Commissioner of Income Tax vs Market Committee

M.M. Kumar, J.—The instant appeal filed u/s 260A of the IT Act, 1961 (for brevity, ''the Act''), challenges order dt. 31st March, 2009, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ''A, Chandigarh (for brevity, ''the Tribunal''), in ITA No. 1009/Chd/2008, in respect of asst. yrs. 2003-04 to 2005-06, condoning the delay and directing the CIT to grant registration certificate to the assessee-respondent Market Committee, Grain Market, Sector 26, Chandigarh.

The facts are undisputed. The income of the assessee-respondent was exempt u/s 10(20) of the Act before amendment by the Finance Act, 2002, which came into force from 1st April, 2003. The market committees were excluded from the purview of Section 10(20) of the Act with effect from the asst. yr. 2003-04. Accordingly, the assessee-respondent filed an application dt. 14th March, 2006 for registration u/s 12A of the Act w.e.f. 1st April, 2002 to get its income exempt. The CIT held that the assessee-respondent Market Committee had reasonable cause for making delayed application u/s 12A of the Act and the registration was granted w.e.f. 1st April, 2005 i.e. the first day of financial year in which the application was made (A-1). However, registration w.e.f. 1st April. 2002 was declined.

The assessee-respondent aggrieved by the order of the CIT filed an appeal before the Tribunal. The Tribunal vide order dt. 16th Nov., 2007, restored the matter back on the file of the CIT for reconsideration of the assessee-respondent''s request for grant of registration from the earlier date after granting a reasonable opportunity of being heard (A-2). The CIT after affording opportunity of hearing again rejected the request of the assessee-respondent for condonation of delay and grant of registration u/s 12A w.e.f. 1st April, 2002 (A-3).

Again the assessee-respondent filed an appeal before the Tribunal. The Tribunal vide order dt. 22nd May, 2008 remitted the matter back to the file of the CIT for reconsideration of the case in the light of the decision of the Chandigarh and Delhi Benches of the Tribunal and also the decision of the jurisdictional High Court in this regard. Again the request of the assessee-respondent for condonation of delay and grant of registration u/s 12A of the Act w.e.f. 1st April, 2002 was rejected (A-5). Once again the assessee-respondent approached the Tribunal and vide the impugned order dt. 31st March, 2009 (A-6), the Tribunal has condoned the delay and directed the CIT to grant registration u/s 12A of the Act to the assessee-respondent w.e.f. 1st April, 2002.

The view of the Tribunal is discernible from the last para of its order. It has been observed that had the assessee-respondent been a party to the proceedings before the Delhi Bench where 251 market committees of Punjab & Haryana were parties, then the question of seeking condonation of delay would not have arisen. It is pertinent to mention that the Delhi Bench of the Tribunal had condoned the delay in its order dt. 14th March, 2005, which is now reported as Market Committee, Sullar Gharat and Ors. v. CIT (2005) 94 TTJ (Del) 692. Against the aforesaid view of the Delhi Bench even the SLP has been dismissed. The assessee-respondent had also filed an application, which was delayed by about three years, and sought condonation of delay. The prayer for condoning the delay and registration w.e.f. 1st April, 2002 was based on the facts that all other market committees have been granted registration w.e.f. 1st April, 2002, therefore, prayer for condonation of delay was claimed to be justified. The Tribunal is also influenced by the fact that the assessee-respondent is a Government organisation and no prejudice would be caused if registration is granted with retrospective date.

The Tribunal has further found that the assessee-respondent was under a reasonable belief that the Punjab State Agricultural Marketing Board had been granted registration after condonation of delay vide order dt. 24th Oct., 2008, which benefit would automatically enure to the assessee-Market Committee. The Tribunal found the explanation plausible and the Chandigarh Bench of the Tribunal vide order dt. 14th March, 2005 held the Punjab State Agricultural Marketing Board entitled to registration u/s 12AA of the Act holding that their activities are charitable in nature. Even the assessee-respondent was granted registration u/s 12AA w.e.f. 1st April, 2005 and charitable nature of the assessee has not been disputed.

Having heard learned Counsel we are of the considered view that once on the basis of numerous factors the Tribunal has condoned the delay and has directed registration of the assessee-respondent w.e.f. 1st April, 2002 then the discretion exercised by the Tribunal would not be open to interference merely because the Department is holding a contrary view or another view is possible. The Punjab State Agricultural Market Board has already been granted exemption and registration vide order dt. 14th March, 2005. Moreover, there was a bona fide belief with the assessee-respondent that the benefit of registration would enure to it as well. The charitable nature of the assessee-respondent is undisputed as registration has in any case been granted w.e.f. 1st April, 2005. Therefore, we are not inclined to entertain the appeal because no question of law, much less a substantive question of law, would arise for determination of this Court. Accordingly, the appeal is dismissed.