act, 1961 in Form No. 10AB. Vide letter dated 27.8.2022, the ld. CIT (Exemption) sought certain clarifications from the assessee but no reply was filed by the assessee. He issued two more reminders to the assessee but there was no compliance to the same. The ld. CIT (Exemption) pointed out that the enquiry letter was sent for seeking documents and information so as to verify the genuineness of the activities as well as the charitable nature of the trust and the commencement of the activities of the society. In the absence of any reply, this aspect could not be verified and the charitable objects and genuineness of the charitable activities could not be proved. Hence, the ld. CIT (Exemption) decided to treat the application of the society as not maintainable and she rejected it. However, she did not draw any adverse inference against the assessee in respect of the provisional registration granted to it earlier.
The assessee is aggrieved at this dismissal of its application for registration. Sh. Rakesh Garg, Advocate appearing on behalf of the assessee filed a paper book containing the details of the previous registration of the society, copy of the final accounts of the society and Audit Report in Form No. 10B for the period 31st March, 2017 to 31st March, 2021 and the details regarding the society. He submitted that the reasons for non-compliance had been clearly spelt out in the condonation petition and he prayed that since the order of the ld. CIT (Exemption) had been passed without hearing the assessee, and since the assessee had been indulged in M/s Radhe Shyam Shri Krishan Education Samiti the charitable activities for a long time, as evidenced by its audited financial statements submitted in the paper book, the matter may kindly be restored to the ld. CIT (Exemption) for re-consideration, after hearing the assessee.
On the other hand, Sh. Neeraj Kumar, CIT DR (hereinafter referred to as the ld. DR) had no objection to the matter being restored back to the file of the ld. CIT (Exemption) but submitted that the directions should be given to the assessee to make full compliance so that the ld. CIT (Exemption) could satisfy himself with regard to the charitable nature of the assessee and the genuineness of its activities.
We have duly considered the facts and circumstances of the case. It has already emerged during the course of the condonation petition that the non- compliance of the assessee was primarily due to the fact of the email being sent to the email of the erstwhile counsel, who was negligent in informing the assessee with regard to the same. In these circumstances, we deem it fit to restore the matter back to the file of the ld. CIT (Exemption) so that the assessee may be given an opportunity to present his case. We would urge the assessee to provide the ld. CIT (Exemption) the details of its email for communication so that it receives the notices and makes due compliance to the same. The ld. CIT (Exemption) may, thereafter, pass a fresh order, in accordance with law after considering the submissions of the assessee and the evidences presented by it in support of its activities and charitable nature.