Tca/3/2017 Of M/S Hosanna Ministries v. The Income Tax Officer

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 07.03.2017 CORAMTHE HONOURABLE MR.JUSTICE RAJIV SHAKDHER AND THE HONOURABLE MR.JUSTICE R.SURESH KUMAR T.C.(Appeal).No.3 of 2017 M/s.Hosanna Ministries,6-7, Vadakkanadu,Chengody Post-629 177.Kanyakumari DistrictPAN: AAATH8004R... Appellant/AppellantvsThe Income Tax Officer (Exemptions)Tirunelveli ... Respondent/RespondentPrayer : The appeal filed under Section 260A of the IncomeTax Act, 1961, against the order, dated 12.04.2016, passed inI.T.A. No.2351/Mds/2015, on the file of the Income Tax AppellateTribunal "A" Bench, Chennai, against the Order dated 16/08/2010in C.No. 464/190/CIT-1/2009-10 by the Commissioner of IncomeTax, Madurai.For Appellant : Mr.S.SridharFor Respondent : Mr.J.Narayanasamy Standing CounselJUDGMENT (Judgment of the Court was delivered by R.SURESH KUMAR,J.) This appeal has been preferred by the assessee against theorder passed by the Income Tax Appellate Tribunal (in shortTribunal), Chennai by order dated 12.04.2016. 2. The assessee is a charitable trust duly registered underIndian Trust Act and has been engaging in charitable activities. 3. In order to fulfill one of the objects of the trust, theassessee had started and is running a children home in the nameand style of Hosanna Children's Home (Girls) at No.13 – 1A,Chellampatti, Sangareddikottai (P.O), Athoor Taluk, Dindugal https://hcservices.ecourts.gov.in/hcservices/ Main Road, Batlagundu, Dindugal District. 4. The assessee in fact had made an application to theRevenue for Registration under section 12AA of the Income TaxAct (hereinafter refered to as Act) on 11.01.2010. Thereafter,the Revenue had sent a letter on 16.03.2010 to the assesseeseeking some additional particulars which the assessee hadresponded. Finally, an order was passed by the Commissioner ofIncome Tax (in short CIT) by order dated 16.08.2010 whereby theapplication of the assessee seeking for registration wasrejected. Though such order was passed by the CIT on 16.08.2010,no further action had been taken by the assessee. 5. After some years, during December 2015, the assessee hadreceived recovery notice from the Revenue dated 14.12.2015 forthe assessment year 2013-14. Only in that context, the assesseehad discussion with professional person for getting professionaladvise where the issue that the rejection order passed by theCIT refusing to register the assessee's entity under section12AA of the Act had been brought to the notice to theprofessional and on whose advise the assessee came to know thatas against the order of rejection made by the CIT under section12AA of the Act, an appeal to the Tribunal has been provided forby way of newly inserted section 253(1)(c) of the Act witheffect from 01.06.1999. 6. Only on coming to know these factors, immediateinstructions seems to have been given by the assessee to hisprofessional advisor i.e., a Chartered Accountant and onlythereafter, an appeal had been filed on 30.12.2015 before theTribunal. 7. Because the appeal was filed long after the order of CITobviously, there was a huge delay of 1902 days in preferring thesaid appeal before the tribunal. Therefore, a petition tocondone the said delay was also filed in the said appeal i.e.,ITA.No.2351 of 2015 before the Tribunal. 8. The said appeal filed by the assessee had been nowrejected through the impugned Judgment of the Tribunal by orderdated 12.04.2016. In the impugned Judgment, the Tribunal hasstated that the reasons adduced by the assessee for such hugedelay of 1902 days in preferring the appeal showed that theassessee was not vigilant in pursuing the appeal and also itappeared that the assessee was not serious in complying with theprovisions of the Act. Mainly on these reasons, theTribunal hadrejected the appeal of the assessee. 8. The said appeal filed by the assessee had been nowrejected through the impugned Judgment of the Tribunal by orderdated 12.04.2016. In the impugned Judgment, the Tribunal hasstated that the reasons adduced by the assessee for such hugedelay of 1902 days in preferring the appeal showed that theassessee was not vigilant in pursuing the appeal and also itappeared that the assessee was not serious in complying with theprovisions of the Act. Mainly on these reasons, theTribunal hadrejected the appeal of the assessee. 9. Also in the said order which is impugned herein, theTribunal further stated that it did not find that the assesseeto be engaged in the activities in accordance with the objects https://hcservices.ecourts.gov.in/hcservices/ specified in the trust deed. That was one of the added reasonsfor coming to a conclusion that the assessee's appeal had to berejected in limine mainly on the ground of huge delay. 10. Heard Mr.S.Sridhar, the learned counsel appearing forthe appellant/assessee. 11. The learned counsel would submit that the appellant is acharitable institution under a registered trust and thechildren's home started and being run by the appellant is onlymeant for children, who are in the need of support and in thisregard, the activities undertaken by the appellant assessee ispurely charitable in nature. Since it is not a commercialventure and it is not running on profit motive, it is being runonly out of the funds, the assessee is legally able to generate.The learned counsel submits that obviously, the assessee being acharitable entity could not get professional advise from bestbrain. 12. In this regard, the learned counsel would further submitthat after the order passed by the CIT rejecting the applicationof the assessee for registering the assessee's institution undersection 12AA of the Act, the matter was entrusted to itsChartered Accountant, one Mr.A.Johnson FCA, for further action.According to the assessee, since it is a complicated technicalissue from the point of view of the assessee, as how to proceedfurther on receipt of the rejection order from the CIT, it hadto necessarily depend for the advise and further action, onlyhis Chartered Accountant. However, the said CharteredAccountant, as claimed by the assessee, had miserably failed togive proper advise for preferring any appeal against the orderof the CIT. 13. Only at that time of discussion with other professional,pursuant to the recovery notice issued by the Revenue in themonth of December 2015, this subject of rejection order passedby the CIT came up for discussion and ultimately, proper advisewas received by the assessee to prefer an appeal. Therefore,only because of this genuine reason, the assessee could not makean appeal in time therefore, even though the delay was huge andinordinate one, the reason attributable to such delay isabsolutely genuine and that is the reason why the actual reasonfor delayed approach on the part of the assessee to the Tribunalwas alone given in the appeal. 14. However, the learned standing counsel appearing for theRevenue would vehemently oppose such argument advanced on behalfof the assessee and to state that the reason adduced by theassessee in not approaching the Tribunal within the time andapproaching the Tribunal with such a long delay of yearstogether is, absolutely unacceptable. In this regard, the https://hcservices.ecourts.gov.in/hcservices/ learned standing counsel for Revenue would submit that it is afundamental and age old principle that ignorance of law cannotbe a defence. Therefore, the Tribunal has rightly considered thesaid aspect in proper perspective and dismissed the appeal filedby the assessee which is impugned herein and therefore, there isno requirement for interference by this Court in the orderimpugned. 15. This court has considered the facts and circumstances ofthe case as well as the rival submissions made by both sides. https://hcservices.ecourts.gov.in/hcservices/ learned standing counsel for Revenue would submit that it is afundamental and age old principle that ignorance of law cannotbe a defence. Therefore, the Tribunal has rightly considered thesaid aspect in proper perspective and dismissed the appeal filedby the assessee which is impugned herein and therefore, there isno requirement for interference by this Court in the orderimpugned. 15. This court has considered the facts and circumstances ofthe case as well as the rival submissions made by both sides. 16. In so far as the genuinity and functioning of theassessee's institution as trust is concerned, the learnedcounsel appearing for the assessee has produced documents toshow that the assessee's institute in the name and style of thatHosanna Children's home (Girls) had been functioning with properregistration in the Directorate of Social Defence, State ofTamil Nadu, especially after the coming into effect of JuvenileJustice (Care and Protection of Children) Act 2015 (for shortJuvenile Act). Every such children home had necessarily to beregistered under the said Act and without such registration, noinstitute or home dealing with children can function. 17. In this regard section 1(4) of the Juvenile Act can beusefully referred to herein:“(4) Notwithstanding anything containedin any other law for the time being in force,the provisions of this Act shall apply to allmatters concerning children in need of careand protection and children in conflict withlaw, including - (i)apprehension, detention, prosecution,penalty or imprisonment, rehabilitationand social re-integration of children inconflict with law;(ii) Procedures and decisions or ordersrelating to rehabilitation, adoption,re-integration, and restoration ofchildren in need of care and protection” 18. Like that section 41 of the Juvenile Act is the enablingprovision under which registration has to be made and the saidprovision is also reproduced hereunder for ready reference. “41. Registration of child careinstitutions. - (1) Notwithstanding anythingcontained in any other law for the time beingin force, all institutions, whether run by aState Government or by voluntary or non- https://hcservices.ecourts.gov.in/hcservices/ governmental organisations, which are meant,either wholly or partially, for housingchildren in need of care and protection orchildren in conflict with law, shall, beregistered under this Act in such manner asmay be prescribed, within a period of sixmonths from the date of commencement of thisAct, regardless of whether they are receivinggrants from the Central Government or, as thecase may be, the State Government or not:Provided that the institutions havingvalid registration under the Juvenile Justice(Care and Protection of Children) Act, 2000(56 of 2000) on the date of commencement ofthis Act shall be deemed to have beenregistered under this Act.” 19. In consonance with said provisions of the Juvenile Act,the appellant's children home, after having been registered bythe authority concerned, was certified by proceedings dated14.12.2016 in proceedings No.15566/D1/2016 of the Directorate ofSocial Defence, Government of Tamil Nadu. The relevant contentof the said certification is reproduced hereunder: “Proc.No.15566/D1/2016 Dt: 14.12.2016 This certificate of Registration is awarded toHosanna Children's Home (Girls), 13-1A, Chellmapatti,Sangareddikkottai (P.O), Athoor (T.K). Dindigul MainRoad, Batlagundu, Dindigul District – 624 211 aninstitution for children in need of care andprotection vide S.No.316/DSD/2016 under section 41 (1)of the Juvenile Justice (Care and Protection ofChildren) Act, 2015. This certificate of registrationis valid for five years from the date of issue and issubject to the following conditions:-” This certificate of Registration is awarded toHosanna Children's Home (Girls), 13-1A, Chellmapatti,Sangareddikkottai (P.O), Athoor (T.K). Dindigul MainRoad, Batlagundu, Dindigul District – 624 211 aninstitution for children in need of care andprotection vide S.No.316/DSD/2016 under section 41 (1)of the Juvenile Justice (Care and Protection ofChildren) Act, 2015. This certificate of registrationis valid for five years from the date of issue and issubject to the following conditions:-” 20. Therefore, from the said proceedings, it becomes obviousthat the assessee institution is run under the provisions of theJuvenile Act after having been duly registered under the saidAct. Therefore, the additional reason given by the Tribunal inthe order impugned to say that the assessee was not engaging inactivities in accordance with the objects specified in the trustdeed, may not be backed by any materials. 21. Now, we come to the main reason i.e., the reason ofdelay shown for the rejection of the appeal through the impugnedorder. No doubt, the delay of 1902 days is a huge and enormousdelay. But, when we look at the reasons given by the assesseefor such a delay, it shows that it is not attributable to anylame excuses on medical grounds or otherwise. But, it is onlythe reason of either non advise on the part of the professional, who has been engaged by the assessee or the ignorance of law bythe assessee itself. Assessee knew well that if a plea ofignorance of law is taken, that would be, on the face of it,rejected by the court/Tribunal, nevertheless, such a plea alonehad been taken by the assessee and that itself would show theinherent genuineness attached with the reason cited by theassessee for such huge delay. 22. In this regard, we would emphasise that no doubt, thedelay that too a long delay has to be explained with properreasons. But, it does not mean that every day's delay must beexplained. The court must take a pragmatic view in appreciatingthe reasons attributable to the delay caused to the party toapproach the court of law. No pedantic view or approach to beadopted by the court in considering the reasons given by theparties for delay in approaching the court. 23. In this regard, we would like to quote a decision of theHon'ble Apex court, in the matter of Collector, land acquisition-vs- M.S.T.Katiji and others reported in I.T.R.Vol.167(1987)Page 471. In the said Judgment, their Lordships have givencertain principles based on which, the issue with regard to thedelay can be approached and the said portion of the order of theJudgment cited supra is reproduced hereunder: “And such a liberal approach is adoptedon principle as it is realized that: 1. Ordinarily, a litigant does not stand tobenefit by lodging an appeal late. 2. Refusing to condone delay can result ina meritorious matter being thrown out atthe very threshold and cause of justicebeing defeated. As against this whendelay is condoned, the highest that canhappen is that a cause would be decidedon merits after hearing the parties.3. “Everyday'sdelaymustbeexplained”does not mean that a pedanticapproach should be made. Why not everyhour's delay, every second's delay? Thedoctrine must be applied in a rational,common sense and pragmatic manner. 4. When substantial justice and technicalconsiderations are pitted against eachother, the cause of substantial justicedeserves to be preferred, for the otherside cannot claim to have vested rightin injustice being done because of anon-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on accountof culpable negligence, or on account ofmala fides. A litigant does not stand tobenefit by resorting to delay. In fact,he runs a serious risk. 6. It must be grasped that the judiciary isrespected not on account of its power tolegalize injustice on technical groundsbut because it is capable of removinginjustice and is expected to do so.” 4. When substantial justice and technicalconsiderations are pitted against eachother, the cause of substantial justicedeserves to be preferred, for the otherside cannot claim to have vested rightin injustice being done because of anon-deliberate delay. 5. There is no presumption that delay is occasioned deliberately, or on accountof culpable negligence, or on account ofmala fides. A litigant does not stand tobenefit by resorting to delay. In fact,he runs a serious risk. 6. It must be grasped that the judiciary isrespected not on account of its power tolegalize injustice on technical groundsbut because it is capable of removinginjustice and is expected to do so.” 24. That apart, in a similar situation in a related appealin T.C.A.No.886/2016 where also the very same facts have beengiven or adduced by the assessee for the huge delay of 1631 daysin approaching the Tribunal. After having considered the verysame reason cited in the said case as has been stated hereinalso, we have taken a view that in the given circumstances evensuch a huge delay can be condoned. The relevant portion of theorder of us passed today in the said appeal is extractedhereunder: “6.1. A perusal of the petition forcondonation of delay would show, (as wascontended before us by the learned counselfor the appellant), that the CharteredAccountant engaged in the matter, one,Mr.A.Johnson, FCA, was unaware of the factthat an appeal could be filed against theorder of the CIT, post the amendment made inSection 253(1)(c) of the Act. 6.2. The reason, we have come to theconclusion that the counsel for the Assesseewould have taken instructions from theAssessee in preparing the petition forcondonation of delay, is, becuase, the nameof the Chartered Accountant is mentioned inthe petition. Learned counsel could not haveconjured up the name of the CharteredAccountant. There is nothing on record tosuggest that the Revenue refuted thisaverment made in the petition. 6.3. Therefore, the matter has to beappreciated from a different angle, which is,can a litigant be prejudiced on account of,virtually, ignorance of law displayed, by aprofessional engaged by him, to prosecute hiscase before the appropriate forum. 7. The answer to this poser lies in thefelicitous observations of the Supreme Courtin the case of : Motilal Padampat Sugar MillsV. State of U.P., AIR 1979 SC 621 - wherein, it accepted the dicta of Maule, J. and LordAtkin, that while ignorance of law is noexcuse, (a maxim of different scope andapplication), there is not and never has beena presumption that everyone knows the law.(See observations made in this behalf at page629) : 7. The answer to this poser lies in thefelicitous observations of the Supreme Courtin the case of : Motilal Padampat Sugar MillsV. State of U.P., AIR 1979 SC 621 - wherein, it accepted the dicta of Maule, J. and LordAtkin, that while ignorance of law is noexcuse, (a maxim of different scope andapplication), there is not and never has beena presumption that everyone knows the law.(See observations made in this behalf at page629) : “...... 6. The claim of the appellant toexemption could be sustained only on thedoctrine of promissory estoppel and thisdoctrine could not be said to be so welldefined in its scope and ambit and so freefrom uncertainty in its application that weshould be compelled to hold that theappellant must have had knowledge of itsright to exemption on the basis of promissoryestoppel at the time when it addressed theletter dated 25th June, 1970. In fact, in thepetition as originally filed, the right toclaim total exemption from sales tax was notbased on the plea of promissory estoppelwhich was introduced only by way ofamendment. Moreover, it must be rememberedthat there is no presumption that everyperson knows the law. It is often said thatevery one is presumed to know the law, butthat is not a correct statement: there is nosuch maxim known to the law. Over a hundredand thirty years ago, Maule, J., pointed outin Martindala v. Faulkner, (1846) 2 CB 706"There is no presumption in this country thatevery person knows the law: it would becontrary to common sense and reason if itwere so". Scrutton, also once said: "It isimpossible to know all the statutory law, andnot very possible to know all the commonlaw." But it was Lord Atkin who, as in somany other spheres, put the point in itsproper context when he said in Evans v.Bartlem, 1937 AC 473 " ...... the fact isthat there is not and never has been apresumption that every one knows the law.There is the rule that ignorance of the lawdoes not excuse, a maxim of very differentscope and application." It is, therefore, notpossible to presume, in the absence of anymaterial placed before the Court, that theappellant had full knowledge of its right toexemption so as to warrant an inference thatthe appellant waived such right by addressing the letter dated 25th June, 1970. Weaccordingly reject the plea of waiver raisedon behalf of the State Government. .......” (emphasis is ours)” 25. In view of these reasons, the order impugned of theTribunal rejecting the appeal of the assessee mainly on theground of delay, is liable to be interfered with. In addition,we also feel that the further reason given by the Tribunal forarriving at such a conclusion that the assessee was not engagingin activities in accordance with the objects specified in thetrust deed also is not supported by materials as we aresatisfied that the assessee has been functioning after properregistration with the authorities concerned under the JuvenileAct and a recent certification issued dated 14.12.2016 of theauthorities concerned as referred to above would be valid fornext five years. Therefore, the genuineness or otherwise of thefunctioning of the assessee cannot be easily doubted, in view ofthe certification issued by the Directorate of Social Defence,Government of Tamil Nadu as stated supra. 26. Therefore, even that reason given by the Tribunal forits conclusion in the order impugned cannot stand in the legalscrutiny. Therefore in our view, both the reasons cited in theimpugned order of the Tribunal are liable to be interfered withand accordingly, the impugned Judgment is set aside. 27. In the result, we allow the appeal remitting the matterto the Tribunal for taking decision on merits on the issueraised by the assessee. There shall be no order as to costs. Sd/- Asst.Registrar /true copy/ Sub Asst. Registrar kua To 1.he Income Tax Officer (Exemptions) Tirunelveli Tirunelveli 26. Therefore, even that reason given by the Tribunal forits conclusion in the order impugned cannot stand in the legalscrutiny. Therefore in our view, both the reasons cited in theimpugned order of the Tribunal are liable to be interfered withand accordingly, the impugned Judgment is set aside. 27. In the result, we allow the appeal remitting the matterto the Tribunal for taking decision on merits on the issueraised by the assessee. There shall be no order as to costs. Sd/- Asst.Registrar /true copy/ Sub Asst. Registrar kua To 1.he Income Tax Officer (Exemptions) Tirunelveli Tirunelveli 2.The Income Tax Appellate Tribunal "A" Bench, Chennai. "A" Bench, Chennai. 3.The Commissioner of Income Tax-I, Madurai. Madurai. +1cc to Mr.S. Sridhar, Advocate Sr. 14763 +1cc to Mr.J. Narayanaswamy, Advocate Sr. 14971 T.C.(Appeal).No.3 of 2017 GJII(CO)VR(11/04/2017)