Income Tax Appellate Tribunal - Hyderabad
M/S. A.P. Endowments Archakas And Other ... vs Assessee on 10 April, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCH "B", HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER
ITA Nos. 1993 and 1994/HYD/2011
Assessment Years : 2004-05 and 2005-06
A.P. Endowments Archakas and other
Employees Welfare Fund Trust, ... Appellant
Hyderabad.
(PAN - AABTA6286F)
Vs.
Director of Income-tax(Exemption)-I, ... Respondent
Hyderabad.
ITA Nos. 1672 and 1673/HYD/2012
Assessment Years : 2004-05 and 2005-06
A.P. Endowments Archakas and other
Employees Welfare Fund Trust, ... Appellant
Hyderabad.
(PAN - AABTA6286F)
Vs.
Asst. Director of Income-tax(Exemption), ... Respondent
Hyderabad.
Assessee by : Shri P. Murali Mohan Rao
Revenue by : Shri D. Sudhakar Rao
Date of Hearing : 10/04/2012
Date of Pronouncement : /06/2012
ORDER
PER SAKTIJIT DEY, J.M:
These are four appeals filed by the assessee. W hile ITA.No.1993 & 1994/Hyd/2011 are against order dated 04.12.2006 of the DIT(E), Hyderabad, the other two appeals in ITA No. 1672 & 1673/Hyd/2012 are against two separate orders of the CIT(A) pertaining to the assessment years 2004-05 and 2005-06. Since the assessee is common and issues are inter-connected all these appeals are clubbed together and disposed of in this combined order for the sake of convenience.
2ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust ITA.No.1993 & 1994/Hyd/2011
2. The only issue in these appeals is with regard to the fact that the DIT(E) while allowing registration under section 12A of the Act has granted it prospectively and not from the date of creation of the Trust.
3. Briefly the facts emanating from the materials on record are, the assessee is a trust created by the Government of Andhra Pradesh under the A.P. Religious Institutions and Charitable Endowment Act, 1987 vide trust deed/memorandum and articles of association dated 21.07.1998. It further appears from the facts on record, the trust was created at the direction of the Hon'ble Supreme Court for the social welfare of the Archakas and other employees of temples. The corpus of the trust comprises of contributions received from various Devasthanams. The assessee trust filed an application before the DIT(E), Hyderabad on 27.06.2006 in the prescribed manner for grant of registration under section 12A of the Act. Though the DIT(E) vide impugned order dated 04.12.2006 granted registration to the assessee trust under section 12A
(a) of the Act, but he granted it prospectively w.e.f. 01.04.2006 by refusing to condone the delay of 06 years 11 months 06 days, thereby rejecting assessee's claim for grant of registration from the date of creation of the trust i.e., 27.09.1998.
4. Being aggrieved of the order so passed by the DIT(E), assessee has preferred the present appeals before the ITAT, Hyderabad Bench on 05.12.2011. These appeals came up for hearing before a Bench of this Tribunal on 21.05.2012. The Tribunal after hearing the parties, disposed of both the appeals in a common order dated 06.06.2012 by condoning the delay in filing the application for registration u/s 12A and remitted 3 ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust the matter to the DIT(E) with a direction to consider granting registration from the date of creation of the trust. Subsequent to the aforesaid order of the Tribunal, the department filed miscellaneous applications for recalling the order dt.6.6.2012 passed by the bench for the reason that though there is delay of 1757 days in presenting the appeals before the ITAT but the Bench without addressing the issue of delay has disposed of the appeals on merits. Upon considering the misc. applications of the department the Tribunal recalled its earlier order and appeals were again posted for hearing.
5. In course of the present proceeding the assessee trust has furnished before us reasons explaining delay of 1757 days in presenting the appeals and has sought condonation of the same. Though, the reasons for delay are in affidavit format signed by the trusteebut actually it is not a sworn affidavit. Be that as it may, reason for delay as per assessee's explanation is as under-
"The order of DIT(E), Hyderabad, dated 04/12/20065, was received on 14/12/2006, and the same could not be filed in time as the papers had been misplaced by one of office staff and the same could be traced out and could be filed on 05/12/2011 with the delay of 1757 days as the appeal was due for filing on 12/02/2007 and instead of that the same has been filed on 05/12/2011. The delay in filing of the appeal may please be condoned and the appeal may please be considered.
In view of the above reasons, the delay may please be condoned and the appeal may please be considered due to circumstances which were beyond the control of the assessee."
6. The learned AR submitted that as there is reasonable cause for belated filing of the appeals, the delay may be condoned. He submitted that on the earlier occasion the Tribunal having found merit in the case of the assessee had not only condoned the delay in filing application for 4 ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust registration, but has also directed the DIT(E) to consider granting registration from the date of creation of the trust. Therefore, technicalities should not come in the way of substantive justice. The learned AR submitted that delay in filing of the appeals is due to a bonafide reason and not due to any deliberate latches or negligence on the part of the assessee. It was submitted that by not preferring the appeals in time, the assessee would not have gained anything, rather, the assessee ran the risk of not availing exemption. It was submitted that the assessee trust having been created with a charitable object for benefiting the archakas, delay needs to be condoned for the interest of justice.
7. The learned Departmental Representative on the other hand objected to condonation of delay.
8. We have considered rival submissions. Admittedly, there is a delay of 1757 days in filing the present appeals. Section 253(3) prescribes that an appeal before the ITAT has to be filed within 60 days from the date of receipt of the order to be appealed against. However, sub-section (5) of section 253 empowers the Tribunal to admit an appeal beyond the period of 60 days if it is satisfied that there was sufficient cause for not presenting the appeal within the prescribed period. There is no straight jacket formula to measure what constitutes "sufficient cause" as it has to be decided on the basis of facts involved in each individual case. Further, the satisfaction of the appellate authority must be on the basis of objective analysis of facts and should not be arbitrary or mechanical. In case of Collector of Land Acquisition V/s. Mst. Katiji and others, AIR 1987 SC 1353, the Hon'ble Supreme Court while interpreting the expression 'sufficient cause' has laid down certain principles which 5 ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust certainly can guide us in deciding the issue. The Hon'ble Supreme Court held that the words 'sufficient cause' are adequately elastic to enable the courts to do substantial justice to parties by disposing of matters on merits. The Hon'ble Apex Court held that 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 threshold and cause of justice being defeated. On the other hand, if delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. It was held that when substantial justice and technical considerations are pitted against each other, 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. There is no presumption that delay is occasioned deliberately or on account of culpable negligence, or on account of malafide. A litigant does not stand to benefit by resorting to delay. Rather he runs a serious risk. The Hon'ble Apex Court observed that 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.
9. As can be seen, in the present case, the assessee has explained that the belated filing of appeal was due to the fact that relevant papers were misplaced by one of the office staff and the appeals could be filed only after the papers were traced out. Considered in the light of the ratio laid down by the Hon'ble Apex Court as above, in our view, there is 'sufficient cause' for condoning the delay. It is a fact on record that the assessee trust is created by the Government of Andhra Pradesh on the directions of the Hon'ble Supreme Court for the benefit of the archakas. It is also a fact on record that so far as the object of the trust is 6 ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust concerned, there is no doubt with regard to the charitable nature of such object as the DIT(E) has himself granted registration u/s 12A of the Act, though, prospectively. In these circumstances, in our view, delay needs to be condoned, as otherwise, the assessee trust would be deprived of substantial justice. Accordingly, we condone the delay and admit the appeal for hearing.
10. So far as the merits of the issue are concerned, it is within a narrow compass as to whether assessee is entitled for registration u/s 12A of the Act from the date of creation of trust. As mentioned earlier, the DIT(E) has granted registration to the Trust prospectively with effect from 01/04/2006 on the ground that the assessee has not explained properly the delay in filing the application for registration. However as can be seen from the facts and materials on record, during the earlier round of litigation before the Tribunal the assessee had explained the cause of delay in making the application before the DIT(E) in an affidavit. The Tribunal after considering the cause shown by the assessee was of the view that there was reasonable cause for delay in filing the application for registration before the DIT(E). The Hon'ble Tribunal held in the following manner while disposing of the appeals in ITA No. 1993 & 1994/Hyd/2011 dated 06/06/2012:
"10. In the present case, the trust has filed the application to the Chief Commissioner of Income-tax on the bona-fide belief that the Chief Commissioner was an appropriate authority in this regard. Further, the Endowment Commissioner has made frequent requests to the Chairman, CBDT on the belief that the power of granting 100% exemption to the trust from the purview of income tax lies with the Central Government represented by the Chairman CBDT. Due to these reasons, the trust could not file the application for registration of trust within the stipulated time before the DIT(E) and the registration has not been granted with effect from 1997-98 till today. The assessee based on his bonafide belief had been approaching the wrong authorities for granting 7 ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust exemption. We also find that the authorities who are in the knowledge of things have not advised the assessee regarding the person to whom the application should have made nor did they forward the application to the correct authority, leading to the delay in filing of application to the correct authority by the assessee.
11. Since there was a sufficient cause for delay in filing the application, we condone the delay and remit the matter back to the file of the DIT(E), who shall decide upon the application of the assessee in considering the case in terms of section 12AA. Further the DIT(E) shall consider according registration with effect from the date of creation of the trust in accordance with law after providing reasonable opportunity of hearing to the assessee in the matter."
11. As can be seen from the aforesaid extracted portion of the order of the coordinate bench, the delay in filing the application before the DIT(E) was due to the fact that the assessee filed application for registration before a wrong forum. Further, it is evident that the assessee in fact was pursuing the matter with CBDT and the Central Government. Therefore, it cannot be said that the delay was deliberate or due to latches or negligence on the part of the assessee. May be due to lack of professional advice as well as proper guidance from the departmental authorities, the assessee was prevented from making the application for registration in time before the appropriate authority. In these circumstances, we fully agree with the view expressed by the bench earlier and see no reason to take a view other than what was taken by the Tribunal in order dated 06/06/2012 referred to hereinabove. It needs to be mentioned here that the earlier order of the Tribunal was recalled due to technical reasons and not for any error of judgment or error in decision making process, hence, the conclusion drawn by the bench still holds good. Accordingly, in consonance with the direction given by this bench earlier in paragraph 11 of the order dt.6.6.2012(supra), we 8 ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust condone the delay in filing application for registration before DIT(E) and remit the matter back to him with a direction to consider assessee's claim for grant of registration u/s 12A of the Act from the date of creation of trust.
12. In the result, appeals of the assessee are allowed for statistical purposes.
ITA Nos. 1672 and 1673/H/2012
13. These are appeals against the order passed by the CIT(A) pertaining to the assessment years 2004-05 and 2005-06.
14. Briefly the facts are, for the assessment years 2004-05 and 2005- 06 the assessee has filed its return of income declaring NIL income after claiming exemption u/s 11 of the IT Act. Initially assessments were completed u/s 143(3) of the Act by accepting the income declared. Subsequently, the Assessing Officer noticing that the assessee trust was granted registration u/s 12AA of the Act, with effect from 01/04/2006, reopened the assessments u/s 147 for the assessment years 2004-05 and 2005-06. In response to the notice issued u/s 148 of the Act, the assessee submitted its reply stating therein that the return filed earlier may be treated as return in response to notice issued u/s 148 of the Act. The Assessing Officer completed assessment for both the assessment years by bringing to tax the excess of income over expenditure amounting to Rs. 1,03,30,007/- and Rs. 88,40,365/- for AYs 2004-05 and 2005-06 respectively.
15. Being aggrieved of the assessment orders so passed the assessee preferred appeals before the CIT(A).
9ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust
16. The CIT(A), though, held that in absence of registration u/s 12A of the Act for the periods under consideration, the Assessing Officer was justified in denying exemption u/s 11 of the Act. However, the CIT(A) on considering the fact that the ITAT in its order dated 06/06/2012 passed in ITA NO. 1993 & 1994/Hyd/2011, condoned the delay in filing the application for registration before DIT(E) and remitted the matter back to him for fresh consideration held in the following manner:
"6.2 However, it is seen that the Hon'ble ITAT vide their order dated 06/06/2012 in ITA Nos. 1993 and 1994/hyd/2011 in the appellant' case have held that there was sufficient cause for delay in filing the application for registration by the appellant. Condoning the delay, therefore they have remitted the matter back to the file of the DIT(E) directing him to decide upon the application of the appellant after considering the case in terms of section 12AA. It has also been mentioned that the DIT(E) shall consider according registration with effect from the date of a creation of law in accordance with law after providing reasonable opportunity of hearing to the appellant in the mater. In view of the said order of the Hon'ble ITAT, therefore, the AO is directed to ascertain whether the appellant has been granted registration with effect from the date of creation of the trust. In case such registration has been granted since inception, the appellant would indeed be eligible for exemption u/s 11 for the AY 2004-05 also subject to fulfillment of the conditions u/s 11 to 13 of the IT Act, 1961. However, till the time such registration is granted by the DIT(E) specifically for the AY 2004-05, no infirmity can be said to exist in the order passed by the AO."
Identical order was also passed for the AY 2005-06.
17. We have heard the parties and perused the materials on record. The only issue in the present appeals is denial of exemption claimed u/s 11 of the Act due to absence of registration u/s 12A of the Act for the assessment years under consideration. W hile deciding assessee's 10 ITA Nos. 1993 & 1994/H/11 & 1672 & 1673/H/14 A.P. Endo wments Archakas and other E mployees Welf are Fund Trust appeals in ITA Nos1993 & 1994/Hyd/2011(supra) we have directed the DIT(E) to consider the issue of granting registration from the date of creation of trust. Therefore, we consider it appropriate to set aside the impugned orders of the CIT(A) and remit the matter back to the file of Assessing Officer for deciding afresh after necessary order is passed by the DIT(E) in respect of effective date of registration u/s12A.
18. In the result, these appeals are considered to be allowed for statistical purposes.
19. To sum up, all four appeals filed by the assessee are considered to be allowed for statistical purposes.
Pronounced in the open court on 06/06/2014.
Sd/- Sd/-
(CHANDRA POOJARI) (SAKTIJIT DEY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad, Dated: 6 th June, 2014
kv
Copy to:-
1) A.P. Endowments Archakas and other
Employees Welfare Fund Trust
C/o P. Murali & Co., Chartered Accountants,
6-3-655/2/3, 1 s t Floor, Somajiguda, Hyderabad - 32.
2) DIT (Exemptions)-Hyderabad
3) DDIT (Exemptions) - 1, Hyderabad
4) The Departmental Representative, I.T.A.T., Hyderabad