ALL INDIA PRIMARY TEACHERS FEDERATION Vs. DIT

JUDGEMENT

(1.) The only ground in this appeal of the assessed preferred against the order dated 23 -8 -2001 passed by Director of Income Tax (Exemption) (hereinafter referred to as the 'DIT') under section 12A of the Income Tax Act is against the action of Director of Income Tax in not condoning the delay in filing the application for registration.

(2.) FACTS of the present case are that the appellant is a Society which has sought registration under section 12A(a) of the Income Tax Act vide application dated 6 -2 -2001 which was though allowed by Director of Income Tax but it was allowed with effect from 1 -4 -2000. In its application for registration and in its application for condensation of delay dated 6 -2 -2001, it was admitted by the appellant society that there was delay in filing the application on account of several reasons and thereforee it was requested to Director of Income Tax that the delay in filing the application for registration be condoned. Director of Income Tax in his order dated 23 -8 -2001 though granted the registration but granted the same with effect from 1 -4 -2000. Delay involved, as per Director of Income Tax, was 43 years 8 months and 14 days which was however not condoned as, according to the Director of Income Tax, nothing was bona fide in law which was not done with due diligence. It is against this order of Director of Income Tax refusing the condensation of delay, the appellant society felt aggrieved and has come tip in appeal before us.

(3.) ON the date of hearing Mr. Rakesh Gupta, counsel for the appellant Society filed a brief synopsis of his submissions. It was submitted by him that the Director of Income Tax is empowered to condone the delay if there was sufficient reason for the delay and his power to condone delay is mentioned under section 12A(a)(t) itself and in CBDT Circular No. 108 dated 20 -3 -1973. According to him, this power of Director of Income Tax is further recognized by the Board in paras 15. 10 and 15.11 of its Circular No. 621 dated 19 -12 -1991. According to him, Director of Income Tax was however required to consider the reasonable cause for the delay in filing the application for registration with judicial mind and since in the case of the appellant Society, there existed sufficient reasons for the delay, Director of Income Tax ought to have condoned the delay. It was pointed out by counsel that the appellant Society was incorporated on 22 -5 -1957 with no profit motive and with no political affiliation. It was pleaded by him that assessed is an all India body of Primary School Teachers with no profit motive and with no political affiliation. It was inaugurated by the first Prime Minister of India in the year 1957. The society was incorporated under Societies Registration Act in Patria on 22 -5 -1957 as per the certification of registration which was appended at the back of PB 19. It was further submitted that the appellant aims at national integration and to improve the social, economical and educational status of primary teachers and the detailed submissions on its objects and nature were made in the application for condensation of delay filed at PB 44 -45 and its memorandum of association (PB 4 to 7) and in the application of registration at PB 2. It was further argued by Mr. Gupta that there were sufficient reasons for making the application for registration under section 12A in February 2001 i.e., belatedly. The society was registered in year 1957 i.e., much before the enactment of Income Tax Act, 1961. thereforee, the society could not make itself aware to file any application for registration under the 1961 Act. Voluntary contributions received by a trust or society were also exempt under the old Act of 1922. further submitting, learned Counsel pleaded that Office bearers of the society change after every 2 -3 years and successor office bearers remained under the bona fide belief that no statutory formality under the Income Tax Act, 1961 remained to be complied with. Thus, bona fide belief and ignorance on the part of the successive office bearers of the society constituted sufficient cause for the impugned delay. Ignorance of law can happen there and there was no such maxim that every body knows the law as approved by Supreme Court in the case Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh : [1979]118ITR326(SC) was the submission of the counsel. It was further argued that Office bearers of the society are primary teachers who are of ordinary background and awareness, who did not know the intricacies of the income -tax law and the statutory requirement there under. Their simple background without any knowledge of income -tax law constituted sufficient reason for the impugned delay. The society being the society for primary teachers remained under the bona fide belief that since educational institutions have always been exempt under the Income Tax Act, the body of the teachers of the primary school would also be similarly exempt from the Income Tax Act. This natural impression and belief entertained by the society constituted sufficient reason. The society of the primary teachers remained under the bona fide belief that it enjoys exemption like the one enjoyed by the trade unions and their society is also like that. This belief also constituted the sufficient reason for not moving application for registration. Since there was no profit motive of the society and all the grants received were the specific grants to be used for the specific purpose, the society remained under the bona fide belief that nothing under the Income Tax Act concerns them. When notice under section 148 was issued, the society went into tizzy and tried to dig past records of number of years to verify in Bihar whether any such statutory formality was ever complied with. When nothing of this sort was found, it applied for registration under section 12A on 6 -2 -2001. It was argued that the registration had been granted by Director of Income Tax but with effect from 1 -4 -2000 meaning thereby that its aims and objectives were found charitable and its activities were found genuine but delay in filing the application which was for sufficient reasons was not condoned. Thus, chain of facts according to the counsel. would prove that there were sufficient reasons for not making application before the specified period and Director of Income Tax ought to have condoned the delay for the delayed period. It was lastly argued by the counsel that jurisdiction to condoned delay should be exercised liberally and matter relating to condensation of delay should be judged broadly and not in pedantic manner in view of decisions in the cases of Ashok Automobiles Ranchi (P) Ltd. v. State of Bihar : [1988]174ITR566(Patna) and in the case of Collector of Land Acquisition v. Mst. Katiji : (1987)ILLJ500SC .