| SooperKanoon Citation | sooperkanoon.com/75532 |
| Court | Income Tax Appellate Tribunal ITAT Guwahati |
| Decided On | Mar-22-2007 |
| Judge | V Gandhi, H Sausarkar, B Kaushik |
| Reported in | (2007)109TTJ(Gau.)426 |
| Appellant | Shrimanta Shankar Academy |
| Respondent | income Tax Officer |
2. The assessee has objected to registration of application under Section 12A filed on 30th March, 2004 seeking registration with effect from the financial year 2001-02 relevant to the asst. yr. 2002-03 as per his order dt. 1st/13th Oct., 2004. It has been contended that there was nothing in the order dt. 1st/13th Oct., 2004 in conformity with Section 12AA(1)(b)(ii) of the IT Act to show that the prayer of the assessee for registration with effect from earlier year as discussed above was considered by the learned CIT. The observation of the learned CIT that he could not allow registration under Section 12AA with effect from the asst. yr. 2002-03 because it would amount to two orders under Section 12AA in the same case has also been challenged. It has thus been contended that the learned CIT erred in law and in fact in not registering the appellant society under Section 12AA of the Act with effect from the previous year relevant to the asst. yr. 2002-03. During the course of hearing of the appeal the learned Counsel invited attention to statement of facts enclosed along with the grounds of appeal. He contended that the society was registered with the Registrar of Societies, Assam, dt. 19th June, 1992 as per Societies Registration Act, 1860. The sole purpose of the society was to run the educational institution and its income was exempt from the asst. yrs. 1993-94 to 1998-99 under Section 10(22) of the Act and the claim of the assessee was accepted by the Department. The Section 10(22) of the Act was omitted by the Finance (No. 2 ) Act, 1998 w.e.f. 1st April, 1999 and for the asst. yrs. 1999-2000 and 2000-01 the exemption was claimed under Section 10(23C)(iiiad) of the Act and the returns for the aforestated assessment years were duly filed in response to notices issued under Section 142(1) of the Act. The relevant particulars for the asst. yr. 2001-02 were filed as per petition claiming exemption under Section 10(23C)(iiiad). The claim of exemption for the asst. yrs.
1999-2000 to 2001-02 was accepted by the AO. However, the aggregate annual receipt of the appellant society for the asst. yrs. 2002-03 and 2003-04 exceeded the amount prescribed under Section 10(23C)(iiiad) and the society was covered by Section 10(23C)(vi). The application was accordingly submitted to the Chief CIT, Guwahati, under Rule 2CA in Form No. 56D on 31st March, 2004 requesting his approval for the aforestated two assessment years but the petition has not been disposed of so far. The assessee at the same time submitted an application for approval of the society under Section 12A(a) before the CIT, Guwahati on 31st March, 2004 for the asst. yr. 2002-03 requesting him to grant registration w.e.f. 1st April, 2001. A separate petition was also submitted for the asst. yr. 2003-04. The CIT, Guwahati, among other things required the assessee to submit reasons for not filing the application for approval under Section 12A(a) within one year of the date of creation/establishment of the society on 19th June, 1992. It was pointed out that since the assessee was exempt under Section 10(22) or Section 10(23C)(iiiad) upto asst. yr. 2001-02 there was no necessity for obtaining approval under Section 12A(a) of the Act and the society was under bona fide belief that its total income for the subsequent assessment year i.e. asst. yr. 2002-03 was also exempt under Section 10(23C)(vi) of the Act and the application for approval under Section 12A(a) was out of abundant caution. The CIT vide his order under Section 12AA of the Act dt. 1st/13th Oct., 2004 registered the society w.e.f. 1st April, 2003. However, the second application of the assessee was not disposed of for the asst. yr. 2002-03 asking for registration w.e.f. 1st April, 2001 and for the asst. yr. 2003-04 w.e.f. 1st April, 2002. The second application was also not rejected by the learned CIT.The assessee, therefore, again approached the CIT, Guwahati to register the society under Section 12AA of the Act w.e.f. 1st April, 2001 and as per impugned order the learned CIT rejected the application and hence this appeal.
3. During the course of hearing the learned Counsel of the assessee reiterated the submissions taken before the CIT and the facts discussed above.
4. The learned Departmental Representative pointed out that the learned CIT was required to register the society from first day of the financial year in which the application was filed and since the application was submitted on 30th March, 2004 he rightly registered the society w.e.f. 1st April, 2003 and since no reason was given for delay in filing the application, the registration was not required to be given w.e.f. 1st April, 2001. According to the learned Departmental Representative the learned CIT was also correct in holding that there could not be two orders of registration under Section 12AA of the Act.
5. The learned Counsel relied on the decision in the case of Society of Divine Providence v. Union of India and Anr. and submitted that cogent reason was required to be assigned as to why the learned CIT refused registration as per application of the assessee.
6. We have carefully considered the issue. It could not be denied that the second application of the assessee filed for registration for financial year relevant to the asst. yr. 2002-03 was not considered while granting registration under Section 12AA of the Act as per the order of the CIT dt. 1st/13th Oct., 2004. The view of the learned CIT that there could not be two orders under Section 12AA in the same case cannot be disputed but nothing prevented the CIT to modify his first order and grant registration w.e.f. 1st April, 2001. The second application of the assessee has not, therefore, been rightly rejected on that ground. The learned CIT in his order dt. 8th May, 2006, which is the subject-matter of this appeal has stated that the assessee could not give any reason for not filing the application by 31st March, 2002 when the income of the society exceeded the prescribed limit under Section 10(23C)(iiiad) of the Act. The learned Counsel has, however, rightly pointed out that the reasons were given in the second application and there was no application of mind on the same especially in view of the fact that the application of the assessee before the Chief CIT was pending. We are, therefore, of the considered opinion that the submission of the learned Departmental Representative that the first order dt. 1st/13th Oct., 2004 was not appealed against by the assessee, would not come in the way of the assessee. Respectfully following the decision in the case of Society of Divine Providence v.Union of India & Am. (supra), we restore the issue back to the file of the learned CIT with the direction that he should apply his mind to the reasons given in the second application of the assessee and also take up the matter with the Chief CIT for disposal of pending application of the assessee. The order should be made afresh duly considering the request of the assessee for granting registration w.e.f. 1st April, 2001 and giving proper opportunity of hearing to the assessee as per law.
7. In the result, the appeal is treated as allowed for statistical purpose.
1. The appeal is filed at the instance of the assessee against the order of the learned CIT passed under Section 12AA dt. 1st Oct., 2004.
2. The learned CIT while passing the order under Section 12AA of the Act dt. 1st Oct., 2004 (placed on p. 37 of the paper book) has considered the registration of the institution w.e.f. 1st Oct., 2004.
4. The learned Counsel of the assessee has submitted that the assessee is a registered society with effect from June, 1993 running a school and a junior college for imparting education solely in the form of charitable institution. The assessee has filed relevant papers with effect from first asst. yr. 1993-94 for claiming exemption under Section 10(22). There was no demand raised from the asst. yrs. 1993-94 to 1998-99. It is presumed that the assessee was exempted under Section 10(22) since no adverse intimation was given by the Revenue.
5. From the asst. yrs. 1999-2000 to 2001-02 as per amended provisions of the Act, the institution comes under the purview of Section 10(23C)(iiiad) for which details were also filed and no tax was paid.
6. Since the gross receipt for the asst. yr. 2002-02 exceeded Rs. 1,00,00,000 the institution was covered under Section 10(23C)(vi), therefore, approval of the learned Chief CIT was required. The assessee filed application with complete details on 30th March, 2004 for needful approval for the asst. yrs. 2002-03 and 2003-04 which is still pending before the learned Chief CIT. More so, the assessee simultaneously applied for registration under Section 12A on the same date i.e. on 30th March, 2004 in Form No. 10A along with forwarding letter, explaining the delay. The learned CIT has passed the order under Section 12AA registering the society w.e.f. 1st April, 2003 vide order dt. 1st Oct., 2004 and not allowed exemption for the intervening period of asst. yrs. 2002-03 and 2003-04.
7. The assessee is running a school and a junior college for imparting education as charitable purpose and filed audited statements every year since its inception including the period when exemption was sought but not considered. The assessee relied on the decision of the Hon'ble Madhya Pradesh High Court i.e. Society of Divine Providence v. Union of India and Anr. and submitted that the delay was explained in writing before the learned Chief CIT and CIT in forwarding letter attached with Form No. 10 for registration under Section 12A.The application filed before the learned Chief CIT is still pending.
Therefore, registration may be considered in favour and granted for the intervening period since for the asst. yr. 2004-05 the registration is granted by the learned CIT.8. The learned Departmental Representative relied on the order of the learned CIT and submitted that there was delay not explained to the satisfaction of the learned CIT. Therefore, the order under Section 12AA w.e.f. 1st Oct., 2004 may be confirmed.
9. We have heard the rival submissions and perused the records and statement of facts submitted by the learned Counsel, which is part of the record before us.
10. It is admitted fact that the assessee is a registered society with effect from June, 1992 running a school and a junior college involved in educational activities. For assessment year i.e. 1993-94 the assessee has filed the complete details along with audited accounts claiming exemption under Section 10(22). The same benefit was continued upto asst. yr. 1998-99 since the assessee was exempted under Section 10(22). Our views get support from orders i.e. Secondary Board of Education v. WO (1972) 86 ITR 408 (On) and Birla Vidhya Vihar Trust v.CIT .
11. With effect from asst. yr. 1999-2000 the Act amended and the same institution was covered under Section 10(23C)(iiiad) for which the details were filed claiming exemption and the same benefit was continued upto asst. yr. 2001-02 (from asst. yrs. 1999-2000 to 2001-02). There is change/amendment in the Act, the assessee was subject to provisions under Section 10(23C)(vi) for approval of the Chief CIT. There was no change in the activities of the institution i.e. running school and junior college for educational purpose and no other activity was carried on. The application dt. 30th March, 2004 was filed before the learned Chief CIT which is still pending.
12. The assessee has applied for registration in Form No. 10A under Section 12A dt. 30th March, 2004 w.e.f. 1st April, 2003 before the learned CIT. The learned CIT has passed order under Section 12AA dt.
1st Oct., 2004 granting registration while issuing the order under Section 12AA w.e.f. 1st April, 2003. The intervening period i.e. asst.
yrs. 2002-03 and 2003-04 is left since no order has been passed giving registration or refusal on reasons. The assessee has submitted application dt. 31st March, 2004 along with forwarding letter where delay was explained submitted for exemption for intervening period.
13. It is expected from the Chief CIT that the authority should have passed the order after hearing the assessee within the provisions of the Act and reasonable time since the delayed order cannot meet the justice. The claim of the assessee for registration of the institution for charitable purpose cannot be denied only for reasons of delay, which are already brought on record before the learned Chief CIT and CIT. It is not expected by the Revenue authorities to pass two orders dt. 1st April, 2003 and 8th May, 2006 under Section 12AA (placed on paper book pp. 28 and 37 for the same assessment years). But it is mandatory for the learned CIT to decide the application within the provisions of the Act after allowing reasonable opportunity of hearing to the assessee. The opportunity of hearing is also denied for granting registration for the asst. yrs. 2002-03 and 2003-04.
14. The delay is not the reason for denying the exemption for the asst.
yrs. 2002-03 and 2003-04 since the exemption under Section 12A was granted w.e.f. 1st Oct., 2004. The learned CIT should have brought on record the reasons either for denial or for not considering the delay as condonable, since delay itself cannot be the reason for denial of registration unless there is a change in the activities of the institution, which is prevented under the Act being charitable purpose, brought on record by the Revenue. The learned Counsel of the assessee has relied on the order of the Hon'ble Madhya Pradesh High Court (1998) 146 CTR (MP): (1999) 235 ITR 339 (MP) (supra), which helps the claim of the assessee. Our views get support from the ratio of the orders i.e.
CIT v. Rajasthan Construction Co. (2004) 190 CTR (Raj) 129, CIT v.Sitaram Bhagwandas ITO v. Andhra Cut Piece Centre 15. While respectfully relying on the order relied by the learned Counsel of the assessee, we are of the opinion that the assessee is entitled for registration under Section 12A for the intervening period and the learned CIT is directed to grant registration under Section 12A for the intervening period i.e. asst. yrs. 2002-03 and 2003-04.
In this appeal there is difference of opinion between the Members of the Bench. Therefore, the following question is referred to the Hon'ble President of the Tribunal under Section 255(4) of the IT Act, 1961, for the opinion of the Third Member. The question framed is as under: Whether in the facts and circumstances of the case that the learned CIT had erred in rejecting the application of the assessee for grant of registration under Section 12A of the Act for the asst. yrs.
2002-03 and 2003-04 1. This appeal by the assessee for asst. yr. 2002-03 is directed against the order of CIT refusing to grant registration under Section 12A of the IT Act, 1961 (the Act) to the assessee for asst. yr.
2002-03.
2. The facts of the case are that the assessee is a registered society and is running educational institutions, i.e. school and a college at Guwahati. It was created on 19th June, 1992 and registered on the same day with Registrar of Societies, Assam. It was treated as a society existing solely for educational purposes and was granted exemption under Section 10(22) of the Act right upto asst. yr. 1998-99 when above provision was omitted from the statute. Thereafter assessee claimed and was allowed exemption under Section 10(23C)(iiiad) of the Act right upto asst. yr. 2001-02.
3. The assessee applied under Section 12A of the Act to the CIT for grant of registration of the society for asst. yr. 2002-03 to claim benefit of registration as a charitable institution vide application dt. 23rd March, 2004 filed on 30th March, 2004. Although in the title it was application only for the asst. yr. 2002-03, but in para 4 approval (registration) was sought for asst. yrs. 2002-03 and 2003-04.
The assessee moved separate application under Section 10(23C) of the Act for getting approval as an educational institution to the Chief CIT and those applications are stated to be still pending with the learned Chief CIT. The present appeal is not concerned with those applications.
It is concerned only with application under Section 12A of the Act.
3.1. After receipt of aforesaid application, the learned CIT sent notice dt. 5th April, 2004 to the assessee asking the assessee to explain delay in submission of the application, which reads as under: The application for the purpose of registration under Section 12A of the IT Act, 1961 is required to filed within one year of the date of creation/establishment of the trust. From your application it is seen that your trust was created on 19th June, 1992. Your application is therefore time barred. You are, therefore, requested to submit a petition stating the reason for late filing of your application.
The assessee submitted a detailed reply explaining the delay in the submission of the application. A copy of said reply is available at pp.
21 to 27 of the paper book. In the above reply, the assessee explained its background, nature of activities carried on by it and details of receipt, more particularly receipt for asst. yr. 2001-02 onward. It was pointed out that the assessee was duly granted exemption under Section 10(22) right upto asst. yr. 1998-99. It also referred to its applications filed under Section 10(23C)(iiiad) of the Act. The assessee also explained how and why necessity to apply for registration under Section 12A of the Act arose in this case. How the aggregate total annual receipt of the assessee society for asst. yrs. 2002-03 and 2003-04 exceeded Rs. 1 crore under Clause (iiiad) of Section 10(23C) of the Act and it has come under the purview of Clause (vi) of Section 10(23C) of the Act; the society explained that it was not in a position to foresee the fate of its application under r. 2CA in Form No. 56D under Section 10(23C)(vi) of the Act for asst. yrs. 2002-03 and 2003-04 by 31st March, 2004, i.e. the date of submission of the application.
The fate of the application moved by the assessee under Section 10(23C) was not made known to the assessee. The assessee thus explained compelling circumstances that resulted in submitting the application under Section 12A of the Act only on 30th March, 2004. It was also stated in the application that as a society running solely for educational purposes, "the assessee shall face a perilous situation in the form of immense tax burden and its entire purpose of existence shall be jeopardised" if approval under Section 12A would not be granted to the assessee. The assessee also rendered detailed explanation with reference to various functions carried on by the assessee leading to the delay in the submission of application for registration.
4. The learned CIT thereafter passed the order under Section 12AA on 1st Oct., 2004 as under: Shrimanta Shankar Academy, Panbazar, Guwahati as constituted by the memorandum of association registered with the Registrar of Societies, Assam, Guwahati on 19th June., 1992 had filed an application for registration under Clause (a) of Section 12A of the IT Act, 1961 in the prescribed form on 30th March, 2004.
The above, noted society has been registered under Section 12AA of the IT Act w.e.f. 1st April, 2003.
42/12A(a)/CIT/GHY-l/TECH/2003-04 of the register of application under Section 12A(a) of the IT Act, 1961.
4.1. It is evident from above order that the assessee was granted registration w.e.f. 1st April, 2003, i.e. for the asst. yr. 2003-04 and not for asst. yr. 2002-03. In fact, in the above order there is no mention about application and registration under Section 12A for asst.
yr. 2002-03.
4.2. Thereafter the assessee moved application on 10th Jan, 2006 requesting the learned CIT, Guwahati to grant registration to the assessee for asst. yr. 2002-03. All the relevant information was once again submitted with the application. The learned CIT disposed of the above application as per the impugned order dt. 8th May, 2006 by observing as under: Smt. Bina Chowdhury, President of Shrimanta Shankar Academy, Panbazar, Guwahati, filed an application on behalf of the society on 13th Jan., 2006 requesting for registration under Section 12A with effect from asst. yr. 2002-03.
The society was registered under the Societies Registration Act on 19th June, 1992 and had been claiming its income to be exempt under Section 10(22) or under Section 10(23C)(iiiad), as applicable, upto asst. yr. 2001-02. Therefore, it filed an application under Section 12A before me on 30th March, 2004. The said application was disposed of vide an order dt. 1st Oct., 2004 granting registration under Section 12AA w.e.f. 1st April, 2003 only as the application was filed during the financial year 2003-04. There was no satisfactory reason why the application was not filed by 31st March, 2002 when the income of the society exceeded the prescribed limit under Section 10(23C)(iiiad) in the financial year 2001-02.
Now the society wants the order of registration to take effect from asst. yr. 2002-03.
There cannot be two orders under Section 12AA in the same case. If a fresh order is passed, that will replace the original order. I have no power to revise my own orders, nor can I rectify my earlier order as the same does not suffer from an apparent mistake.
5. The assessee being aggrieved with the impugned order of learned CIT filed appeal before the Tribunal. After considering the submissions of both the parties, the learned AM was of the view that nothing prevented the CIT to modify his order and grant registration to the assessee w.e.f. 1st April, 2001, The learned CIT was not right in rejecting application on the ground that he could not pass two orders under Section 12AA. He further observed that there was no application of mind by the learned CIT to the facts stated by the assessee in its application. In the light of decision of Hon'ble Madhya Pradesh High Court in the case of Society of Divine Providence v. Union of India and Anr. , the learned AM directed as under: We restore the issue back to. the file of the learned CIT with the direction that he should apply his mind to the reasons given in the second application of the assessee and also take up the matter with the Chief CIT for disposal of pending application of the assessee.
The order should be made after duly considering the request of the assessee for granting registration w.e.f. 1st April, 2001 and giving proper opportunity of hearing to the assessee as per law.
6. The learned JM did not agree with the above view. He observed that the assessee was a registered society running school and a college since 1992 and its income was always granted exemption under Section 10(22) of the Act. It was further treated as a charitable institution and granted registration under Section 12A of the Act w.e.f. 1st April, 2003. Thus when the assessee was a charitable institution, it will be unjust to refuse registration to it under Section 12A of the Act for the intervening period. He, therefore, directed the assessee be granted registration for asst. yrs. 2002-03 and 2003-04 under Section 12A of the Act.
7. On account of above difference, the following has been referred to me under Section 255(4) of the Act: Whether in the facts and circumstances of the case that the learned CIT had erred in rejecting the application of the assessee for grant of registration under Section 12A of the Act for the asst. yrs.
2002-03 and 2003-04 8. I have heard submissions of both the parties. I have also examined relevant facts and circumstances of the case. There is no dispute that the assessee is a registered society existing solely for educational purposes. It is running a school and a college since 1992 and its income was granted exemption under Section 10(22) of the Act. It has also been registered under Section 12A of the Act as a charitable institution solely existing for educational purposes w.e.f. 1st April, 2003. The learned Counsel for the assessee submitted that dispute was only for asst. yr. 2002-03 as registration granted for that assessment year would be valid for subsequent asst. yr. 2002-03 (sic-2003-04). He also argued that learned CIT in the impugned order was wrong in saying that "now the society wants order of registration". He drew my attention to the application dt. 23rd March, 2004 wherein registration under Section 12A of the Act was sought for asst. yr. 2002-03 and in the second application the above request was merely repeated. He also challenged the observation of learned CIT that two orders under Section 12AA of the Act cannot be passed. He submitted that assessee had sought registration for asst. yr. 2002-03 and no order was passed for that assessment year while disposing of assessee's application and granting exemption w.e.f 1st April, 2003. He further submitted that there was no good ground for not treating assessee as a charitable institution extending benefit under Section 12A of the Act for asst. yr. 2002-03 when delay in the submission of the application was duly explained and there was no dispute that the assessee society was a charitable institution existing solely for educational purposes. Remand of matter would lead to multiplicity of proceeding which could have been avoided in this case. Remand is also unjust and unfair to the assessee. The learned Counsel of the assessee, accordingly, supported the proposed order of the learned JM.9. The learned Departmental Representative, on the other hand, relied upon the proposed order of learned AM which, according to the learned representative, was fair as he merely directed re-examination of entire issue afresh.
10. On careful consideration of rival submissions. I am inclined to agree with order proposed by learned JM. It is true that remand of a matter is discretionary. But such discretion is required to be shown to be exercised in a judicial manner. In the case of Saurashtra Packaging (P) Ltd. v. CIT Court have observed that where matter can be disposed of by the Tribunal on the basis of material already on record, a remand should not be resorted to. It is always necessary to avoid multiplicity of proceeding and to save time. There are large number of decisions of High Courts and Supreme Court where instead of directing the Tribunal to make a reference of question under Section 256(2), the Courts while disposing of reference application answered the question sought to be referred and directed the Tribunal to proceed in a particular manner.
All this is done to save time and multiplicity of proceeding. I am convinced that such a course to save time should have been adopted in this case and remand of the matter is totally unnecessary. I say so for the reasons and after noting following facts available on record.
11. It is not in dispute that the assessee is a registered society existing solely for educational purposes. It is running a school and a college in Guwahati and was granted exemption under Section 10(22) of the Act right upto asst. yr. 1998-99. The learned CIT has also registered the society under Section 12A w.e.f. 1st April, 2003 without appreciating that the assessee had made application dt. 23rd March, 2004, filed on 30th March, 2004 for registration for asst. yr. 2002-03.
It had also explained delay in filing said application for the abovementioned assessment year in its letter, copy of which is available at pp. 21 to 27 of the paper book. The learned CIT did not note asst. yr. 2002-03 nor recorded any finding on the claim made by the assessee for the above assessment year, but granted registration w.e.f. 1st April, 2003 in order dt. 10th Jan., 2004 (sic-1st Oct., 2004). Nothing was recorded why explanation of the assessee for delay was not being accepted. The order of the learned CIT was a mistake apparent from record as far as asst. yr. 2002-03 was concerned. The assessee, therefore, was right in moving second application seeking registration under Section 12A of the Act for asst. yr. 2002-03 again.
In my considered opinion, the assessee had given reasonable explanation which could be termed as "satisfactory" for condoning delay. The assessee was prevented by sufficient reason for making aforesaid application before the expiry of the period.
12. The provisions of Section 12A prescribing conditions as to registration of trust are as under: 12A. Conditions as to registration of trusts, etc.--The provisions of Section 11 and Section 12 shall not apply in relation to the income of any trust or institution unless the following conditions are fulfilled, namely: (a) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and in the prescribed manner to the CIT before the 1st day of July, 1973, or before the expiry of a period of one year from the date of the creation of the trust or the establishment of the institution, (whichever is later and such trust or institution is registered under Section 12AA): Provided that where an application for registration of the trust or institution is made after the expiry of the period aforesaid, the provisions of Sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i) from the date of the creation of the trust or the establishment of the institution if the CIT is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; (ii) from the 1st day of the financial year in which the application is made, if the CIT is not so satisfied; 12.1. In the present case the assessee in its reply (copy at pp. 21 to 27 of the paper book) explained reasons as to how its aggregate total receipt in above particular year had exceeded prescribed limit by few lakhs. It further explained that how persistent efforts were made to claim exemption by making petitions to the Chief CIT under Section 10(23C) of the Act but those petitions remained pending with the learned Chief CIT. It also explained circumstances leading to delay in filing application under Section 12A of the Act for asst. yr. 2002-03.
None of the claim made by the assessee has been refuted by learned CIT.At p. 30 of the paper book, copy of assessment order for asst. yr.
2002-03 has been filed which shows that aggregate receipt of the assessee was just Rs. 1,06,86,351 slightly more than the prescribed limit of Rs. 1 crore under Section 10(23C)(iiiad) of the Act. It is to be appreciated that above figures for the year ending 31st March, 2002 were available only on making up of the accounts which had been prepared much after 31st March, 2002. Besides the assessee was required to act only on audited accounts which is insisted upon in all provisions of the Act relating to exemptions but adds to delay.
13. The AO as per order dt. 31st March, 2005 did not allow exemption to the assessee as the assessee was unable to show approval under Section 12AA or 10(23C)(vi) of the Act. The result is that the assessee has been required to pay tax on more than Rs. 10 lakhs when there are consistent findings from year to year that it is a charitable institution solely existing for purposes of education. It is palpable injustice. The facts on which such unwarranted treatment was given have already been noted but need to be restated again. There is no doubt that there was delay in filing application for registration under Section 12A of the Act. On being specifically asked, the assessee elaborately explained the circumstances which prevented it from making the application in time. It explained how assessee's gross receipts increased the prescribed limits in asst. yr. 2002-03 and how it moved successive applications to learned Chief CIT for benefit in terms of Section 10(23C) of the Act; but no order was passed. Facts stated are not refuted. The delay is satisfactorily explained, yet instead of recording satisfaction in terms of proviso (i) to Section 12A(a) and granting registration w.e.f. 1st April, 2001 as requested by the assessee and as the learned CIT was obliged to grant, no order was passed nor any reasons were given in order dt. 1st Oct., 2004 for not extending benefit for asst. yr. 2002-03. When learned CIT's attention was drawn to above mistake in the second application, the learned CIT took the stand that two orders cannot be passed under Section 12AA of the Act. It was also wrongly stated that the assessee society now wants order of registration for asst. yr. 2002-03. This way an admittedly charitable institution was denied exemption on technical and flimsy grounds. If for some good reasons exemption was denied, it would have been a different matter. But after thorough examination of accounts, the AO in assessment order dt. 31st March, 2005 has asked the assessee to pay tax of several lakhs for its inability to show requisite approval under Section 12AA or 10(23C) of the Act. This totally disregards that a public authority is obliged to carry mandate of the legislature in a just and fair manner. Remand here also appears to be unjust. Objects of the assessee institution and its accounts have been examined. The delay has been explained. What is left to be considered for which remand is necessary The assessee has been running from post to pillar to get exemption and its bona fides are proved to the hilt.
On facts and circumstances of the case, only reasonable order can be to read order dt. 1st Oct., 2004 as effective from "1st April, 2001" in place of "1st April, 2003" and treat it as modified and rectified to the above extent. For the above reasons, I agree with final order proposed by the learned JM and allow this appeal of the assessee.
14. The order passed in this case may be placed before the regular Bench for passing consequential order under the law in accordance with majority view.
1. The Hon'ble President, Shri Vimal Gandhi, Tribunal, being the Third Member after hearing the counsels of the parties on 8th Feb., 2007 has opined and concurred with the finding of the learned JM. He further opined that the reasonable order can be to read order dt. 1st Oct., 2004 as effective from 1st April, 2001 in place of 1st April, 2003.
2. While adopting the majority view the appeal of the assessee is allowed for exemption under Section 10(22)/10(23C) of the Act for the period mentioned above.