Case Law Details
Amhi Udyogini Pratishthan Vs CIT (ITAT Mumbai)
The assessee appealed against the order dated 26.07.2024 passed by the Commissioner of Income Tax (Exemptions) rejecting its application for registration under Section 12AB of the Income-tax Act, 1961. The appeal also challenged the invocation of Section 11(1)(c) and the rejection of registration on the basis of expenditure described as “Foreign Conference Expenses.”
At the outset, the Tribunal noted that there was a delay of 511 days in filing the appeal. The assessee sought condonation of delay through a petition supported by an affidavit, stating that provisional registration under Section 12AB and provisional approval under Section 80G(5) had been granted on 11.09.2023 and that an application for regular registration under Section 12AB was filed on 15.01.2024. The assessee explained that the delay occurred due to serious medical issues faced by the trustee responsible for filing the appeal and asserted that the delay was neither deliberate nor intentional. The Revenue did not seriously object to condonation and left the matter to the Tribunal’s discretion.
After considering the explanation and referring to various judicial precedents on condonation of delay, the Tribunal held that the delay resulted from circumstances beyond the assessee’s control, that a reasonable and bona fide cause had been shown, and that there was nothing on record to indicate deliberate delay or mala fides. In the interest of substantial justice, the Tribunal condoned the delay and admitted the appeal for adjudication on merits.
On merits, the assessee submitted that the Commissioner (Exemptions) had wrongly rejected the application for registration under Section 12AB by invoking Section 11(1)(c). It was argued that the expenditure in question did not amount to application of income outside India and that the Commissioner had proceeded on an erroneous factual premise by treating the expenditure as “Foreign Conference Expenses.” The assessee relied upon a clarification certificate dated 06.05.2026 issued by its Statutory Auditor, forming part of Annexure A-16 of the paper book, certifying that the description “Foreign Conference Expenses” in the books of account was merely a typographical error. According to the certificate, the expenditure actually related to conferences conducted within India, was incurred and paid entirely within India to an Indian travel agency, and no foreign outward remittance had been made during the relevant previous year. The assessee requested that the matter be restored to the Commissioner (Exemptions) for fresh adjudication in light of this evidence.
The Departmental Representative fairly submitted that, if the clarification certificate had not been examined by the Commissioner (Exemptions), the matter could be restored for fresh consideration.
The Tribunal observed that the impugned order had been passed on the premise that the assessee incurred expenditure towards “Foreign Conference Expenses”, thereby attracting Section 11(1)(c). It noted that the clarification certificate dated 06.05.2026 categorically stated that the reference to “Foreign Conference Expenses” was only a typographical or classificatory error, that the expenditure actually related to conferences held within India, that the payments were made entirely within India to an Indian travel agency, and that no foreign outward remittance had been made during the relevant previous year. The Tribunal further observed that this document went to the root of the controversy and had admittedly not been available before the Commissioner (Exemptions) when the impugned order was passed.
Accordingly, the Tribunal set aside the impugned order and remitted the matter to the Commissioner (Exemptions) for de novo adjudication. The Commissioner (Exemptions) was directed to examine the clarification certificate at Annexure A-16 along with any other evidence and submissions furnished by the assessee and thereafter decide the application for registration under Section 12AB afresh by passing a reasoned and speaking order after providing adequate opportunity of hearing to the assessee.
The Tribunal also noted the assessee’s submission that its application for approval under Section 80G had been rejected as a consequence of the rejection of registration under Section 12AB. Since no separate appeal had been filed against the order rejecting approval under Section 80G, the Tribunal declined to express any opinion on that issue. However, it granted liberty to the assessee to file a separate appeal against the order passed under Section 80G, if so advised, to be dealt with in accordance with law.
The appeal was allowed for statistical purposes.
Cases Discussed
- Midas Polymer Compounds Pvt. Ltd. (ITAT Cochin), ITA No. 288/Coch/2017 dated 25.6.2018
- People Education & Economic Development Society Vs. ITO, 100 ITD 87 (TM) (Chen)
- Venkatadri Traders Ltd. v. CIT (Madras HC), (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad)
- Bajaj Hindusthan Ltd. v. Jt. CIT (AT), 277 ITR 1
- Sreenivas Charitable Trust v. Dy. CIT (Madras HC), 280 ITR 357
- Collector, Land Acquisition v. Mst. Katiji and Ors. (SC), 167 ITR 471
- Collector Land Acquisition Vs. Mst. Katiji & Ors. (SC), (1987) 167 ITR 471
- Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi (SC), AIR 1978 SC 537
- CIT vs. K.S.P. Shanmugavel Nadai and Ors. (Madras HC), 153 ITR 596
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Present appeal is directed against the order dated 26/07/2024 passed by the Ld. CIT(Exemptions) rejecting the assessee’s application seeking registration u/s 12A of the Income-tax Act, 1961, on the following grounds of appeal:-
“1) 1.That the Learned CIT Exemptions erred in law and on facts in rejecting the Appellants application for registration under section 12AB of the Income tax Act, 1961.
2) 2. That the Learned CIT Exemptions failed to appreciate that the expenditure of Rs.11,22,143 incurred towards a foreign conference was paid within India to an Indian travel agency and therefore does not constitute application of income outside India within the meaning of section 11 sub section 1 clause c of the Act.
3) 3. That the Learned CIT Exemptions erred in invoking section 11 sub section 1 clause c at the stage of registration, ignoring the settled legal position that compliance with section 11 is to be examined during assessment proceedings and not while granting registration under section 12AB.
4) 4. That the Learned CIT Exemptions failed to consider that the foreign conference attended by the Appellant was in furtherance of and incidental to its charitable objects, as it facilitated knowledge exchange, capacity building, and promotion of Indian perspectives at the international level, thereby advancing public interest with a clear nexus to India s socio economic objectives.
5) 5. Further appellants submit that expenditure of Rs.11,22,143 was incurred and paid entirely within India to an Indian travel agency, with no remittance outside India, and thus does not constitute application of income outside India. Relevant supporting documents are available on record.
6) 6. That the Learned CIT Exemptions exceeded the jurisdiction vested under section 12AB by undertaking a detailed examination of application of income, which is beyond the scope of registration proceedings.
7) 7. That the Learned CIT Exemptions erred in not granting registration despite the Appellant having charitable objects and bona fide activities, thereby violating the principles laid down under section 12AB of the Act.
8) 8. That the order passed by the Learned CIT Exemptions is arbitrary, unjustified, and contrary to the principles of natural justice, and therefore liable to be set aside.
9) 9. That the Appellant craves leave to add, amend, alter, OR withdraw any of the above grounds of appeal at the time of hearing.”
2. At the outset, we find that there is a delay of 511 days in filing the present appeal before this Tribunal. The assessee has filed a petition seeking condonation of the delay supported by an affidavit. It has been stated therein that the assessee was granted provisional registration u/s 12AB and provisional approval u/s 80G(5) of the Act on 11/09/2023, and thereafter filed an application for grant of regular registration u/s 12AB on 15/01/2024.
2.1. The said application came to be rejected by the Ld.CIT(E) vide order dated 26/07/2024, against which the present appeal has been preferred. It has further been averred that the delay in filing the appeal occurred on account of serious medical issues faced by the trustee who was responsible for taking the necessary steps for filing the appeal. Owing to the said medical circumstances, the appeal could not be filed within the prescribed period of limitation. It has been asserted that the delay was neither deliberate nor intentional but was occasioned due to circumstances beyond the control of the assessee. The assessee has further undertaken to place on record the relevant medical certificates and other supporting documents in support of the aforesaid explanation and has prayed for condonation of the delay in the interest of substantial justice.
2.2. The Ld. DR did not seriously object to the condonation of delay and left the issue to the discretion of the Bench.
3. Having regard to the submissions by the assessee, we refer to the decision of Hon’ble Cochin Bench of this Tribunal in the case of Midas Polymer Compounds Pvt. Ltd. in ITA No. 288/Coch/2017 dated 25.6.2018, wherein the Tribunal condoned the delay of 2819 days by observing as follows:
“6. We have heard the rival submissions and perused the record. There was a delay of 2819 days in filing the appeal before the Tribunal. The assessee has stated the reasons in the condonation petition accompanied by an affidavit which has been cited in the earlier para. The assessee filed an affidavit explaining the reasons and prayed for condonation of delay. The reason stated by the assessee is due to inadvertent omission on the part of Shri Unnikrishnan Nair IV, CA in taking appropriate action to file the appeal. He had a mistaken belief that the appeal for this year was filed by the assessee as there was separate Counsel to take steps to file this appeal before the ITAT. Therefore, we have to consider whether the Counsel’s failure is sufficient cause for condoning the delay. The Madras High Court considered an identical issue in the case of Sreenivas Charitable Trust v. Dy. CIT (280 ITR 357) and held that mixing up of papers with other papers are sufficient cause for not filing the appeal in time. The Madras High Court further observed that the expression “sufficient cause” should be interpreted to advance substantial justice. Therefore, advancement of substantial justice is the prime factor while considering the reasons for condoning the delay.
6.1 On merit the issue is in favour of the assessee. But there is a technical defect in the appeal since the appeal was not filed within the period of limitation. The assessee filed an affidavit saying that the appeal was not filed because of the Counsel’s inability to file the appeal. The Revenue has not filed any counter affidavit to deny the allegation made by the assessee. While considering a similar issue the Apex Court in the case of Collector, Land Acquisition v. Mst. Katiji and Ors. (167 ITR 471) laid down six principles. For the purpose of convenience, the principles laid down by the Apex Court are reproduced hereunder:
(1) Ordinarily, a litigant does not stand to benefit by lodging an appeal late
(2) Refusing to condone delay can result in a meritorious matter being thrown at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
(3) ‘Every day’s delay must be explained’ does not mean that a pedantic approach should be made. Why not every hour’s delay, every second’s delay?
The doctrine must be applied in a rational, commonsense and pragmatic manner.
(4) When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right in injustice being done because of a nondeliberate delay.
(5) There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of mala fides. A litigant does not stand to benefit by resorting to delay. In fact, he runs a serious risk.
(6) It must be grasped that the judiciary is respected not on account of its power to legalise injustice on technical grounds but because it is capable of removing injustice and is expected to do so.
6.2 When substantial justice and technical consideration are pitted against each other, the cause of substantial justice deserves to be preferred, for the other side cannot claim to have vested right for injustice being done because of nondeliberate delay. In the case on our hand, the issue on merit regarding allowability of deduction u/ s. 80IB of the Act was covered in favour of the assessee by the binding Judgment of the jurisdictional High Court. Moreover, no counter-affidavit was filed by the Revenue denying the allegation made by the assessee. It is not the case of the Revenue that the appeal was not filed deliberately. Therefore, we have to prefer substantial justice rather than technicality in deciding the issue. As observed by Apex Court, if the application of the assessee for condoning the delay is rejected, it would amount to legalise injustice on technical ground when the Tribunal is capable of removing injustice and to do justice. Therefore, this Tribunal is bound to remove the injustice by condoning the delay on technicalities. If the delay is not condoned, it would amount to legalising an illegal order which would result in unjust enrichment on the part of the State by retaining the tax relatable thereto. Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 2819 days has to be condoned.”
3.1. In the present facts, on examining whether the reason stated by the assessee to seek condonation of delay before this Tribunal is sufficient to condone the delay and whether, there exists sufficient cause for not presenting the appeal before this Tribunal within the period of limitation under the statute, the assessee must show that, it was diligent in taking appropriate steps and the delay was caused notwithstanding with its due diligence. It is for the party concerned to explain the reasons for delay and it is not the function of concerned authorities often to find cause for delay. The Court/authority has to examine whether the sufficient cause has been shown by the party for condoning the delay, and whether such cause is reasonable or not.
3.2. In case of People Education & Economic Development Society Vs. ITO reported in 100 ITD 87 (TM) (Chen), it was held that;
“when substantial justice and technical consultation are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of non-deliberate delay”.
3.3. The next question that arises is whether delay was excessive or inordinate. There is no question of any excessive or inordinate when the reason stated by the assessee was a reasonable cause for not able to file the appeals within the period of limitation. The cause for the delay therefore deserves to be considered, when there exists a reasonable cause, and therefore the period of delay may not be relevant factor. In support, we rely on the decision of Hon’ble Madras High Court in the case of CIT vs. K.S.P. Shanmugavel Nadai and Ors. (153 ITR 596) considered the condonation of delay and held that there was sufficient and reasonable cause on the part of the assessee for not filing the appeal within the period of limitation. Hon’ble Madras High Court thus condoned nearly 21 years of delay in filing the appeal. As compared to 21 years, delay of about 1000 to 2000 days cannot be considered to be inordinate or excessive.
3.4. Hon’ble Madras High Court in the case of Sreenivas Charitable Trust reported in 280 ITR 357 held that, no hard and fast rule can be laid down in the matter of condonation of delay and the Court should adopt a pragmatic approach and the Court should exercise their discretion on the facts of each case keeping in mind that in construing the expression “sufficient cause” the principle of advancing substantial justice is of prime importance and the expression “sufficient cause” should receive a liberal construction. Therefore, this Judgment of the Hon’ble Madras High Court (supra) clearly says that in order to advance substantial justice which is of prime importance, the expression “sufficient cause” should receive a liberal construction. Therefore, for the purpose of advancing substantial justice which is of prime importance in the administration of justice, the expression “sufficient cause” should receive a liberal construction. In opinion of this Tribunal, this decision of Hon’ble Madras High Court is applicable to the present facts of the case. A similar view was taken by Hon’ble Madras High Court in the case of Venkatadri Traders Ltd. v. CIT (2001) 168 CTR (Mad) 81 : (2001) 118 Taxman 622 (Mad).
3.5. Reliance is also placed on the decision of Hon’ble Mumbai Bench of this Tribunal in the case of Bajaj Hindusthan Ltd. v. Jt. CIT (AT) reported in 277 ITR 1 condoned the delay of 180 days when, the appeal was filed after the pronouncement of the Judgment of the Hon’ble Supreme Court. It is also to be noted that the Revenue has not filed any counter-affidavit opposing the application of the assessee for condonation of delay. Hon’ble Supreme Court in the case of Mrs. Sandhya Rani Sarkar vs. Smt. Sudha Rani Debi reported in AIR 1978 SC 537 held that, non-filing of affidavit in opposition to an application for condonation of delay may be a sufficient cause for condonation of delay. In this case, the Revenue has not filed any counter-affidavit opposing the application of the assessee, therefore, as held by Hon’ble Supreme Court, there is sufficient cause for condonation of delay. Hon’ble Supreme Court also observed that; “It does not mean that when the delay was for longer period, the delay should not be condoned even though there was sufficient cause. Condonation of delay is the discretion of the Court/ Tribunal. Therefore, it would depend upon the facts of each case. In our opinion, when there is sufficient cause for not filing the appeal within the period of limitation, the delay deserves to be condoned, irrespective of the duration/ period.”
3.6. After considering the contents of the petition for condonation of delay, we are satisfied that the delay was caused due to circumstances beyond the control of the Assessee and that there was a reasonable and bona fide cause for not filing the appeal within the stipulated period. There is nothing on record to suggest that the delay was deliberate or attributable to any mala fide intention. We, therefore, feel that the reasons assigned by the assessee for the inability to present the appeal within time before this Tribunal deserves consideration based on the principles laid down by Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors., reported in (1987) 167 ITR 471. The relevant observation of Hon’ble Supreme Court in case of Collector Land Acquisition Vs. Mst. Katiji & Ors.,(supra) is as under:-
“The Legislature has conferred the power to condone delay by enacting section 51 of the Limitation Act of 1963 in order to enable the courts to do substantial justice to parties by disposing of matters on de merits”. The expression “sufficient cause” employed by the Legislature is adequately elastic to enable the courts to apply the law in a meaningful manner which subserves the ends of justice that being the life purpose of the existence of the institution of courts. It is common knowledge that this court has been making a justifiably liberal approach in matters instituted in this court. But the message does not appear to have percolated down to all the other courts in the hierarchy.
And such a liberal approach is adopted on principle as it is realized that :
1. Ordinarily, a litigant does not stand to benefit by lodging an appeal late.
2. Refusing to condone delay can result in a meritorious matter being thrown out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties.
………………………………. 1.Any appeal or any application, other than an application under any of the provisions of Order XXI of the Code of Civil Procedure, 1908, may be admitted after the prescribed period if the appellant or the applicant satisfies the court that he had sufficient cause for not preferring the appeal or making the application within such period.”
Accordingly, in the interest of substantial justice, we condone the delay and the appeal is admitted for adjudication on merits.
4. On merits, the Ld. AR submitted that the Ld. CIT(E) had erred in rejecting the assessee’s application seeking registration u/s 12AB of the Act by invoking the provisions of section 11(1) (c) of the Act. It was submitted that the expenditure in question did not constitute application of income outside India and that the Ld. CIT(E) had proceeded on an erroneous factual premise by treating the expenditure as “Foreign Conference Expenses”. The Ld. AR invited our attention to the clarification certificate dated 06/05/2026 issued by the Statutory Auditor, placed at Annexure A-16 of the paper book, wherein it has been categorically certified that the description “Foreign Conference Expenses” appearing in the books of account was merely a typographical error and that the expenditure actually pertained to conferences held within India. It was further certified that the entire expenditure had been incurred and paid within India to an Indian travel agency and that no foreign outward remittance had been made during the relevant previous year. It was, therefore, prayed that the matter may be restored to the file of the Ld.CIT(E) for fresh adjudication in the light of the aforesaid evidence.
4.1. The Ld.DR fairly submitted that if the aforesaid document had not been examined by the Ld.CIT(E), the matter may be restored to his file for fresh consideration.
We have perused the submissions advanced by both sides in light of the record placed before us.
5. We find that the impugned order has been passed by the Ld.CIT(E) on the premise that the assessee had incurred expenditure towards “Foreign Conference Expenses”, thereby attracting the provisions of section 11(1)(c) of the Act. However, during the course of hearing before us, the assessee has placed on record a clarification certificate dated 06/05/2026 issued by its Statutory Auditor, forming part of the paper book as Annexure A16, wherein it has been categorically clarified that the reference to “Foreign Conference Expenses” was merely a typographical/classificatory error and that the expenditure actually related to conferences conducted within India. The auditor has further certified that the expenditure was incurred and paid entirely within India to an Indian travel agency and that no foreign outward remittance was made during the relevant previous year. Since the aforesaid document goes to the root of the controversy and was admittedly not available for the consideration of the Ld.CIT(E) while passing the impugned order, we are of the considered view that the matter deserves to be restored to his file for fresh examination.
5.1. Accordingly, we set aside the impugned order and remit the matter to the file of the Ld. CIT(E) for de novo adjudication. The Ld.CIT(E) shall examine the clarification certificate placed at Annexure A-16 of the paper book, along with such other evidences and submissions as may be furnished by the assessee, and thereafter decide the assessee’s application seeking registration u/s 12AB afresh by passing a reasoned and speaking order in accordance with law after affording adequate opportunity of being heard to the assessee.
6. We further note the submission of the Ld. AR that the assessee’s application seeking approval u/s 80G of the Act has also been rejected as a consequence of the rejection of registration u/s 12AB. However, admittedly, no separate appeal has been filed before us against the order rejecting approval u/s 80G. Since the said order is not the subject matter of the present appeal, we refrain from expressing any opinion thereon. Nevertheless, liberty is granted to the assessee to prefer a separate appeal against the order passed u/s 80G, if so advised, and the same shall be dealt with in accordance with law.
Accordingly, the grounds raised by assessee are allowed for statistical purposes.
In the result, appeal filed by assessee stands allowed for statistical purposes.
Order pronounced in the open court on 30/06/2026.
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