TaxTMI 
TaxTMI 
2013 (1) TMI 157
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.... same day: - "Whether the Income Tax Appellate Tribunal was right in setting aside the order passed by the Director General of the Income Tax (Exemption) under Section 263 of the Income Tax Act, 1961?" 3. Two separate orders were passed by the Income Tax Appellate Tribunal, Delhi Bench „I‟. The first order is dated 06.05.2009 and was passed in ITA Nos.3052-3054/Del/2008 which order is challenged by the Revenue in ITA Nos.754, 773 and 775 of 2010. The second order of the Tribunal was passed on 10.07.2009 in ITA Nos.1653-1658/Del/2009. This order was passed by the Tribunal in the appeals filed by the assessee against the orders passed by the Director of Income Tax (Exemptions) under section 263 of the Act. The Tribunal followed its first order dated 06.05.2009 and allowed the appeals of the assessee. In the first order, the Tribunal held that the assessee was entitled to registration under section 12A and section 80G of the Act and that the delay in making the application for such registration was condoned. This was the order passed by the Tribunal in ITA No.3054/Del/2008, which was the main appeal by the assessee and consequently ITA Nos.3052-3053/Del/2008 were dismi....
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....e income of the assessee - society on the ground that it had applied for registration under section 12A. 7. Subsequently, the DIT (Exemptions) seems to have found that the assessee had issued certificates under section 80G for collection of donations for the period 01.04.2001 to 31.03.2003; these certificates of approval were found not to have been issued by the income tax authorities. Based on this serious irregularity the DIT (Exemptions) sought an explanation from the assessee. Several other particulars were also called for such as the names, addresses and PAN numbers of the donors, the mode in which the donations were received, etc. The assessee was also called upon to explain the reasons for not filing the returns of income on a regular basis even though no registration under section 12A was granted. The assessee responded by a letter dated 17.03.2006 the gist of which was that the financial matters and tax related issues were being dealt with by its erstwhile treasurer A. K. Sikri, Chartered Accountant who had since ceased to work for the society and that the assessee had made inquiries from him, that he had informed the society that "due to certain lapses by his sub....
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.... and, therefore, his services were terminated and steps were taken to comply with the filing of the returns. The assessee also explained that these developments constituted sufficient cause for the delayed filing of the applications for approval under sections 12A and 80G and that the DIT (Exemptions) ought to have condoned the delay and accorded registration. 9. The DIT (Exemptions) refused to grant registration to the assessee-society. He gave several reasons for the refusal. The main reasons were that the activities of the assessee - society were not genuine, that the assessee had forged the 80G certificates, that the assessee had also faked the certificate granting extension of registration under section 12A for the period 01.04.2005 to 31.03.2008, that no such certificate has been issued to the assessee by the DIT (Exemptions), that the assessee did not submit any particulars relating to the donations received on the basis of alleged certificates issued under section 80G, that simply by taking the plea that the society was dependent on A.K. Sikri, its erstwhile treasurer, it cannot wash off its hands from the illegality committed by it, that the conduct of the societ....
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....be that of the trust unless they are enacted with the involvement of other trustees. Eventually, the Tribunal by order dated 15.5.2007 held as under: - "80. Thus it was necessary for the ld. DIT (E) to examine that whether other members of Governing Body were also involved in obtaining fake certificates or they were in the knowledge that the certificates are fake. Individual activity of a trustee or a member cannot be termed to be the activity of the trust. The language used in the provision of section 12AA refers to genuineness of the activities of the trust or institution and not to the activities of an individual trustee. If any misappropriation is made that will be only a breach of trust on the part of that particular trustee. Thus in our view it was necessary for the DIT (E) to examine that aspect as all the relevant materials were placed before him. Without examining he cannot draw a presumption that other members of the Governing Body were also involved. In the circumstances we consider it just and proper to restore this issue to the file of DIT (E) to examine this issue properly and after making verification in this regard pass an order u/s 12AA as per provisions of law. ....
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....rgery and, therefore, its plea for condonation of the delay cannot be accepted. 12. In fine, the DIT (Exemptions) concluded that registration under section 12A cannot be granted and the delay in filing the application cannot be condoned. Consequently the claim for certificate of exemption under section 80G was also rejected. This order was passed on 24.9.2008. 13. It was against the aforesaid order of the DIT (Exemptions) that the assessee preferred an appeal to the Tribunal in ITA No.3054/Del/2008. The Tribunal examined the facts and the submissions in great detail from paragraphs 30 to 104 of the impugned order dated 06.05.2009. In these paragraphs the entire sequence of events was marshalled cogently and the rival submissions have been elaborately adverted to including the authorities cited by both the sides. Ultimately the findings of the Tribunal are contained in pagaraphs 105 to 124 of the impugned order. A perusal of these paragraphs shows that the Tribunal has recorded the following findings: - (a) In the earlier order of the Tribunal dated 25.05.2007, it was held that the DIT (Exemptions) should examine whether the other members of the governing body of the assessee - s....
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....mediately on receipt of the complaint, the assessee convened a meeting of its governing body in its head office at Delhi in which Sikri was present. His explanation was that he had applied for exemption certificates in the normal course of his work, relying on his office accountant (Vishnu Prasad). The accountant was absconding and according to Sikri an FIR had been lodged with the police for taking action. Sikri also signed the minutes of the meeting in which these facts were apparently recorded. The general body appointed a committee consisting of Sikri and Dev Raj Kataria, the General Secretary to enquire into the matter. On 15.01.2006, Sikri wrote a letter to the Chairman that as Treasurer he was responsible for all the accounting and tax matters, that he was following up the issue about the forged registration certificates with the income tax authorities and a private agency was appointed (by him) to ascertain the whereabouts of the erring employee. Sikri submitted a report on 28.02.2006 to the Chairman of the society that the fake certificates were procured by his employee which was submitted by him (Sikri) in turn to the society. He accepted moral responsibility and promised....
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....e the same explanation, namely, the entrustment of the work of filing the applications for approval under sections 12A and 80G and the filing of the income tax returns to his employee. He also stated that it was his employee who had given the certificates to R.L. Gupta, the President of the assessee - society for further action. Radhey Lal who was also examined by the Kirti Nagar Police confirmed the statement of Sikri. On 29.02.2008 a report was submitted by the police in the Court of the Metropolitan Magistrate, Rohini to the effect that Sikri was making false statements and a prayer was made that action under section 181, Indian Penal Code may be taken against him. Prior thereto, on 21.11.2007, on the basis of the criminal complaint No.1870/2007 filed by the assessee on 28.06.2006 in the Court of ACMM, Rohini Courts, Delhi an FIR was registered against Sikri and he was arrested by the police. He remained in custody till 26.12.2007. In the meantime on 27.11.2007 he filed a bail application under section 437 of the Cr.P.C. and even in this bail application, he reiterated his earlier stand that he alone was responsible for the controversy, through his employee. He also stated that ....
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.... from any guilt or culpability. It is contended that an overall appreciation of the sequence of events and the evidence would suggest that there was collusion between A.K. Sikri and the assessee - society in the whole affair. It is pointed out that Sikri did not stand to gain or benefit by the alleged acts of illegality, forgery, etc. and that the ultimate beneficiary of such acts was only the assessee - society and this crucial aspect has been missed by the Tribunal. According to the learned standing counsel, Sikri could not have had any motive for indulging in such acts except on the prompting or directions of the members of the governing body of the assessee - society. Attention is also drawn to the fact that the whole affair came to light only because of the complaint of M. P. Mansinghka Trust of Mumbai. It is vehemently contended that Sikri was only acting as an employee i.e. Treasurer of the society without any personal motive or benefit and it is wrong on the part of the Tribunal to have concluded that the society itself was a victim of the fraud allegedly committed by Sikri. 17. On the other hand, it was submitted on behalf of the assessee - society that it took pr....
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....ue in the memorandum of appeal and, therefore, there was no substance in the appeals. In support of these submissions reliance was placed on several authorities compiled in the form of a paper-book. 18. The main question that falls for our consideration is whether the Tribunal was justified in condoning the delay in the filing of the application for registration under section 12A of the Act and whether the view taken by the Tribunal is perverse. The question whether there was sufficient cause for the delay is always a question of fact as has been held by two Division Bench judgments of this Court: (i) CIT v. Parma Nand, (2004) 266 ITR 255 and (ii) CIT v. ITOCHU Corporation, (2004) 268 ITR 172. The Tribunal has, in an elaborate order in which all the facts and the rival submissions have been taken into consideration, held that there was sufficient cause for the delay on the part of the assessee - society in making the applications for registration under section 12A and 80G of the Act. It is not necessary, nor is it proper, for us to decide the culpability or otherwise of A.K. Sikri who was the Treasurer of the assessee - society. All that we need to examine is whether the....
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....tion was filed on 14.03.2006 narrating the events that led to the delay. 19. In the above circumstances, it seems to us that the Tribunal has acted judicially, taking note of all the facts and circumstances including probabilities of the case. In Esthuri Aswathiah v. CIT, (1967) 66 ITR 478 SC, the Supreme Court outlined the duties of the Tribunal in the following words: - "The function of the Tribunal in hearing an appeal is purely judicial. It is under a duty to decide all questions of fact and law raised in the appeal before it: for that purpose it must consider whether on the materials relied upon by the assessee his plea is made out. Conclusive proof of the claim is not predicated: the Tribunal may act upon probabilities, and presumptions may supply gaps in the evidence which may not, on account of delay or the nature of the transactions or for other reasons, be supplied from independent sources. But the Tribunal cannot make arbitrary decisions: it cannot found its judgment on conjectures, surmises or speculation. Between the claims of the public revenue and of the taxpayers, the Tribunal must maintain a judicial balance." In Udhavdas Kewalram v. CIT, (196....
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....t. But the message does not appear to have percolated down to all the other courts in the hierarchy." 22. The following general principles were laid down and it is these principles which guide the Court in approaching the question of condonation of delay: - "And such a liberal approach is adopted on principle as it is realized that: 1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. 3. "Every day's delay must be explained" does not mean that a pedantic approach should be made. Why not every hour's delay, every second's delay? The doctrine must be applied in a rational, common sense and pragmatic manner. 4. When substantial justice and technical considerations are pitted against each other, the 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. 5. There ....
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....al is anything but one of fact. It has been held on the corresponding provisions in the English Income-tax statutes that a finding on a question of fact is open to attack as erroneous in law only if it is not supported by any evidence, or if it is unreasonable and perverse, but that where there is evidence to consider, the decision of the Tribunal is final even though the Court might not, on the materials, have come to the same conclusion if it had the power to substitute its own judgment. In Great Western Railway Co. v. Bater (1), Lord Atkinson observed: "Their (Commissioners') determinations of questions of pure fact are not to be disturbed, any more than are the findings of a jury, unless it should appear that there was no evidence before them upon which they, as reasonable men, could come to the conclusion to which they have come: and this, even though the Court of Review would on the evidence have come to a conclusion entirely different from theirs." There is no need to further elaborate this position, because the law as laid down in these observations is well settled, and has been adopted in the construction of section 66 of the Act." 25. This view was reiterated....