Commissioner Of Income Tax-Ii, Chandigarh v. M/S Market Committee, Grain Market, Sector 26, Chandigarh

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 702 of 2009 (O&M) Commissioner of Income Tax-II, Chandigarh ..Appellant Versus M/s Market Committee, Grain Market, Sector 26, Chandigarh ...Respondent CORAM:HON'BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE JITENDRA CHAUHAN Present:Ms. Urvashi Dhugga, Advocate, for the revenue-appellant. 1.To be referred to the Reporters or not?2.Whether the judgment should be reported inthe Digest?2.Whether the judgment should be reported inthe Digest? M.M. KUMAR, J. The instant appeal filed under Section 260-A of the Income-taxAct, 1961 (for brevity, ‘the Act’), challenges order dated 31.3.2009, passed bythe Income Tax Appellate Tribunal, Chandigarh Bench ‘A’, Chandigarh (forbrevity, ‘the Tribunal’), in I.T.A. No. 1009/CHANDI/2008, in respect ofAssessment Years 2003-04 to 2005-06, condoning the delay and directing theCommissioner of Income Tax to grant registration certificate to the assessee-respondent Market Committee, Grain Market, Sector 26, Chandigarh. 2.The facts are undisputed. The income of the assessee-respondentwas exempt under Section 10(20) of the Act before amendment by the FinanceAct, 2002, which came into force from 1.4.2003. The Market Committees wereexcluded from the purview of Section 10(20) of the Act with effect from theassessment year 2003-04. Accordingly, the assessee-respondent filed an application dated 14.3.2006 for registration under Section 12A of the Act w.e.f.1.4.2002 to get its income exempt. The Commissioner held that the assessee-respondent Market Committee had reasonable cause for making delayedapplication under Section 12A of the Act and the registration was granted witheffect from 1.4.2005 i.e. the first day of financial year in which the applicationwas made (A-1). However, registration with effect from 1.4.2002 was declined. 3.The assessee-respondent aggrieved by the order of theCommissioner filed an appeal before the Tribunal. The Tribunal vide orderdated 16.11.2007, restored the matter back on the file of the Commissioner ofIncome Tax for reconsideration of the assessee-respondent’s request for grant ofregistration from the earlier date after granting a reasonable opportunity ofbeing heard (A-2). The Commissioner after affording opportunity of hearingagain rejected the request of the assessee-respondent for condonation of delayand grant of registration under Section 12A with effect from 1.4.2002 (A-3). 4.Again the assessee-respondent filed an appeal before the Tribunal.The Tribunal vide order dated 22.5.2008 remitted the matter back to the file ofthe Commissioner of Income Tax for reconsideration of the case in the light ofthe decision of the Chandigarh and Delhi Benches of the Tribunal and also thedecision of the jurisdictional High Court in this regard. Again the request of theassessee-respondent for condonation of delay and grant of registration underSection 12A of the Act with effect from 1.4.2002 was rejected (A-5). Onceagain the assessee-respondent approached the Tribunal and vide the impugnedorder dated 31.3.2009 (A-6), the Tribunal has condoned the delay and directedthe Commissioner of Income Tax to grant registration under Section 12A of theAct to the assessee-respondent with effect from 1.4.2002. 5.The view of the Tribunal is discernible from the last para of itsorder. It has been observed that had the assessee-respondent been a party to the 5.The view of the Tribunal is discernible from the last para of itsorder. It has been observed that had the assessee-respondent been a party to the proceedings before the Delhi Bench where 251 Market Committees of Punjaband Haryana were parties, then the question of seeking condonation of delaywould not have arisen. It is pertinent to mention that the Delhi Bench of theTribunal had condoned the delay in its order dated 14.3.2005, which is nowreported asMarket Committee Sullar Gharat and others v. CIT, (2005) 94TTJ (Del) 692. Against the aforesaid view of the Delhi Bench even the SpecialLeave Petition, has been dismissed. The assessee-respondent had also filed anapplication, which was delayed by about three years, and sought condonation ofdelay. The prayer for condoning the delay and registration with effect from1.4.2002 was based on the facts that all other Market Committees have beengranted registration with effect from 1.4.2002, therefore, prayer for condonationof delay was claimed to be justified.. The Tribunal is also influenced by the factthat the assessee-respondent is a Government organisation and no prejudicewould be caused if registration is granted with retrospective date. 6.The Tribunal has further found that the assessee-respondent wasunder a reasonable belief that the Punjab State Agricultural Marketing Boardhad been granted registration after condonation of delay vide order dated24.10.2008, which benefit would automatically enure to the assessee-MarketCommittee. The Tribunal found the explanation plausible and the ChandigarhBench of the Tribunal vide order dated 14.3.2005 held the Punjab StateAgricultural Marketing Board entitled to registration under Section 12AA of theAct holding that their activities are charitable in nature. Even the assessee-respondent was granted registration under Section 12AA with effect from1.4.2005 and charitable nature of the assessee has not been disputed.7.Having heard learned counsel we are of the considered view thatonce on the basis of numerous factors the Tribunal has condoned the delay and has directed registration of the assessee-respondent with effect from 1.4.2002then the discretion exercised by the Tribunal would not be open to interferencemerely because the department is holding a contrary view or another view ispossible. The Punjab State Agricultural Market Board has already been grantedexemption and registration vide order dated 14.3.2005. Moreover, there was abona fide belief with the assessee-respondent that the benefit of registrationwould enure to it as well. The charitable nature of the assessee-respondent isundisputed as registration has in any case granted w.e.f. 1.4.2005. Therefore,we are not inclined to entertain the appeal because no question of law much lessa substantive question of law would arise for determination of this Court.Accordingly, the appeal is dismissed. (M.M. KUMAR)JUDGE April 29, 2010 (JITENDRA CHAUHAN) JUDGE Pkapoor