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Income Tax Appellate Tribunal, “B” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI S. RIFAUR RAHMAN
Per N.V. Vasudevan, Judicial Member
Both these appeals are filed by the assessee against the separate orders, both dated 20.09.2011 of the Commissioner of Income-tax, Hubli. ITA 1615/B/13 is an appeal against the order withdrawing the registration granted u/s. 12AA of the Income-tax Act, 1961 [“the Act”] . ITA 1616/B/13 is an appeal against the order derecognizing approval granted u/s. 80G(5) of the Act.
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There is a delay of about 730 days in filing these appeals by the assessee. The assessee has filed an application for condonation of delay
in which Secretary of the assessee has stated that the impugned orders passed by the CIT, Hubli were served on the assessee on 27.9.2011 and
that the appeals before the Tribunal ought to have been filed on or before
20.11.2011, but were however filed only on 25.11.2013. Therefore a delay of 730 days occurred in filing the appeals before the Tribunal. It has
further been stated in the petition for condonation of delay that after the receipt of the impugned orders, the assessee met tax consultant at
Bangalore, who advised the assessee to file appeals before the Tribunal. The appeal memo was drafted by the tax consultant and sent to the
assessee for signature and onward filing of appeals before the ITAT. It has
further been stated that the docket containing the appeal papers were received by the earlier accountant of the assessee, who left the job without
any prior notice. The earlier accountant also did not intimate the assessee regarding receipt of the aforesaid docket. The tax consultant of the
assessee at Bangalore was under the belief that the assessee had signed
the appeal papers and filed it before the Tribunal. It appears that the Secretary of the assessee met the tax consultant at Bangalore for seeking
legal advice on some other issue, when the tax consultant enquired him about any hearing notice having been received by the assessee from the
Tribunal. Thereupon, the Secretary of the assessee made enquiries in his office and found that the sealed cover sent by the tax consultant to the
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assessee containing the appeal memo was lying in the accountant’s drawer. Thereafter, the petitioner reverted to the tax consultant and filed the present appeals. The facts stated in the petition for condonation of delay have been verified by Shri Kangaram Choudhary, Secretary of the assessee.
The ld. counsel for the assessee submitted before us that the reasons given by the assessee are bona fide and that there was no mala fide on the part of the assessee in filing the appeals belatedly. He further submitted that the number of days of delay should have any bearing in the matter of condonation of delay, when the reasons given for the delay are found to be genuine. He placed reliance on the following decisions in support of his submissions:-
Angela J. Kazi v/s. Income-tax Officer [2006] 10 SOT 1 39(Mum) 2. Pay and Accounts Officer v/s. Income-tax Officer, TDS-III [2010 190 TAXMAN 396 (MAD.) 3. Raghubar Automobile & General Finance (P) Ltd. v/s. CIT [2013] 35 taxmann.com 520 (Allahabad) / [2013] 218 Taxman 39 (Allahabad) (MAG.) 4. Sreenivas Charitable Trust v/s. DCIT [2006] 154 TAXMAN 377 (MAD.)
The ld. DR, however, opposed the prayer for condonation of delay and submitted that assessee has been negligent and the delay should not be condoned.
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We have given a very careful consideration to the rival submissions. We are satisfied that the delay in filing the appeals has occasioned on account of reasonable cause. In this regard, we find that in Raghavendra
Constructions v. ITO, ITA No.425/Bang/2012, order dated 14.12.2012, this Tribunal held as follows:-
“13. We have considered the rival submissions. At the outset, we observe that the Hon’ble Supreme Court, in the case of Mst. Katiji (supra), has explained the principles that need to be kept in mind while considering an application for condonation of delay. The Hon’ble Apex Court has emphasized that substantial justice should prevail over technical considerations. The Court has also explained that a litigant does not stand to benefit by lodging the appeal late. The Court has also explained that every day’s delay must be explained does not mean that a pedantic approach should be taken. The doctrine must be applied in a rational common sense and pragmatic manner. In the case of Shakuntala Hegde, L/R of R.K. Hegde v. ACIT, ITA No.2785/Bang/2004 for the A.Y. 1993-94, the Hon’ble Tribunal condoned the delay of about 1331 days in filing the appeal wherein the plea of delay in filing appeal due to advice given by a new counsel was accepted as sufficient. The Hon’ble Karnataka High Court in the case of CIT v. ISRO Satellite Centre, ITA No. 532/2008 dated 28.10.2011 has condoned the delay of five years in filing appeal before them which was explained due to delay in getting legal advice from its legal advisors and getting approval from Department of Science and PMO. In the aforesaid decision, the Hon’ble Court found that the very liability of the assessee was non-existent and therefore condoned the delay in filing appeal. 14. Keeping in mind the aforesaid principles, we shall consider the claim of the assessee in the present case. Admittedly the advice was given by the counsel who appeared on behalf of the Assessee before the Hon’ble High Court. The decision of the Hon’ble High Court was rendered on 28.2.2012. The appeal has been filed by the Assessee before the Tribunal on 26.3.2012. Hence, we find that there has been no willful neglect on the part
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of the Assessee. In such matters the advice of the professional would be the point of time at which the Assessee would begin to explore the option of exhausting all legal remedies. We are also of the view that by condonation of delay there is no loss to the revenue as legitimate taxes payable in accordance with law alone would be collected. We therefore accept the reason given for condonation of delay in filing the appeal. The delay in filing the appeal is accordingly condoned.”
Keeping in mind the principle laid down in the aforesaid decision, we will examine the present case. It may be true that the reasons given for the delay are self-serving, but there is no reason for the assessee delaying the filing of appeals before the Tribunal. In the circumstances, we accept the reasons given by the assessee for delay in filing the appeals. Accordingly, the delay in fling the appeals is condoned.
As far as merits of the appeals are concerned, the factual background of the case needs to be highlighted. The assessee enjoyed the benefit of registration u/s. 12AA of the Act by virtue of an order dated 15.7.2007. The assessee also enjoyed the benefit of recognition u/s. 80G vide order dated 28.11.2007 of the CIT, Hubli. Recognition u/.s 80G of the Act was valid from 15.11.2007 to 31.3.2010.
As per Circular of the CBDT No.5/2010 dated 3.6.2010 (para 29.5), approval once granted will continue to be valid in perpetuity. Prior to this Circular, proviso to section 80G(5)(vi) provided that approval granted shall be in effect for such assessment year or years, not exceeding five assessment years, as may be specified in the approval. This proviso was
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omitted by the Finance Act, 2009 and therefore the approval once granted shall continue to be valid in perpetuity.
It can be seen from the aforesaid Circular and the statutory amendment that there was no necessity for the assessee to make any application for continuation of recognition granted u/s. 80G of the Act. The assessee, however, in total ignorance of the aforesaid statutory amendment, filed an application in Form 10G on 17.11.2011 requesting for continuance of recognition granted u/s. 80G. Consequent to this application, the CIT, Hubli called for a report from the AO of the assessee. In the report submitted by the AO before the CIT, the AO opined that assessee has failed to produce the details of genuineness of the charitable activities carried out and proof of the same. The AO opined that request for continuance of recognition u/s. 80G should be rejected. The CIT therefore called upon the assessee to produce books of accounts and list of addresses of donors and provide proof for having conducted charitable activities. According to the CIT, the assessee failed to produce the required information. Thereafter, the CIT observed as follows:-
“The details on record and the report of the AO were perused. It is observed on verification of the balance sheet as on 31.03.2010 that the above institution had purchased an agricultural land on 05.05.2007 for rupees 7,32,000 after obtaining the permission from reforms Act on 05.02.2007. The order passed clearly mentions that the land to be used is for religious purposes. During the course of the proceedings it is observed that the assessee has not produced a copy of the registered trust deed. The AR or the trustees / president failed to explain clearly the objects of the trust
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and the details of the activities conducted and also failed to explain as to whether the activities are in accordance with the objects and also whether the same are charitable in nature. Therefore, it cannot be ascertained that the activities come under the definition of charitable purposes as per sec 2(15) of the Income-tax Act 1961. Under the circumstances, the Trust cannot be said to have satisfied the conditions required to be eligible for continuation of registration u/s 12AA. Therefore, the registration granted u/s 12AA is withdrawn w.e.f 01.04.2009 vide this office order dated 19.09.2011. In view of this the grant of recognition u/s 80G of the IT Act 1961 is also de recognized herewith.”
The CIT also accordingly cancelled the registration granted u/s. 12AA for the very same reasons as were given for not extending the registration u/s. 80G(5) of the Act.
Aggrieved by the aforesaid orders of the CIT, the assessee has preferred the present appeals before the Tribunal.
We have heard the rival submissions. We have already seen that there was no requirement of making an application for renewal of recognition granted u/s. 80G of the Act, as the recognition granted to the assessee will hold good in perpetuity. In such circumstances, the proper course to have been adopted by the CIT was to have filed the application of the assessee seeking extension of recognition u/s. 80G(5) of the Act. The action of the CIT in further withdrawing registration already granted to the assessee u/s. 12AA of the Act is also not proper. Registration granted u/s. 12AA of the Act can only be cancelled only in the circumstances specified in section 12AA(3) of the Act, which reads as under:-
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“(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution. Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.”
It appears to us that the ld. CIT has proceeded on the basis of an incorrect appreciation of facts inasmuch as, he has presumed that the assessee existed for religious purpose and not for charitable purpose. It appears that the assessee has also not explained the position properly in the proceedings before the CIT, as to the true nature of the use of land. We are therefore of the view that it would be just and proper to set aside the orders of the CIT and remand the issue of withdrawing recognition u/s. 12AA of the Act for fresh consideration by the CIT. As far as recognition u/s. 80G(5) of the Act is concerned, we hold that the recognition already granted will continue to operate and the order passed by the CIT provided the registration u/s.12AA of the Act continues. Insofar as order passed u/s. 12AA(3) is concerned, the issue will be considered afresh by the CIT after affording the assessee opportunity of being heard. We may also clarify that in the event of registration u/s. 12AA of the Act being withdrawn, the CIT is at liberty to take appropriate action for withdrawing recognition granted u/s. 80G of the Act to the assessee.
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In the result, ITA No.1615/B/13 is treated as allowed for statistical purposes and ITA No.1616/B/13 is allowed.
Pronounced in the open court on this 4th day of September, 2015.
Sd/- Sd/-
( S. RIFAUR RAHMAN ) ( N.V. VASUDEVAN ) Accountant Member Judicial Member
Bangalore, Dated, the 4th September, 2015.
/D S/
Copy to:
Appellant 2. Respondents 3. CIT 4. CIT(A) 5. DR, ITAT, Bangalore. 6. Guard file
By order
Assistant Registrar / Senior Private Secretary ITAT, Bangalore.