Ita/3/2008 Of Commissioner Of Income Tax v. Shrimanta Sankar Academy

ITA 3/2008BEFORETHE HON’BLE MR. JUSTICE RANJAN GOGOITHE HON’BLE MR. JUSTICE B.P. KATAKEY[Katakey, J.] This appeal by the revenue under Section 260A of the Income Tax Act, 1961 (in short the Act) is directed against the order dated 22.03.2007 passed by the learned Appellate Tribunal in ITA No.68(Gau)/2006 allowing the appeal filed by the assessee, relating to the exemption under Section 10(22)/10(23C) of the Act w.e.f. 01.04.2001 in respect of the assessment years 2002-03. 2.The facts relevant for the purpose of disposal of this appeal may be noticed as under: (i)The respondent assessee, which is a society registered on 19.06.1992 under the provisions of the Societies Registration Act, is running educational institutions, namely, the schools and the colleges at Guwahati and was treated as a society existing solely for educational purposes and hence was granted exemption under Section 10(22) of the Act, since its inception up to the assessment year 1998-99 i.e. till the said provision was omitted from the statute. The respondent assessee, thereafter, claimed and was allowed exemption under Section 10(23C)(iiiad) of the Act up to the assessment year 2001-02, since the amount ofannual receipt of the said society did not exceed Rs.1.00 crore. The respondentassessee, thereafter, filed an application dated 23.03.2004 on 30.03.2004 underSection 12A of the Act before the Commissioner of Income Tax (in short CIT), for grant of registration of the society for the assessment years 2002-03 and 2003-04. The respondent assessee also filed a separate application under Section 10(23C)(vi) of the Act before the Chief Commissioner of Income Tax (in short CCIT),for according approval as an educational institution, for the purpose of getting the exemption under the provisions of the Act. The said applications were filed since the amount of annual receipts of the society exceeded Rs.1.00 crore. (ii)The CIT on receipt of the application filed on 30.03.2004 by therespondent authority under Section 12A of the Act, issued a notice dated 05.04.2004 to the respondent assessee asking it to explain the delay in submission of the application. The respondent assessee on receipt of such notice, submitted a detailed reply explaining the delay in making such application under Section 12Aof the Act, basically contending that the assessee was duly granted exemption under Section 10(22) of the Act up to the assessment year 1998-99 and thereafter under Section 10(23C)(iiiad) of the Act up to the assessment year 2001-02, on the basis of the claim made by it, that, thereafter, since the annual receipts of the assessee for the assessment years 2002-03 and 2003-04 exceeded Rs.1.00 crore, an application under Section 10(23C)(vi) of the Act was filed before the CCIT for grant of approval for the purpose of getting the exemption for the assessment years 2002-03 and 2003-04 and though the assessee waited for some time for disposal of such application, since the same has not been disposed of, it had to file the application under Section 12A of the Act on 30.03.2004, which resulted inthe delay. (iii)The CIT, however, without considering the claim of the respondent assessee for registration under Section 12A of the Act for the assessment year2002-03, vide order dated 01.10.2004, registered the assessee under Section 12AA of the Act w.e.f. 01.04.2003 i.e. in respect of the assessment year 2003-04, though the assessee pursuant to the notice dated 05.04.2004 issued by the CIT directing to explain the delay caused in filing the application, had explained the delay. (iv) The respondent assessee, thereafter, on 10.01.2006 filed anotherapplication for grant of registration for the assessment year 2002-03 enclosingtherewith all the relevant informations as was submitted along with the earlierapplication filed on 30.03.2004. The said application, however, has been reject (iii)The CIT, however, without considering the claim of the respondent assessee for registration under Section 12A of the Act for the assessment year2002-03, vide order dated 01.10.2004, registered the assessee under Section 12AA of the Act w.e.f. 01.04.2003 i.e. in respect of the assessment year 2003-04, though the assessee pursuant to the notice dated 05.04.2004 issued by the CIT directing to explain the delay caused in filing the application, had explained the delay. (iv) The respondent assessee, thereafter, on 10.01.2006 filed anotherapplication for grant of registration for the assessment year 2002-03 enclosingtherewith all the relevant informations as was submitted along with the earlierapplication filed on 30.03.2004. The said application, however, has been reject ed by the CIT vide order dated 08.05.2006 on the ground that there was no satisfactory reason why such application under Section 12A of the Act could not be filed by 31.03.2002 as required under the law and also on the ground that there cannot be two orders under Section 12AA of the Act and the CIT cannot revise its own earlier order, the same having not suffered from any apparent mistake. (v)The respondent assessee being aggrieved filed an appeal before the Appellate Tribunal, which has been registered and numbered as ITA No.68(Gau)/2006. In the said appeal, there were differences of opinion between the learned Judicial Member and the learned Accountant Member. While the learned Judicial Member has allowed the appeal by directing the CIT to grant registration to the respondent assessee under Section 12A of the Act for the assessment year 2002-03, the learned Accountant Member has remanded the matter to the CIT with a direction to reconsider the request of the respondent assessee for grant of registrationw.e.f. 01.04.2001 and pass necessary order after giving proper opportunity of hearing to the respondent assessee as per law. The appeal was thus referred to the learned Third Member, who vide order dated 09.02.2007 agreed with the final order proposed by the learned Judicial Member and allowed the appeal filed by the respondent assessee. Consequential order dated 22.03.2007, was passed by the learned Appellate Tribunal allowing the appeal by adopting the majority view. Hencethe present appeal. 3.While admitting the appeal for hearing on 04.02.2008, the following substantial questions of law were framed:- �1.Whether on the facts and in the circumstances of the case, the Tribunal was justified and correct in law in allowing registration under Section 12AA of the Income Tax Act, 1961 with retrospective effect where the delay in the submission of application for registration was not condoned by the concerned Commissioner of Income Tax? 2.Whether on the facts and in the circumstances of the case, the Commissioner of Income Tax was competent to entertain a second petition under Section 12Aof the Income Tax Act, 1961 when the first order under Section 12AA did not suffer from any apparent mistake and when the said Commissioner was not in a position to release his own earlier order? 3.Whether on the facts and in the circumstances of the case, the Tribunal is justified and correct in law in holding that the respondent is entitled for registration under Section 12A of the Income Tax Act, 1961 w.e.f. 1.4.2001? � 4.We have heard Mr. U. Bhuyan, the learned counsel appearing for the revenue and Mr. A.K. Goswami, the learned Sr. counsel appearing on behalf of the respondent assessee. 5.It has been contended by the learned counsel appearing for the revenue that since under Section 12A of the Act period of limitation has been prescribed for filing an application seeking registration, the learned Appellate Tribunal ought not to have allowed the appeal preferred by the respondent assessee, as it has failed to satisfactorily explain the delay in filing the application under Section 12A of the Act for grant of registration in respect of the assessment year 2002-03. According to the learned counsel, the application filed on 30.03.2004 4.We have heard Mr. U. Bhuyan, the learned counsel appearing for the revenue and Mr. A.K. Goswami, the learned Sr. counsel appearing on behalf of the respondent assessee. 5.It has been contended by the learned counsel appearing for the revenue that since under Section 12A of the Act period of limitation has been prescribed for filing an application seeking registration, the learned Appellate Tribunal ought not to have allowed the appeal preferred by the respondent assessee, as it has failed to satisfactorily explain the delay in filing the application under Section 12A of the Act for grant of registration in respect of the assessment year 2002-03. According to the learned counsel, the application filed on 30.03.2004 being in respect of the assessment year 2003-04, the learned Appellate Tribunalought not to have held that such application was also in respect of the assessment year 2002-03 and hence ought not to have passed the order impugned in the present appeal. 6.Mr. Goswami, the learned Sr. counsel on the other hand, has submitted that it is apparent from the application filed on 30.03.2004 that the respondent assessee by the said application had prayed for grant of registration for two assessment years, namely, 2002-03 and 2003-04 and the CIT also took cognizance of s uch fact, by issuing notice dated 05.04.2004 directing the respondent assessee to explain the delay in filing the application, even though the application for registration under Section 12A of the Act in respect of the financial year 2003-04 was within the time allowed under Section 12A of the Act. Mr. Goswami, therefore, submits that the CIT ought to have allowed the prayer for grant of registration in respect of both the assessment years, he having found that the respondent assessee is an existing society solely for educational purposes and not for thepurpose of profit. The learned Sr. counsel further submits that the second application filed on 10.01.2006 under Section 12A of the Act was nothing but the reiteration of the earlier application filed on 30.03.2004 and the CIT, therefore, ought not to have rejected such application on the ground that there cannot be two orders under Section 12AA of the Act, when there is no bar in the Act for passing two separate orders for two assessment years. It has further been submittedthat the CIT should have adopted a pragmatic and liberal approach in condoning the delay in filing the application under Section 12A of the Act seeking the registration, when the respondent assessee could demonstrate sufficient cause in not filing such application in time. Mr. Goswami, therefore, submits that the learned Appellate Tribunal has rightly allowed the appeal preferred by the respondent assessee and there being no substantial questions of law involved in the present appeal, the same is liable to be dismissed. 7.We have considered the submissions of the learned counsel for the parties and also perused the materials available on record. 7.We have considered the submissions of the learned counsel for the parties and also perused the materials available on record. 8.The facts narrated above are not in dispute. It is apparent from the application filed on 30.03.2004 that the respondent assessee had prayed for registration under Section 12A of the Act in respect of two assessment years, namely, 2002-03 and 2003-04. In respect of the assessment year 2003-04, the said application having been filed on 30.03.2004, was within the time allowed by Section 12A.The prayer made in the said application for grant of registration under Section12A in respect of the assessment year 2002-03, however, was barred by time, thesame having not been filed by 30.03.2003. The CIT took cognizance of the said fact and hence issued the notice dated 05.04.2004 directing the respondent assessee to explain the delay in filing such application. The respondent assessee has,thereafter, explained the delay, as noticed above, in filing such belated application. It is evident from the reply filed by the respondent assessee, pursuant to the notice dated 05.04.2004 issued by the CIT, that such application in respect of the assessment year 2002-03 could not be filed in time, as the respondent assessee was not in a position to foresee the fate of its earlier application filed under Rule 2CA in Form No.56D for grant of approval under Section 10(23C)(vi) of the Act for the assessment years 2002-03 and 2003-04, which application waspending at that point of time. The respondent assessee has also stated in such reply that it was exempted from payment of income tax under Section 10(22) up tothe assessment year 1998-99 and thereafter up to 2001-02 under Section 10(23C)(iiiad) of the Act. The respondent assessee, in fact, from the assessment year 2003-04 has been granted the registration and consequent exemption. 9.The application filed by the respondent assessee on 30.03.2004 along with the reply filed by it explaining the delay being for grant of registration under Section 12A of the Act in respect of the assessment year 2002-03 also, the CIT should have satisfied himself about the grounds given explaining the delay in filing such application and if so satisfied ought to have allowed the prayer forregistration under Section 12A, since it is not the case of the revenue that the respondent assessee is not an existing society for educational purposes only but for the purpose of profit also. The learned CIT, however, failed to so act and no order in respect of the assessment year 2002-03 was passed. The said lacunain the order dated 01.10.2004 of the CIT was corrected by the learned Tribunal on finding the explanations furnished by the assessee for the delay in filing the application dated 30.03.2004 for registration in respect of the assessment year 2002-03 to be good and cogent. 10.The ground on which the subsequent prayer made by the respondent assessee vide application dated 10.01.2006 for registration under Section 12A of the Act in respect of the assessment year 2002-03 has been rejected, is also not tenable in law, since the said application was nothing but the reiteration of the averments as well as the prayer made in the earlier application filed on 30.03.2004, on which no order has been passed by the CIT in respect of the assessment year2002-03, while granting the registration for the assessment year 2003-04. The learned Appellate Tribunal, therefore, has rightly passed the impugned order, as the remand of the matter would lead to multiplicity of the proceeding, since therespondent assessee was found to have satisfactorily explained the delay in filing the application on 30.03.2004 seeking registration under Section 12A of the Act in respect of the assessment year 2002-03. Moreover the authority is required to adopt a pragmatic and liberal approach while dealing with an application seeking condonation of delay in making the prayer for registration under Section 12A of the Act.