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Facts
The assessee, M.V. Karmari Charitable Trust, applied for registration under Section 12AB of the Income Tax Act, 1961. The CIT(Exemptions) rejected the application, stating that the trust's financials did not show substantial activity towards its objects. The assessee filed an appeal against this order, which was delayed by 338 days.
Held
The Tribunal condoned the delay in filing the appeal, considering the explanation provided by the assessee to be bonafide and a sufficient reason. The Tribunal noted that the author of the trust is elderly and has limited access to communication, and the trust lacks employees for administrative work. While condoning the delay, the Tribunal decided to grant the assessee one more opportunity to represent its case before the CIT(Exemptions).
Key Issues
Whether the delay in filing the appeal should be condoned, and whether the CIT(Exemptions) erred in rejecting the application for registration under Section 12AB without proper application of mind.
Sections Cited
12AB, 253(5)
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Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER KESHAV DUBEY, JUDICIAL MEMBER:
This appeal at the instance of the assessee is directed against order of ld. CIT(A) Exemptions) Bangalore dated 12.10.203 vide DIN & Notice No.ITBA/EXM/F/EXM45/2023-24/1056999705(1) and application No.CIT(Exemptions)Bangalore/2023-24/12AA/11199 for the AY 2024-25 rejecting the registration u/s 12AB of the Income Tax Act, 1961 (in short “The Act”).
The assessee has raised following grounds of appeal:
At the outset, the ld. A.R. of the assessee submitted that this appeal is filed belatedly by 338 days before this Tribunal instead of 368 days as mentioned in the application of condonation of delay filed u/s 253(5) of the Act along with an affidavit in original. For the sake of reference and convenience, the application for condonation and affidavit are reproduced below:
3.1 On going through the application as well as affidavit filed by the assessee, we find that explanation given is Bonafide and it is a good and sufficient reason to condone the delay in filing the appeal before us. It is noted that there is no malafide intention on behalf of the assessee in not filing the present appeal within time. In these circumstances, it may not be said that the assessee is very callous in its approach in filing the appeal before us.
3.2 While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471)
(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. (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.
3.3 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. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government M.V. Karmari Charitable Trust, Hubli Page 9 of 11 cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 338 days is condoned and the appeal is taken up for adjudication.
The brief facts of the case are that the assessee trust applied for the registration u/s 12AB of the Act in form No.10AB on 20.5.2023. Thereafter, the case was assigned to the jurisdictional AO for verification. The assessee was granted opportunity of being heard by the jurisdictional AO as well as by ld. Commissioner. Ld. CIT (Exemptions), Bangalore. On perusal of financial statement of the financials of the trust do not show substantial activity towards the object of the Trust. Further in the absence of the Charitable activity towards the condoning of the object of the trust, form No.10AB dated 20.5.2023 filed for registration u/s 12AB of the Act was rejected by the ld. CIT(Exemptions).
4.1 Aggrieved by the order of ld. CIT(Exemptions) passed in form No.10AD along with annexure dated 12.10.2023 the assessee has filed the present appeal before this Tribunal. Before us, ld. A.R. of the assessee vehemently submitted that on the one hand the ld. CIT(Exemptions) observed that the financials do not show substantial activity towards the object of the trust and on the other hand, the ld. Commissioner (Exemptions) held that in the absence of charitable activity towards the condoning of the objects, registration u/s 12AB of the Act is rejected, which itself is contrary observations. The AR of the assessee submitted that the ld. CIT(A) had rejected the application in a mechanical manner and without application of mind.
M.V. Karmari Charitable Trust, Hubli Page 10 of 11 4.2 Further, the ld. A.R. submitted that the ld. CIT(Exemptions) has not disputed that the activity has not been carried out at all but in the opinion of ld. CIT (Exemptions) as the financial do not show substantial activity, he rejected the registration u/s 12AB of the Act.
The ld. A.R. of the assessee further submitted that the author of the trust is more than 82 years old and has limited access to the e-mail communication. The assessee was in the honest and Bonafide belief that since the assessee has got the provisional registration, the assessee has to apply for renewal of registration only after completion of 3 years and therefore, could not represent his case properly before the AO as well as ld. CIT(Exemptions).
Ld. D.R. on the other hand supported the orders of the authorities below and vehemently submitted that sufficient opportunity has been granted not only before the AO but also before the ld. CIT(Exemptions) to substantiate its claim.
We have heard the rival submissions and perused the materials available on record. Since before us ld. A.R. of the assessee vehemently submitted that the author of the trust is more than 82 years old and has limited access to the e-mail communication and further the assessee trust does not have any employees to take care of the administrative work and therefore could not represent its case properly before the authorities. being so, in the interest of justice and equity, we are of the opinion that one more opportunity may be granted to the assessee to represent its case before the ld. CIT(Exemptions), Bangalore. The assessee shall submit all the relevant documents, Bye laws, activity report in support of its claim along with audit reports and financials as required by the ld. CIT(Exemptions) to substantiate its claim. Needless to say, reasonable opportunity of being heard may be given
In the result, appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 20th Dec, 2024