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िनधा�रती की ओर से /Assessee by Shri Rasesh Shah, C.A राज� की ओर से /Revenue by Shri SM Keshkamat, CIT-DR सुनवाई की तारीख/Date of hearing 13.09.2023 उद्घोषणा की तारीख/Date of 12.10.2023 pronouncement Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee is directed against the order of Commissioner of Income Tax (Exemptions), Ahmedabad [for short to as “Ld. CIT(E)”] dated 28.02.2022 passed under section 12AA of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 23.09.2019. The assessee has raised the following grounds of appeal: “1. On the facts and in circumstances of the case as well as law on the subject, the learned Commissioner of Income Tax has erred in rejecting the application of assessee for registration/s 12AA of the I.T. Act, 1961.
2. It is therefore prayed that order of CIT, passed u/s 12AA of the I.T. Act, 1961 may please be cancelled and registration may be granted or matter may be set aside to the file of CIT with appropriate direction.
3. Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.”
ITAT Bar Association Surat 2. Perusal of record reveals that impugned order passed by Ld. CIT(E) on 28.02.2022, however, the present appeal is filed on 25.05.2022. Thus, there is delay of 26 days in filing appeal before Tribunal. The assessee has filed an affidavit of Secretary, Income Tax Appellate Tribunal Bar Association, Surat. The Ld. Authorized Representative (Ld.AR) for the assessee submits that delay in filing of present appeal is neither intentional nor deliberate but due to reason that Managing Committee of assessee association could not hold schedule meeting for taking a decision for filing appeal as some of the office bearers, whose unanimous opinion was necessary for espousing the cause of assessee- association was not available due to their professional engagement. The Ld. AR for the assessee submits that assessee has a good case on merit and is likely to succeeds, if the delay of condonation and appeal is heard on merit. The other party has no vested right for not allowing the hearing of appeal on merit. The Ld. AR for the assessee submits that assessee is pursuing its appeal with bona fide right from the beginning. The Ld. AR for the assessee prayed for condoning the delay of appeal.
On the other hand, Ld. Commissioner of Income Tax Departmental Representative (Ld. CIT-DR) for the Revenue submits that Bench may take appropriate decision on considering the plea of assessee.
We have considered the submission of both the parties and considering the fact that assessee is an Association of Persons / Bar Association, espousing the cause of Managing Committee for their welfare.
Considering the fact and circumstances of the case we find that there is no mala fide or deliberate delay and such delay was only for the reasons that all the members of Executive Committee to take unanimous decision was not available for passing the resolution for filing appeal before Tribunal. In such circumstances, when there is no mala fide intention or deliberate delay and that the delay was not intentional, on the part of assessee filing appeal of 26 days before the Tribunal, however, the assessee has shown sufficient cause, which is reasonable one and we condone the delay. Now advert to merit of the case.
Brief facts of the case are that assessee is a Bar Association of Income Tax consultant of Surat Bench. The assessee filed an application under section 12AA of the Acton 09.02.2018 before Ld. CIT(E), Ahmedabad in Form No.10A as per Rule 17A of Income Tax Rules 1962. The assessee also furnished various required details necessary for its registration under section 12AA. However, the application of assessee was rejected vide order dated 28.12.2018 by holding that assessee failed to submit copy of registration certificate, evidencing creation of trust / institution. Aggrieved by the order of Ld. CIT(E), the assessee filed appeal before the Tribunal, which was registered in ITA No.78/SRT/2019. The order of ld CIT(E) was set aside by this combination, in order dated 23.08.2021 passed in with the direction to examine the object and the activities of the assessee and to pass speaking order in accordance with law.
The Ld. CIT(E) in terms of direction of this Bench considered the plea of assessee afresh. The Ld. CIT(E) vide show cause notice dated. 18.12.2021 asked the assessee to submit details / documents for verification of object of the assessee and the activities carried out in accordance with the object. The assessee filed its response / reply on ITBA portal on 31.12.2021. In the reply, the assessee submitted that “the association is formed as an institution under its memorandum of association and rules and regulation. As the association is neither a trust nor a Section 8 Company, it does not require any registration from any authority. The Bar Association has not obtained registration under Gujarat Public Trust Act”. The ld CIT(E) noted that the assessee filed its memorandum and rules of registration with reply dated 30.12.2021. The Ld. CIT(E) on considering the material before him held that Rule 17A and Section 12AA require production of document establishing creation of trust or institution. Production of trust deed or memorandum of association, without approval of any competent authority have no legal sanctity in the eyes of law. Various competent authorities like Charity Commissioner / Registered Registrar of Societies /Registrar of Companies etc., have been set up by the company for registration or charitable or religious trust / institution / association without getting registered with the competent authority there will not be any legal obligation on the part of trust or institution to maintain any record of the activities. Moreover, there would be no control / provision for the activities of such unregistered entities. The Ld. CIT(E) further specifically held that sub-clause (c) to clause (i) of Rule 17A inserted with effect from 19.02.2018 required the assessee to furnish certified copy with registration of companies, or registration of farm or society or registrar of public trust, as the case may be. The assessee has not furnished any such document for seeking registration under section 12A either before in original proceedings or before Tribunal. The Section 12AA laid down the procedure to be followed by the Commissioner for granting / refusing registration under section 12A and such procedure, the Ld. CIT(E) is required to call for information and document and to conduct enquiry to satisfy himself of the genuineness of such trust, and upon reaching satisfaction of the charitable and religious nature of the objects and authentic of activity, as to grant registration. For such ratio the Ld. CIT(E) referred the decision of Hon’ble Supreme Court in the case of CIT vs. Dawoodi Bohara Jamat in Civil Appeal No.2492 of 2014. The Ld. CIT(E) on the basis of aforesaid observation held that assessee failed to comply with the provision of Rule 17A. Accordingly application for registration under section 12AA was rejected. Further aggrieved assessee has filed present appeal before the Tribunal.
We have heard the submission of Ld. Authorized Representative (Ld.AR) for the assessee and Ld. Commissioner of Income Tax- Departmental Representative (Ld. CIT-DR) for the Revenue. The Ld. AR for the assessee submits that assessee filed an application 12AA on 19.01.2018. The Ld. CIT(E) initially rejected / denied registration under section 12AA vide his order dated 28.12.2018 mainly for the reasons that assessee neither registered with registrar of Public Trust nor it is registered with Companies Act and that assessee failed to file documentary evidence to satisfy the genuineness of such activities against such order. The assessee filed appeal before Tribunal vide and the appeal of assessee was adjudicated vide order dated 23.08.2021 and the matter was restored back to the file of Ld. CIT(E). While restoring the matter back to the file of Ld. CIT(E) by this Bench relied upon the decision of Co-ordinate Benches of ITAT Ahmedabad Benches in the case of Panchkuva Cloth Merchant Association (2021) 128 taxmann.com 391 (Ahmedabad-Trib.), wherein it was held that it is not necessary for assessee to be registered with Charity Commissioner or it should be Section 8 of Companies Act. Before Ld. CIT(E) in restoration proceedings, the assessee furnished the required details called for vide their letter / reply dated 07.12.2021. The Ld. CIT(E) again rejected the assessee’s application on the ground that assessee is required to produce certified copy of registration with registrar of companies or registration of farms or society or registrar of Public Trust as the case may be. The Ld. AR for the assessee further submits that so far as clause-(b) of Rule 17A is concerned it is to be noted that there was no amendment and similar provision laid down under this clause. The assessee filed copy of memorandum of association and Articles of Association and Rules & Regulation evidencing creation of assessee. Such information was provided on ITBA portal on 31.12.2021. Such fact is confirmed by Ld. CIT(E) in his order. So far as clause-(c) of Rule 17A(2) is concerned, the Ld. AR for the assessee submits that there is no mandatory provision laid down under this clause that institution should be registered with registrar of Companies or registration of firms or society or registrar of Public Trust. It is just provided under this clause that the assessee is required to file certificate of registration as the case may be, meaning thereby, that the assessee is required to file the certificate of registration, if it is so registered. There is no provision that Institution should be constituted under any law. No such provisions were laid down for granting registration under section 12AA that the Institute should be registered with any authority unlike the provision of Section 80G, when it is prescribed under clause (v) in Section 80G(5) that Institution should be constituted as a Public Charitable Trust for registration under the Societies Act or under section 25 of the Companies Act. In first round of litigation, the Tribunal rightly relied on the decision of Co-ordinate Benches of Ahmedabad in the case of Panchkuva Cloth Merchant Association (supra). The registration was refused to the assessee on the same ground, which was subject-matter before of appeal. Ld. AR for the assessee submits that they have provided complete details as required by Ld. CIT(E) for formation of trust and genuineness of such activities, except certificate of registration under other law as it was not so registered. The assessee cannot be expected to do the impossible. The Ld. CIT(E) in impugned order relied on the decision of Hon’ble Supreme Court in the case of CIT Vs Dawoodi Bohara Jamat (supra). The findings in the case of Dawoodi Bohara Jamat (supra) is in favour of assessee.
The ld AR for the assessee submits that in the order passed in set aside proceedings, the ld. CIT(E) exceeded his jurisdiction. The Ld. CIT(E) cannot override with the direction of Tribunal. To support such view, Ld. AR for the assessee relied upon decisions of Hon’ble jurisdictional High Court in the case of Saheli Synthetics (P.) Ltd. vs. CIT (302 ITR 126 (Guj) in the case of Engineering Professional Co. Private Ltd. vs. DCIT [SCA No.1997/2019], Hon’ble Apex Court in the case of Khalid Automobiles vs. Union of India & Ors. (1997) 96 ELT 509 (SC) and in the case of Union of India vs. Kamlakshi Finance Corporation Ltd. (1992) 1992 taxmann.com 62; Hon’ble Bombay High Court in the case of K. Subramanian vs. Siemens India Ltd. (1983) 15 Taxman 594; Hon’ble Rajasthan High Court in the case of Pooja Agarwal vs. CIT [Tax Appeal No.38 of 2020 (Raj). The Ld. AR for the assessee also relied on the following decisions. Bhopal Sugar Industries Ltd. vs. ITO (1960) 40 ITR 618 (SC) Union of India vs. Intercontinental Consultants & Technocrats (P.) Ltd. (2018) 91 taxmann.com 67 (SC) Panchkuva Cloth Merchant Association vs. CIT(Ex) (2021) 128 taxmann.com 391 (Ahmedabad-Trib.) 9. On the other hand, Ld. CIT-DR for the Revenue supported the order of Ld. CIT(E). The ld. CIT-DR of Revenue submits that assessee neither 8 before Ld. CIT(E) nor before the Bench has filed any evidence that assessee / Bar Association is registered with any Government agency/ authority; like Registrar of Society or Trust or under Public Charitable Trust Act or Under the provisions of Companies Act. The Rule regarding registration of trust or institutions under section 12AB has been substituted with effect from 01.04.2021. As per substituted Rule 17A , the assessee must be registered with registrar of company or registrar of firm or society of registrar of Public Trust as the case may be. Such conditions are mandatory. The Ld. AR of the assessee mainly made emphasis that certified copy of registration is required, if they are registered. Such understanding of Ld. AR of assessee is not correct. The provision of sub-clause-(c) of sub-rule-(2) of Rule 17A, is clear and unambiguous and such condition cannot be overlooked. While considering the registration under section 12AB, the Ld. CIT-DR for the Revenue fairly submits that he has no objection if the application of assessee is treated under section 12AB provided that they fulfilled all requisites condition for registration for their registration. The Ld. CIT-DR for Revenue reiterated that neither the memorandum of association is filed before the Tribunal nor assessee has taken any step for seeking registration in accordance with mandatory provision of clause-(c) of sub-Rule(2) of Rule 17A. So far as comparison of application under section 80G by Ld. AR for the assessee for, the Ld. CIT-DR submits that those provision cannot be compared at this stage as registration under section 80G cannot be granted unless the trust / institution is registered under section 12A / 12AA/12AB. The Ld CIT- DR submits that assessee is a body of tax consultant i.e., Bar and member should get its registered under statutory provision either before Charitable Commissioner or before Registrar of society. On getting registration, the memorandum of Article of Association get some legal sanctity, in absence of such registration that there is no legal sanctity of the various clauses of memorandum of association. On the basis of aforesaid submission, Ld. CIT-DR for the Revenue submits that order of Ld.CIT(E) may be upheld.
We have considered the rival submission of both the parties and have gone through the order of Ld. CIT(E) carefully. We have also deliberated on various case law relied on by Ld. AR for the assessee. It is matter of fact that initially the assessee filed application for registration under section 12AA. The application of the assessee was rejected by ld CIT( E) vide order dated 28.12.2018. The sole basis of rejection of application under section 12AA is the want of registration with registrar, registrar of farm and society or registrar of trust as the case may be. It is an admitted fact that assessee / Bar Association has not obtained any registration either under Gujarat Public Trust Act or under any other statutory provision. We find that Rule 17A, which deals with the registration under section12AB has been substituted with effect from 01.04.2021 and as per substituted provision prescribed under clause-(c) of sub-Rule-2 of Rule 17A, the assessee is required to furnish certified copy of registration with registrar of Companies or registrar of farm and society or registrar of Public Trust, as the case may be. Since, the application of the assessee for registration was pending either before this Tribunal or restored back to ld CIT(E), therefore, this application is treated under section 12AB. In or view, this is a condition precedent for making application under Form 10A or 10AB, however, before us Ld. AR for the assessee vehemently submitted that furnishing of self-certified copy is required only if it is so registered and it was also argued that there is no provision that institute should be constituted under any law. Such submission of Ld. AR for the assessee is not acceptable to us, as clause-(c) of sub-Rule (2) of Rule 17A is clear and unambiguous. Income Tax Rules 1962 amended from time to time is framed to supplement of statutory provision under the Act and have approval of Parliament. Thus, in our view the assessee failed to fulfil the primary condition for registration under registrar of company, registrar of farm and society or registrar of Public Trust and in absence of such registered instrument, the application filed by assessee is premature and cannot be proceeded to examine their object and the activities, if in accordance with their object. Therefore, we do not find any merit in the submission of Ld. AR for the assessee.
So far as the reliance on the various case laws are concerned on the ratio of law that lower authorities should not exceed their jurisdiction. We find that ratio for all such decisions are not applicable on the facts of the present case as the Ld. CIT(E) has duly considered the direction ITAT Bar Association Surat of this Bench and granted full opportunity to the assessee, before passing the order in accordance with law. The Ld. CIT(E) has nowhere exceeded his jurisdiction while passing the order afresh, rather the assessee itself failed to fulfil the requisite conditions for making application as per the condition of clause-(c) of sub-Rule (2) of Rule 17A. In the result, grounds of appeal
raised by assessee are rejected.
12. However, keeping in view the activities of the assessee, the assessee given liberty to apply for fresh registration in the event of compiling with the requirement of registration under any of statutory authority like registrar of company, society and farm or registrar of Public Trust as the case may be.
13. In the result, appeal filed by assessee is dismissed. Order pronounced in the open court on 12/10/2023.