All Angels Educational Society, (Old v. The Chief Commissioner Of Income Tax, Chennai – Iii

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 28.07.2016 THE HONOURABLE MR.JUSTICE T.S.SIVAGNANAMW.P.No.4969 of 2014 All Angels Educational Society,(Old No.3) New No.7,Neduchezhian Street,MGR Nagar,Chennai – 78.Rep. By its President Mrs.Jeyaleela Sundar... Petitioner Vs.The Chief Commissioner of Income Tax,Chennai – III,124, M.G.Road,Chennai – 34.... Respondent PRAYER: Writ Petition filed under Article 226 of Constitution ofIndia praying to issue Writ of certiorarified mandamus to callfor the records of the respondent and quash the impugned orderin C.N.No.CCIT III/10(23C)(vi)/13-14, dated 13.11.2013 anddirect the respondent to grant registration under Section 10(23C)(vi) of the Act. For Petitioner : Mr.R.Venkata Narayananfor M/s.Subbaraya Aiyar, Padmanabhanand Ramamani For Respondent : Mr.J.Narayanasamy & Mr.S.Rajesh, Standing Counsel for Income Tax Department ORDER Heard Mr.R.Venkata Narayanan, learned counsel for thepetitioner and Mr.J.Narayanasamy, learned counsel for therespondent and with their consent, the writ petition itself istaken up for disposal. https://hcservices.ecourts.gov.in/hcservices/ 2. The petitioner is a Society registered under theSocieties Registration Act, which has established andadministering an Educational Institution under the name andstyle of “All Angels Matriculation Higher Secondary School”.The petitioner is registered under Section 12A(a) of the IncomeTax Act (hereinafter “the Act”), vide proceedings dated30.07.1990. 3. In the assessment year 2012-2013, the petitionerfiled an application in Form No.56D on 22.11.2012 seekingexemption under Section 10(23C)(vi) of the Act. The respondentissued a show cause notice dated 21.10.2013 calling upon thepetitioner to show cause as to why their application should notbe rejected on two grounds; (a) it is not filed within the timeperiod specified in the 14[th] Proviso to Section 10(23C)(vi), i.e.on or before 30[th] September of the relevant assessment year, fromwhich the exemption is sought for; (b) the petitioner Societycannot be said to be existing solely for educational purpose,since the objects of the Society include other charitable objectclauses. The petitioner Society submitted their objections on29.10.2013, 07.11.2013 and 11.11.2013. The respondent, by theimpugned order, rejected the petitioner's application on theground that it is filed beyond the time prescribed under the 14[th]Proviso to Section 10(23C)(vi) of the Act and also on the groundthat the petitioner Society does not fulfill the requirements ofSection 10(23C)(vi). This order was challenged by thepetitioner on the ground that if the respondent had chosen toreject the petitioner's application on the ground of delay, thenthe respondent could not have proceeded to consider the meritsof the matter. On the merits of the matter, it is submittedthat the petitioner has now amended the objects of the Trust byan amendment dated 10.03.2014 and the petitioner would beentitled to resubmit their application with the amended objects. 4. Learned counsel for the petitioner placed relianceon the decision of this Court in the case of Shri Anand RishiJain Society v. The Chief Commissioner of Income Tax-IV, Chennaiand others (W.P.No.33485 of 2012, dated 07.11.2014) and thejudgment of the Hon'ble Division Bench in an appeal filedagainst the said order in W.A.No.31 of 2015, dated 03.02.2015(CCI and others v. Shri Anand Rishi Jain Society) 5. Learned counsel for the petitioner placed relianceon the decision of the Hon'ble Division Bench of this Court inthe case of Centre for Individual and Corporate Action (CICA) v.Assistant Commissioner of Income Tax (T.C.A.No.283 to 288 of2014, dated 23.09.2014) to buttress the submission that when therespondent chose to reject the application as time barred shouldnot have ventured to adjudicate the matter on merits. https://hcservices.ecourts.gov.in/hcservices/ 5. Learned counsel for the petitioner placed relianceon the decision of the Hon'ble Division Bench of this Court inthe case of Centre for Individual and Corporate Action (CICA) v.Assistant Commissioner of Income Tax (T.C.A.No.283 to 288 of2014, dated 23.09.2014) to buttress the submission that when therespondent chose to reject the application as time barred shouldnot have ventured to adjudicate the matter on merits. https://hcservices.ecourts.gov.in/hcservices/ 6. Learned standing counsel for the respondentsubmitted that under the provisions of the Act, there is nopower to condone the delay and this issue was considered by theOrissa High Court in 2009 309 ITR 50 (Roland Educational andCharitable Trust v. Chief Commissioner, Income Tax), in whichthe Court distinguished the decision of the Orissa High Court inPadmashree Krutharth Acharya Institute of Engineering andTechnology v. Chief Commissioner of Income Tax ([2009] 309 ITR0013 (Orissa)). It is further submitted that these decisionswere taken note of in Shri Anand Rish Jain Society's case (citedsupra) and considering the peculiar facts of the said case, thedelay therein was condoned as the delay was only one day.However, in the instant case, it is submitted that the orderpassed by the respondent is perfectly valid both on the groundof refusing to condone the delay and on the ground that theobject of the petitioner Society does not fulfill therequirements under Section 10(23C)(vi). Learned counsel furthersubmitted that on the merits of the case, the matter is coveredby a decision of this Court in the case of B.S.Abdur RahmanInstitute of Science and Technology v. The Chief Commissioner ofIncome Tax – 3, Chennai (W.P.No.34102 of 2015, dated 11.03.2016). 7. After hearing the learned counsel for the partiesand perusing the materials placed on record, including thecounter affidavit, the issue to be considered is whether therespondent could have proceeded to decide the merits of thematter when he chose to reject the application on the ground ofdelay. 8. Identical issue was considered by the Hon'bleDivision Bench of this Court in the case of Centre forIndividual and Corporate Action (CICA) v. Assistant Commissionerof Income Tax (T.C.A.No.283 to 288 of 2014, dated 23.09.2014)and it was held that the appellate Tribunal (in that case)adopted a procedure which is highly prejudicial to the assesseeinasmuch as it having decided not to proceed with the matter onthe ground of delay, cannot unilaterally decide the appeal onmerits, moreso when the assessee was not given properopportunity to contest the matter in the main appeal on merits. 9. It may be true that the show cause notice issued bythe respondent dated 21.10.2013 pointed out two grounds; (i) theapplication was filed beyond the time limit specified under the14[th] Proviso to Section 10(23C)(vi) of the Act and (ii) thepetitioner Society did not exist solely for educational purpose.In my view, when the authority takes a decision to reject theapplication on the ground of limitation, it is but proper forthe authority to refrain from rendering finding on the merits ofthe matter. However, in the impugned order, the respondent has https://hcservices.ecourts.gov.in/hcservices/ proceeded on both grounds, which cannot be approved by thisCourt. 10. On the question of delay, the contention of therevenue is that there is no power conferred on the respondent tocondone the delay. Nevertheless, this Court, while exercisingjurisdiction under Article 226 of the Constitution of India, hadexamined the facts and circumstances of each case and when it isconvinced that the peculiar facts called for exercise ofdiscretion, the delay was condoned. At this stage, it isbeneficial to refer to the decision in Roland Educational andCharitable Trust (supra), the relevant paragraphs of thejudgment are extracted below: https://hcservices.ecourts.gov.in/hcservices/ proceeded on both grounds, which cannot be approved by thisCourt. 10. On the question of delay, the contention of therevenue is that there is no power conferred on the respondent tocondone the delay. Nevertheless, this Court, while exercisingjurisdiction under Article 226 of the Constitution of India, hadexamined the facts and circumstances of each case and when it isconvinced that the peculiar facts called for exercise ofdiscretion, the delay was condoned. At this stage, it isbeneficial to refer to the decision in Roland Educational andCharitable Trust (supra), the relevant paragraphs of thejudgment are extracted below: “14. Hence, the provisions ofSection 10(23C)(vi) override the provisions ofthe Limitation Act. Therefore, it will not beappropriate/permissible to rely on theprovisions of any other statute including theLimitation Act for the purpose of consideringthe matter relating to condonation of delay.15. The Chief Commissioner ofIncome-tax being a creature of the statutecannot travel beyond the statutory provisions.Law is well settled that court cannot derivejurisdiction apart from the statute (videUnited Commercial Bank v. Their Workmen, AIR1951 SC 230; Smt. Nai Bahu v. Lala Ramarayan,AIR 1978 SC 22; Natraj Studios P.Ltd. v.Navrang Studio, AIR 1981 SC 537, UOI v. DeokiNandan Aggarwal, AIR 1992 SC 96, KarnalImprovement Trust v. Prakash Wanti [1995] 5SCC 159 and Collector of Central Excise v.Flock (India)(Pvt.) Ltd., AIR 2000 SC 2484.16.....................inPadmashree Krutarth Acharya Institute ofEngineering and Technology v. Chief CIT [2009]309 ITR 13 wherein this Court held that thoughthe application for grant of approval forexemption had been filed by an educationalinstitution belatedly, it should have beenconsidered on the merits. This Court furtherheld that in deciding such questions theCommissioner decides the rights of the partiesand, therefore, has to act in a quasi-judicialcapacity. He has to decide rights of theparties after a hearing. Any authorityexercising such quasi-judicial function shouldalso have the incidental power of condoningdelay if there is justifiable ground for suchcondonation. There is no clear statutory barpreventing such condonation. However, law as has been laid downby the Hon'ble Supreme Court, the court has nocompetence to issue a direction contrary tolaw. Nor the court can direct an authority toact in contravention of the statutoryprovisions. (vide State of U.P. v. HarishChandra, AIR 1996 SC 2173, UOI v. KirloskarPneumatic Co. Ltd., AIR 1996 SC 3285 and Vic-Chancellor, University of Allahabad v.Dr.Anand Prakash Mishra [1997] 10 SCC 264)While passing the order dated May15, 2008, in W.P.(C) No.4514 of 2008(Padmashree Krutarth Acharya Institute ofEngineering and Technology v. Chief CIT [2009]309 ITR 13) the ratio of the decisions of theHon'ble Supreme Court which are applied inthis judgment were not brought to the noticeof this Court. Hence, the order of this Courtdated May 15, 2008, in W.P.(C) No.4514 of 2008has no application to the present case.It is settled legal proposition thatfunction of the Court is only to expound thelaw and not to legislate. (See District MiningOfficer v. Tata Iron and Steel Co. [2001] 7SCC 358)27. Be that as it may, we are hereconcerned whether in the absence of anystatutory provision to condone the delay inpresenting the application under Section 10(23C)(vi), the Chief Commissioner of Income-tax can exercise any such power.28. For the reasons stated above,the answer is certainly in the negative.”11. The petitioner had placed reliance on the decisionof Padmashree Krutharth Acharya Institute of Engineering andTechnology (supra) which has been distinguished by the DivisionBench in the subsequent decision in Roland Educational andCharitable Trust (supra). I am in respectful agreement with thedecision in Roland (supra) and the petitioner cannot rest theircase on the decision in Padmashree (supra). 12. Coming back to the facts, on receipt of show causenotice dated 21.10.2013, the petitioner submitted their firstreply on 29.10.2013, wherein they have pointed out that theycould not finalise the accounts for the year 2012-2013 earlierand could do it only by the end of September, 2012, as they wereentrusted with huge responsibility of organizing and conductinga sports event by the Education Department of the Government ofTamil Nadu in July, 2012, and it was the first time, theinstitution was entrusted with such a task. After enclosing therelevant Government Orders in that regard, the petitioner https://hcservices.ecourts.gov.in/hcservices/ pointed out that the event comprised of conducting team sportevents and field events for both boys and girls of 28 schools inSouth Chennai District and the entire staff of the school andthe society members had worked hard from July'2012 and completedthe sports meet on 04.09.2012. To support such contentions,documents were also enclosed. Therefore, the petitioner statedthat due to the maiden responsibility entrusted to theirinstitution by the Education Department, it had taken some timefor them to finalise the accounts. Therefore, the delay, theypleaded, neither willful nor wanton and assured that henceforththey would file returns on time without fail. 13. Subsequently, by another representation dated07.11.2013, the petitioner stated that in event the respondentdoes not condone the delay in filing the application, theyrequested the respondent to consider the application forapproval under Section 10(23C)(vi) of the Act for the subsequentassessment year, namely, 2013-2014. 13. Subsequently, by another representation dated07.11.2013, the petitioner stated that in event the respondentdoes not condone the delay in filing the application, theyrequested the respondent to consider the application forapproval under Section 10(23C)(vi) of the Act for the subsequentassessment year, namely, 2013-2014. 14. After receipt of the reply and written submissionand after affording an opportunity of personal hearing, therespondent pointed out that there is no power for condoning thedelay in filing the application in Form No.56D and with regardto alternative prayer, the same was also rejected stating thatthe assessment year is defined under Section 2(9) to mean theperiod of 12 months commencing on the 1[st] April of every year andtherefore, the application cannot be treated as application forthe assessment year 2013-2014. Ultimately, in paragraph 4.4 ofthe impugned order, the application was rejected as out of time.However, without stopping there, the respondent thereafter,proceeded to analyze the objective of the Society, which, in myview, was an exercise not called for. Having rejected theapplication on the ground of limitation, the question ofexamining the merits of the matter would not arise and it is asuperseded exercise. Therefore, to that extent, this Court isinclined to accept the submissions of the learned counsel forthe petitioner and taking note of the decision of the Hon'bleDivision Bench of this Court in Centre for Individual andCorporate Action (CICA) (cited supra). 15. However, considering the legal position that thereis no power to condone the delay in filing an application underSection 10(23C) of the Act, this Court is not inclined toexercise its extraordinary jurisdiction to condone the delay.However, this Court is inclined to give appropriate direction tothe respondent to consider the petitioner's application as anapplication for the subsequent assessment year, namely, 2013-2014 in accordance with law. Such direction is issuedconsidering the peculiar facts and circumstances of the case andthat the petitioner could not have made an application for thesubsequent assessment year 2013-2014, since their application for assessment year 2012-2013 was still pending considerationand the impugned order came to be passed only on 13.11.2013.The respondent is at liberty to consider the amended objectivesof the petitioner Trust. 16. Accordingly, the writ petition is partly allowedand the finding rendered by the respondent that the petitioner'sapplication cannot be considered as the same is time barred isaffirmed and the finding with regard to objectives of theSociety by respondent holding that the Society cannot be said tobe solely for education purpose is set aside. Consequently, thematter is remanded back to the respondent for freshconsideration and the petitioner's application is directed to beconsidered for the assessment year 2013-2014 in accordance withlaw and while doing so, may consider the amendments made to theobjectives of the petitioner Trust. No Costs. M.P.No.1 of 2014is closed. -s/d-Assistant RegistrarTrue CopySub-Assistant RegistrarToThe Chief Commissioner of Income Tax,Chennai – III,124, M.G.Road,Chennai – 34.+1 cc to Mr.J.Narayanaswamy Advocate sr 42842 W.P.No.4969 of 2014 aa22/08/2016