SIDDHI VINAYAK SHIKSHA PRASAR EVAM SAMAJ KALYAN SAMITI,GWALIOR vs. CIT(EXEMPTION), BHOPAL

We take judicial notice of the order dated 11.03.2024 passed by the surat bench of the Tribunal in Swachh Vapi Mission Trust Vs. Commissioner of Income Tax (Exmption), reported in (2024)206 ITD 187 (Surat) the relevant part of the the referred order is as under: “12. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the learned CIT(Exemptions) and other material brought on record. We note that the issue under consideration, is covered by the order of Co-ordinate Bench in the case of Vananchal Kelavani Trust vs. CIT(Exemption) (2024) 159 taxmann.com 634 (Surat) (Trib) (IT Appeal No. 728/Srt/2023, dt. 9th Jan., 2024) wherein it was held as follows: "13. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. We note that in the latest Circular No. 6 of 2023 dt. 24th May, 2023, the date was not extended by the CBDT, so far as, filing of Form No. 10AB, under s. 80G(5)(iii) of the IT Act, 1961, is concerned.

Thus, in the Circular No. 8 of 2022 dt. 31st March, 2022, cited above, there is mention about s. 80G of the Act (in Form No. 10AB) for registration or approval and extended date is mentioned as 30th Sept., 2022. However, in the latest Circular No. 6 of 2023, dt. 24th May, 2023, the CBDT did not clarify or did not mention about the extension of the time-limit for s. 80G(5) of the Act, (in Form No. 10AB). Therefore in the situation, it is difficult to interpret cl. (iii) the 3rd proviso of s. 80G(5) of the Act, which states as follows:

Therefore, in this ambiguity situation in Circular No. 8 of 2022 of CBDT dt. 31st March, 2022 and latest circular no. 6/2023 dated 24th May, 2023 of the CBDT, we do not have any option but to condone the delay in filing application in Form No. 10AB, under s. 80G(5) of the Act. We note that Co- ordinate Bench of Jodhpur in the case of Bhamashah Sundarlal Daga Charitable Trust vs CIT(Exemption) in (ITA No. 278/Jodh/2023, dt. 10th Nov. 2023) dealt with the issue of cl.(iii) 3rd proviso under s. 80G(5) of the Act stating that "whichever is earlier” is applicable only to the newly constructed trust. The finding of the coordinate Bench in the case of Bhamashah Sundarlal Daga Charitable Trust (supra) a reproduced below: 10.1 In this background, we need to read the sub-cl. (iii) of the proviso to s. 80G(5) of the Act. For ready reference it is again reproduced here under: “(iii) where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval or within six months of commencement of its activities, whichever is earlier”

If we agree with the interpretation of the learned CIT(Exemptions), then say a trust which was formed in the year 2000, performed charitable activities since 2000, but did not applied for registration under s. 80G, the said trust will never be able to apply for registration now. This in our opinion is not the intention of the legislation. This interpretation leads to absurd situation. 11.1 In this context, we will like to refer to observations of the Hon'ble Supreme Court in the case of K. P. Varghase (supra), where in Hon'ble Supreme Court observed as under: Quote, "It is a well-recognised rule of construction that a statutory provision must be so construed, if possible, that absurdity and mischief may be avoided. There are many situations where the construction suggested on behalf of the revenue would lead to a wholly unreasonable result which could never have been intended by the Legislature. Take, for example, a case where A agrees to sell his property to B for a certain price and before the sale is completed pursuant to the agreement and it is quite well known that sometimes the completion of the sale may take place even a couple of years after the date of the agreement the market price shoots up with the result that the market price prevailing on the date of the sale exceeds the agreed price at which the property is sold by more than 15 per cent of such agreed price. This is not at all an uncommon case in an economy of rising prices and in fact we would find in a large number of cases where the sale is completed more than a year or two after the date Siddhi Vinayak Shiksha Prasar Evam Samaj Kalyan Samiti v CIT (Exemption) Bhopal of the agreement that the market price prevailing on the date of the sale is very much more than the price at which the property is sold under the agreement. Can it be contended with any degree of fairness and justice that in such cases, where there is clearly no understatement of consideration in respect of the transfer and the transaction is perfectly honest and bona fide and, in fact, in fulfillment of a contractual obligation, the assessee who has sold the property should be liable to pay tax on capital gains which have not accrued or arisen to him. It would indeed be most harsh and inequitable to tax the assessee on income which has neither arisen to him nor is received by him. merely because he has carried out the contractual obligation undertaken by him. It is difficult to conceive of any rational reason why the Legislature should have thought it fit to impose liability to tax on an assessee who is bound by law to carry out his contractual obligation to sell the property at the agreed price and honestly carries out such contractual obligation. It would indeed be strange if obedience to assessee nor has been received by him. If we may take another illustration, let us consider a case where A sells his property to B with a stipulation that after sometime, which may be a couple of years or more, he shall resell the property to A for the same price. Could it be contended in such a case that when B transfers the property to A for the same price at which he originally purchased it, he should be liable to pay tax on the basis as if he has received the market value of the property as on the date of resale, if, in the mean-while, the market price has shot up and exceeds the agreed price by more than 15 per cent. Many other similar situations can be contemplated where it would be absurd and unreasonable to apply s. 52(2) according to its strict literal construction. We must, therefore, eschew literalness in the interpretation of s. 52(2) and try to arrive at an interpretation which avoids this absurdity and mischief and makes the provision rational and sensible, unless of course, our hands are tied and we cannot find any escape from the tyranny of the literal interpretation. It is now a well-settled rule of construction that where the plain literal interpretation of a statutory provision produces a manifestly absurd and unjust result which could never have been intended by the Legislature, the Court may modify the language used by the Legislature or even 'do some violence" to it, so as to achieve the obvious intention of the Legislature and produce a rational construction- "Unquote.

Even otherwise, the provisional approval is upto asst, yr. 2025-26, and it can be cancelled by the learned CIT(Exemptions) only on the specific violations by the assessee. However, in this case the learned CIT(Exemptions) has not mentioned about any violation by the assessee. Therefore, even on this ground the rejection is not sustainable.

Accordingly, the appeal of the assessee is allowed for statistical purpose. Since we have set aside to learned CIT(Exemptions), we do not intend to adjudicate each ground separately."

We note that the Co-ordinate Bench of Tribunal Jodhpur in the case of Bhamashah Sundarlal Daga Charitable Trust (supra) dealt with only the issue/terminology of "whichever is earlier" which is applicable to new trust which have created recently, and it does not deal with condonation of delay Siddhi Vinayak Shiksha Prasar Evam Samaj Kalyan Samiti v CIT (Exemption) Bhopal in case of old trust who made the application before learned CIT(Exemption) very late, that is, the issue mention in cl. (iii) of 3rd proviso of s. 80(5), "where the institution or fund has been provisionally approved, at least six months prior to expiry of the period of the provisional approval." has not been adjudicated.

In the above circumstances, it seems to us that the Tribunal has acted judicially, taking note of all the facts and circumstances including probabilities of the case. In Esthuri Aswathiah vs. CIT (1967) 66 ITR 478 (SC), the Supreme Court outlined the duties of the Tribunal in the following words: "The function of the Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it for that purpose it must consider whether on the materials relied Siddhi Vinayak Shiksha Prasar Evam Samaj Kalyan Samiti v CIT (Exemption) Bhopal upon by the assessee his plea is made out. Conclusive proof of the claim is not predicated: the Tribunal may act upon probabilities, and presumptions may supply gaps in the evidence which may not, on account of delay or the nature of the transactions or for other reasons, be supplied from independent sources. But the Tribunal cannot make arbitrary decisions it cannot found its judgment on conjectures, surmises or speculation. Between the claims of the public revenue and of the taxpayers, the Tribunal must maintain a judicial balance" In Udhavdas Kewalram vs. CIT (1967) 66 ITIL 462 (SC) the very same Bench of three judges of the Supreme Court again observed as under: "The Tribunal performs a judicial function under the Indian IT Act: it is invested with authority to determine finally all questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions raised by the assessee and the CIT in the light of the evidence and the relevant law. The Tribunal was undoubtedly competent to disagree with the view of the Appellate Asstt. CIT. But in proceeding to do so, the Tribunal had to act judicially, i.e., to consider all the evidence in favour of and against the assessee. An order recorded on a review of only a part of the evidence and ignoring the remaining evidence cannot be regarded as conclusively determining the questions of fact raised before the Tribunal."

We are satisfied that the Tribunal has, in making its decision, kept in mind the aforesaid principles adumbrated by the Supreme Court. Its order cannot. therefore, be branded as perverse or unreasonable or irrational.

That takes us to the question as to whether in condoning the delay the Tribunal committed any error of law or illegality. There is a wealth of judicial literature on the subject of condonation of delay and most of the cases have arisen. under s. 5 of the Limitation Act, 1963. The principles that are to be applied are, however, no different whenever the question of condonation of delay comes up for consideration under other statutes. In the oft quoted judgment of the Supreme Court in Collector, Land Acquisition vs. Mst. Katiji (1987) 62 CTR (SYN) 23 (SC): (1987) 167 ITR 471 (SC), it was observed as follows: "The Legislature has conferred the power to condone delay by enacting s. 5 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on the merits". The Siddhi Vinayak Shiksha Prasar Evam Samaj Kalyan Samiti v CIT (Exemption) Bhopal expression "sufficient cause" employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that this Court has been making a justifiably liberal approach in matters instituted in this Court. But the message does not appear to have percolated down to all the other courts in the hierarchy."

The following general principles were laid down and it is these principles which guide the Court in approaching the question of condonation of delay: "And such a liberal approach is adopted on principle as it is realized that: 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 and pragmatic manner.

When substantial justice and technical considerations 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 non-deliberate delay.

In N. Balakrishnan vs. M. Krishnamurthy (1998) 7 SCC 123, the Supreme Court again reiterated the approach. In Ram Nath Sao vs. Siddhi Vinayak Shiksha Prasar Evam Samaj Kalyan Samiti v CIT (Exemption) Bhopal Gobardhan Sao (2002) 3 SCC 195, it was observed by the Supreme Court that acceptance of the explanation furnished should be the rule and refusal, an exception, more so when no negligence or inaction or want of bona fides can be imputed to the defaulting party. In the present case, the Tribunal has found that the assessee-society has taken prompt remedial action and put Sikri on the dock and he also admitted his fault, though he tried to shift the blame to his employee whose whereabouts were never known. Even in his bail application he had confessed to his role in the alleged irregularities and illegalities. There has been no want of bona fides on the part of the assessee, nor did it fail to take immediate action once it was apprised of the irregularities in its affairs by M. P. Mansinghka Trust of Mumbai. In these circumstances, we are unable to say that the Tribunal committed an error in condoning the delay.

On the question of perversity of the decision of the Tribunal we may also refer to the judgment of the Supreme Court in Sree Meenakshi Mills Ltd. vs. CIT (1957) 31 ITR 28 (SC). In that judgment, it was noted that only a question of law can be referred for decision of the Court and the decision of the Tribunal on a question of fact can be challenged only if it is not supported by any evidence, or is unreasonable or perverse. The following pithy observations of T. L. Venkatarama Aiyar, J. speaking for the Court are relevant:

This view was reiterated by the Supreme Court in CIT vs. Daulatram Rawatmull (1964) 53 ITR 574 (SC) where it was held that "if there is some evidence to support the finding recorded by the Tribunal, even if it appears to the High Court that on re-appreciation of the evidence, it might arrive at a conclusion different from that of the Tribunal the High Court has no power to interfere with the findings of the Tribunal. These decisions were applied by a Division Bench of this Court in CIT vs. Baba Avtar Singh (1972) 83 ITR 738 (Del) where it was observed as under:

The aforesaid principles govern the order of the Tribunal and the approach to be adopted by us in the present case. At best, what can be argued by the Revenue is only that another view was possible to be taken by the Tribunal and this Court should prefer the alternative view on the same facts and evidence and discard the Tribunal's view. Obviously the argument cannot be upheld, having regard to the above judgments.

For the above reasons we answer the substantial questions of law framed in 773 and 775 of 2010 in the negative, against the Revenue and in favour of the assessee. Consequently the sole substantial Siddhi Vinayak Shiksha Prasar Evam Samaj Kalyan Samiti v CIT (Exemption) Bhopal question of law framed by us in 1101, 1103, 1104, 1112 and 1124 of 2010 is answered in the affirmative, against the Revenue and in favour of the assessee. The C. M. Application is disposed of. The appeals of the Revenue are accordingly dismissed with no order as to costs."

We note that assessee claimed to start activities on 2nd May. 2023, and the same was rejected by learned CIT(Exemption), as per the reasons given in the acts of the assessee's trust above, which we do not repeat the same for the sake of brevity. We also confirm the findings of learned CIT Exemption) on the same.

In the instant case, no sufficient opportunity of hearing was afforded to the appellant before passing the impugned order. In such facts and circumstances and interest of justice and in view of the decision of the surat bench of this tribunal in Swachh Vapi Mission (supra), we condone the delay caused in filing application by the assessee in form AB u/s 12A(1)(ac)(iii) and