Madras High Court
Commissioner Of Income Tax I vs Hemla Trust on 3 September, 2018
Author: T.S.Sivagnanam
Bench: T.S.Sivagnanam, V.Bhavani Subbaroyan
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 03.09.2018
CORAM :
THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAM
and
THE HONOURABLE MRS.JUSTICE V.BHAVANI SUBBAROYAN
Tax Case Appeal No.637 of 2009
Commissioner of Income Tax I
Madurai. .. Appellant
Vs.
Hemla Trust,
B-46, First Cross Street,
Maharaja Nagar,
Tirunelveli. .. Respondent
* * *
Prayer : Tax Case Appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Madras 'B' Bench, dated 25.09.2008 in ITA No.324/Mds/2008.
* * *
For Appellant : Mr.Karthik Ranganathan,
Standing Counsel
For Respondent : Mr.Vikram Vijayaraghavan
* * *
J U D G M E N T
[Judgment of the Court was delivered by T.S.Sivagnanam, J.] This appeal filed by the Assessee is directed against the order passed by the Income Tax Appellate Tribunal Bench B, Chennai, in I.T.A.No.324/Mds/2008, dated 25.09.2008.
2. This appeal has been admitted vide order dated 27.07.2009 on the following substantial questions of law:
i) Whether on the facts and circumstances of the case, the Tribunal was right in entertaining an appeal against an order rejecting review of the original order, when no appeal had been filed against the original order under Section 12AA of the Income Tax Act ?
ii) Whether on the facts and in the circumstances of the case, the Tribunal was right in directing the Commissioner of Income Tax to reconsider the issue and grant registration with retrospective effect from 1988, when the application for registration was filed only in 2007 ?
3. The Assessee filed an application under Section 12AA of the Income Tax Act, 1961 (in short, the Act) on 30.05.2007 for grant of registration of trust said to have been created on 10.02.1988. Section 12AA mandates that the application for registration ought to have been filed within one year from the date of creation of the Trust. Admittedly, the Assessee's application was filed after a delay of 18 years, 3 months and 21 days. The Commissioner of Income Tax vide order dated 06.11.2007 considered the application and granted registration under Section 12A(a) of the Act with effect from 01.04.2007 relevant to the Assessment Years 2008-2009 and onwards, i.e., prospectively.
4. So far as the aspect regarding the delay is concerned, the Commissioner of Income Tax held that there has been no separate condonation of delay petition filed along with the application for registration dated 30.05.2007. Secondly, although this deficiency was pointed out to the Assessee/Trust by the Assessing Officer vide a separate letter and inspite of a notice of hearing having been issued to appear on 05.11.2007 to explain such delay along with a condonation of delay petition, none appeared on the appointed date, nor any written communication has been received in the office of the Commissioner of Income Tax either explaining the reasons for such delay or for such non-compliance. Thus, the Commissioner of Income Tax held that the Trustees are not interested in explaining the reasons for such delay in filing the application for registration before the Commissioner. In the absence of any such application, it was held that the delay cannot be condoned. Further, the Commissioner pointed out that the amendment through the Finance Act, 2007, though effective from 01.06.2017, also supports the view that no condonation of delay and grant of registration from first April of the relevant assessment year. The said order dated 06.11.2007 had not been challenged by the assessee. On the contrary, they said to have filed an application for condonation of delay along with application for registration dated 30.05.2007.
5. The said petition was filed on 04.12.2007 requesting the Commissioner to review his order dated 06.11.2007 and consider the condonation of delay petition. The reasons assigned by the Assessee in the said petition was that the Founder Trustee was an age old person and they were of the view that the charitable nature of the activities of the trust does not require any registration and therefore, the delay deserves to be condoned. The Commissioner vide order dated 14.12.2007 pointed out that the order granting registration was passed on 06.11.2007 without condoning the delay of 18 years, 3 months and 21 days beyond one year from the date of creation of the trust. Although the matter was fixed for hearing on 05.11.2007, nobody attended to explain the reasons for such inordinate delay. Therefore, the delay was not condoned and the registration was allowed with effect from 01.04.2007 relevant to Assessment Year 2008-2009 onwards. The Commissioner pointed out that the petition has been filed in his office on 04.12.2007 seeking to review the said order on the ground that the petition for condonation of delay has not been considered. After stating the reasons given in the said petition for the delay in filing the application, the Commissioner held that the reasons for such delay are clearly not adequate and not sufficient to explain the inordinate delay of more than 18 years and 3 months and thus, there are no adequate reasons to review the order.
6. The Assessee carried the matter before the Tribunal and filed an appeal and the Tribunal by the impugned order held that to meet the ends of justice, it is necessary that the Commissioner may consider the question of registration afresh, after giving the Assessee an effective opportunity of hearing and set aside the order, which is impugned before us.
7. We have heard Mr.Karthik Ranganathan, learned Standing Counsel for the Revenue and Mr.Vikram Vijayaraghavan, learned counsel for the Assessee.
8. On a reading of the impugned order passed by the Tribunal, we find that the Tribunal has not assigned any reasons to allow the appeal and to set aside the order of the Commissioner and remanding the matter for fresh consideration. The only expression used by the Tribunal is to meet the ends of justice. When the judicial forum or the quasi-judicial forum, exercising appellate power, is not satisfied with the reasons assigned by the lower authority or the first appellate authority, it should record a finding as to why it is not satisfied with the order passed by the said authority and justify the order of remand. If the approach adopted by the Tribunal is to be followed in others cases, in every order merely recording the view that the matter has to be remanded using the expression to meet the ends of justice, result in an anomalous situation. This procedure cannot be adopted by the Tribunal, while remanding the matter for fresh consideration and a duty is enjoined upon the Tribunal to give sufficient reasons as to why it came to the conclusion that the order of the Commissioner deserves to be set aside and the matter requires fresh consideration. Thus, personal views have absolutely no say on such issues and without assigning specific reasons, the Tribunal erred in setting aside the order and remanding the matter for fresh consideration.
9. Having come to such a conclusion, we need not examine the first substantial question of law with regard to whether the Tribunal was right in entertaining the appeal against the rejection order rejecting the review of the original order. Firstly, the assessee cannot dispute the fact that no application for review is maintainable against the order passed under Section 12A and in this case the order dated 06.11.2007. Faced with this, learned counsel for the Assessee would contend that it is not a review petition and the expression is a misnomer, it is only an application for rectification. The power to rectify an order is conferred on the authority in terms of Section 154 of the Act. Thus, to invoke such a power there should be an error apparent from the record, which, in our considered view, has not been pointed out by the assessee in the petition filed for condonation of delay dated 04.12.2007. Therefore, the Revenue, technically, is right in contending that the Tribunal ought not to have entertained the appeal.
10. Nevertheless, the Tribunal having entertained the appeal, we are of the view that it would be sufficient to decide the substantial question of law No.2, given the facts and circumstances of the case.
11. Admittedly, the delay is more than 18 years and it is inordinate and unexplained. The reason, which was stated by the Assessee, is that the Founder Trustee is an elderly person suffering from several ailments and they were under the impression that the Trust has been registered under the Act, the failure to file the application for registration was not wilful, but due to genuine mistake. Ignorance of law is no excuse. The provision of Section 12A, being a beneficial provision to the Assessee, requires strict interpretation. Therefore, the Assessee should have been in a position to explain the delay, which is more than 18 years in the instant case.
12. As rightly pointed out by the Commissioner, the reasons assigned by the Assessee for the delay are clearly inadequate and not sufficient. Unless and until the Assessee has shown sufficient cause for condonation of delay, the question of condoning the delay does not arise. In the facts and circumstances of the case, the nature of relief sought by the Assessee does not warrant an liberal approach. Furthermore, the Commissioner has pointed out that despite opportunity being granted to the assessee, they did not appear.
13. One more important factor, which the Revenue has raised before us is that there is no power to review an order passed under Section 12A and power to cancel or recall an order was introduced only with effect from 01.10.2004.
14. Learned counsel for the Assessee would contend that what they seek for is not a review, but rectification. This contention does not merit acceptance for the reasons assigned by us earlier. Furthermore, the effective date, having been fixed as 01.04.2007, is attempted to be pushed back by more than 18 years. This would amount to review of the order dated 06.11.2007, which is impermissible.
15. One more contention advanced by the learned counsel for the Revenue is that the proviso to Section 12A was introduced with effect from 01.06.2007 and on the date, when the Commissioner passed the order on 06.11.2007, he had no jurisdiction to pass such an order. However, it is to be pointed that in the instant case, the application was filed on 30.05.2007. Therefore, it is not the date of order, which is relevant, but the date of application. In any event, need to consider such an issue does not arise in this case, as we are fully satisfied that the Commissioner had rightly allowed the registration with effect from 01.04.2007 and the reasons assigned by the Commissioner in the order dated 14.12.2007 declining to condone the inordinate delay is also just and proper. Hence, in the facts and circumstances of the case, the Tribunal committed an error in remanding the matter for fresh consideration.
16. Learned counsel for the Assessee vehemently contended that the Tribunal has directed the Commissioner to afford opportunity to the Assessee and it has also given full liberty to the Commissioner to consider the question of registration afresh. An order for reconsidering the issue already decided cannot be mechanically passed, unless and until, the superior authority or the Court is convinced that the exercise of discretion either improper or illegal. As pointed out earlier, personal opinion has no room in such matters. Thus, the Tribunal ought not to have remanded the matter for fresh consideration and the order of remand deserves to be set aside.
17. For the reasons stated above, the appeal filed by the Revenue is allowed and the impugned order passed by the Tribunal is set aside and the order passed by the Commissioner dated 06.11.2007 and 14.12.2007 are restored. Accordingly, the substantial question of law No.2 is answered in favour of the Revenue and against the Assessee. No costs.
18. As pointed out earlier, there would be no necessity to examine the substantial question of law No.1 and the same is left open.
(T.S.S., J.) (V.B.S., J.)
03.09.2018
gg
To
1.The Income Tax Appellate Tribunal Madras 'B' Bench.
2.The Commissioner of Income Tax,
Chennai.
3.The Commissioner of Income Tax (Appeals)-15,
Chennai.
T.S.SIVAGNANAM, J.
and
V.BHAVANI SUBBAROYAN, J.
gg
T.C.A.No.637 of 2009
03.09.2018