2012 (11) TMI 337 - AT - Income Tax

ITAT condones delay in trust's registration application, emphasizes substantial justice

The Appellate Tribunal ITAT, Hyderabad, condoned the delay in filing the application for registration under section 12AA of the IT Act, 1961 by a trust ... Power of Condonation of Delay in filing an application u/s 12AA – Held that:- 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 exemption. 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 - Since there was a sufficient cause for delay in filing the application, The expression “sufficient cause ' as decided in case of [Collector, Land Acquisition v Mst. Katiji And Others– 1987 (2) TMI 61 – SUPREME COURT] employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which sub serves the ends of justice that being the life-purpose of the existence of the institution of courts. It is common knowledge that the 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 - delay is condoned 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 - In the result, both the appeals under consideration are treated as allowed for statistical purposes. Issues:Delay in filing application for registration u/s 12AA of the IT Act, 1961 leading to denial of exemption claimed by the assessee for assessment years 2004-05 & 2005-06.Analysis:The Appellate Tribunal ITAT, Hyderabad, heard appeals against the Director of Income-tax (Exemptions) order denying registration to the trust due to a delay of 6 years 11 months 6 days in filing the application for exemption. The trust, formed by the State Government for the welfare of temple employees, filed returns declaring nil income. The Tribunal noted the trust's efforts to obtain exemption, including approaching the Chief Commissioner of Income-tax and the Chairman, CBDT, due to a genuine belief that they were the appropriate authorities. The delay was attributed to this misunderstanding and lack of guidance from knowledgeable authorities. The trust filed an affidavit explaining the delay, which was not considered by the DIT(E). The Tribunal cited legal precedents emphasizing the liberal interpretation of 'sufficient cause' for condonation of delay, highlighting the importance of substantial justice over technicalities. It noted that delay should not be presumed deliberate and that legal remedies should be kept alive for a legislatively fixed period.The Tribunal referred to judgments emphasizing the liberal construction of 'sufficient cause' to advance justice, particularly when there is no motive behind the delay. It highlighted the trust's bonafide belief in approaching the wrong authorities for exemption and the lack of guidance from knowledgeable sources. The Tribunal, considering the sufficient cause for delay, condoned the delay and remitted the matter back to the DIT(E) for reconsideration of the application under section 12AA. The DIT(E) was directed to provide a reasonable opportunity of hearing to the assessee and consider granting registration from the trust's creation date in accordance with the law. The Tribunal applied similar reasoning for the assessment year 2005-06 and allowed both appeals for statistical purposes.In conclusion, the Tribunal's judgment focused on the importance of substantial justice, the liberal interpretation of 'sufficient cause' for delay, and the trust's genuine efforts to obtain registration for exemption. It highlighted the need to consider the circumstances leading to the delay and provided detailed legal analysis to support the decision to condone the delay and remit the matter for reconsideration.