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Facts
The assessee filed an application for registration under Section 12AB of the Income Tax Act, which was rejected by the CIT(Exemptions). The assessee filed an appeal before the Tribunal with a delay of 678 days, seeking condonation of delay due to the auditor's preoccupation with tax audits and lack of communication from the department. The Tribunal considered the grounds raised by the assessee regarding non-compliance due to circumstances beyond their control and the potential for grave injustice.
Held
The Tribunal held that the delay in filing the appeal was due to a reasonable cause and that in such cases, substantial justice should be preferred over technicalities. Citing Supreme Court and High Court judgments, the Tribunal found that the delay was not deliberate and that refusing to condone it would defeat a meritorious case. Therefore, the delay was condoned, and the appeal was admitted for adjudication.
Key Issues
Whether the delay in filing the appeal for condonation of registration under Section 12AB of the Income Tax Act is justifiable, and if so, whether the rejection of the registration application by the CIT warrants setting aside for further adjudication.
Sections Cited
12AB, 12AB
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Income Tax Appellate Tribunal, “C’’ BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of assessee is directed against the order of ld. CIT(Exemptions) dated 20.9.2022 rejecting the application for the registration of the Assessee Trust.
The assessee has raised following grounds of appeal:
1. The order of the learned respondent Commissioner is unjustified and not maintainable in law in so far as the application of the appellant has been rejected.
2. The learned Commissioner of Income Tax failed to consider the facts that there is no proper service of the letter dated 13-07-2022 & 03-08- 2022 And this caused the non-compliance and as such the rejection based on the grounds is unjustified and liable to be set aside.
Sri Ayyappaswamy Sannidhana Charitable Trust, Bangalore Page 2 of 7 3. The learned Commissioner ought to have also issued a proper a postal communication before passing the rejection order and hence there is no proper service of the letter dated 13-07-2022 & 03-08-2022.
4. The learned Commissioner ought to have appreciated that the non- compliances to the letter has occasioned due to circumstances beyond the control of the appellant and therefore the rejection on the ground of non-compliance is not sustainable.
5. The learned Commissioner also failed to appreciate that a rejection order has resulted in grave injustice in as much as a meritorious case has been defeated on purely technical grounds which is not found on proper facts.
6. For these and any other ground that may be urged during the hearing with permission of the hon'ble tribunal, this appeal may be allowed in the interest of equity and justice.
There is a delay of 678 days in filing the appeal before this Tribunal. The assessee had filed an application dated 07/11/2024 for condonation of delay along with an affidavit in original sworn before the Notary Public, which are reproduced below:
The ld. D.R. strongly opposed to condone the delay and requested not to allow the appeal for adjudication and dismiss the appeal.
We have gone through the reasons explained by the assessee for filing the appeal belatedly before this Tribunal. The main contention of the assessee is that the Auditor could not checked on the system due to being busy with the tax audit & other matters. Further neither his Auditor nor the assessee have received any communication from the department in this regard. At this juncture, it is appropriate to mention the judgement of Hon’ble Supreme Court in the case of Concord of India Insurance Company Sri Ayyappaswamy Sannidhana Charitable Trust, Bangalore Page 4 of 7 Ltd. Vs. Smt. Nirmala Devi & Ors. Reported in 118 ITR 507 (SC), wherein it has been held that “the mistake of the counsel may in certain circumstances be taken into account in condoning the delay although there is no general proposition that mistake of counsel by itself is always a sufficient ground”. Accordingly, the Hon’ble Supreme Court has held that there is a mistake of the counsel and therefore, the delay in filing the appeal has been condoned. 5.1 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late (2) Refusing to condone delay can result in a meritorious matter being thrown 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, commonsense and pragmatic manner. (4) When substantial justice and technical consideration are pitted against each other, the 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 nondeliberate 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.
Sri Ayyappaswamy Sannidhana Charitable Trust, Bangalore Page 5 of 7 (6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
5.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. Therefore, in our opinion, by preferring the substantial justice, the delay of 33 days has to be condoned. 5.3 Further, in the case of People Education & Economic Development Society Vs/ ITO reported in 100 ITD 87 (TM) (Chen), wherein held that “when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”. 5.4 The next question may arise whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not filing the appeal. When there was a reasonable cause, the period of delay may not be relevant factor. In fact, the Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Furthermore, the Chennai Tribunal by majority opinion in the case of People Education and Economic Development Society (PEEDS) v. ITO (100 Sri Ayyappaswamy Sannidhana Charitable Trust, Bangalore Page 6 of 7 ITD 87) (Chennai) (TM) condoned more than six hundred days delay. 5.5 The Madras High Court in the case of Sreenivas Charitable Trust (280 ITR 357) (Mad.) held that no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression "sufficient cause" the principle of advancing substantial justice is of prime importance and the expression "sufficient cause" should receive a liberal construction. Therefore, this Judgment of the Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression "sufficient cause" should receive a liberal construction.
We have carefully considered the rival submissions and perused the orders of lower authorities. Since there is a “sufficient cause” in filing the appeal before this Tribunal belatedly, we admit this appeal for adjudication.
6.1 We find that in this case, admittedly, the application in Form 10AB for registration u/s 12AB is rejected by the ld. CIT(E), Bengaluru on the sole ground that the assessee neither submitted any documents/details required U/s 12AB of the Act before the Jurisdictional AO nor before him. We are of the opinion that in the interest of justice and fair play, and as requested by the AR of the assessee, one more opportunity may be granted to the assessee to substantiate its claim. Accordingly, we set aside the issue in dispute to the file of the ld. CIT (Exemptions) & the CIT (Exemptions) will pass an Order in accordance with Law after giving reasonable opportunity of being heard. The assessee is also directed to submit all the documents/records/Financials/Rules & Byelaws Sri Ayyappaswamy Sannidhana Charitable Trust, Bangalore Page 7 of 7 along with the Activity Report or such other documents as may be required by the ld. CIT(E) and cooperate with the proceedings before the ld. CIT (Exemptions) for proper adjudication of the case. We clarify that in case of further default, the assessee shall not be entitled for any leniency. It is ordered accordingly.