I.C.SUDHIR, J.M. : Order first appellate order has been impugned by assessee on following grounds : "1. That on facts and in totality of circumstances, appellant being service organ of State, charitable institution, learned CIT grossly erred in rejecting application under s. 12A filed on 16th July, 2005 in limine. 1.1 That learned CIT erred in not condoning delay and not granting registration from 1st April, 2002 or in alternative from subsequent dates. 1.2 That learned CIT erred in drawing adverse view on account of non- audit of accounts after financial year 1999-2000 from chartered accountant and expressing view that accounts have to be audited and it is mandatory requirement for grant of registration. 1.3 That learned CIT erred in drawing adverse view on account of non- furnishing of returns for asst. yrs. 2003-04, 2004-05 and 2005-06 and holding that it is mandatory requirement for grant of registration. 1.4 That learned CIT erred in (sic not) condoning delay and in holding that application had to be made within one year from date of establishment. 1.5 That learned CIT erred in drawing adverse inference on account of surplus of income over expenditure during different years and because income o f appellant is by way of collection of market fees/fines, etc. and that its income is not as prescribed under provisions of ss. 11 and 12 of Act. 1.6. That learned CIT erred in not following view expressed by Delhi Bench of Tribunal, though its copy was duly placed before him and further erred in not granting registration when similar boards and Samitees are being granted registrations under s. 12A of Act." 2 . There is no dispute on facts of case which, as per learned Authorised Representative, are as under : "1. M/s Rajasthan State Agricultural Marketing Board is service organ of State of Rajasthan. It was constituted in exercise of powers conferred under s. 22A(1) of Rajasthan Agricultural Produce Markets Act, 1961 by Government of Rajasthan vide Notification No. F.7(6)(5)Agri/V/74 dt. 6th June, 1974 printed in Rajasthan Gazette Extraordinary issue of 6th June, 1974. Rajasthan Agricultural Produce Markets Act, 1961 (in short Act ) was enacted. Act is intended to provide for better regulation of buying and selling of agricultural produce and for establishment of markets therefor, in State of Rajasthan. Act providing to establish and regulate markets for sale or purchase of agricultural produce is to protect agriculturists from being exploited by middlemen and profiteers and also to secure fair return of their produce, Act has been held to be for public purpose by Rajasthan High Court in Narayan Harishankar vs. State 1977 RLW 485. whole object of Act is supervision and control of transactions of purchase by traders from agriculturists in order to prevent exploitation of latter by former as held by Supreme Court in Kewalkishan Puri vs. State of Punjab AIR 1980 SC 1008. It is charitable institution and has not been created for purpose of earning any profit. Since its constitution it is functioning under supervision, control and administration of State Government. Presently, it is functioning under administrator appointed by Government. Its secretary has also been appointed by Government and is State employee. 2. It maintains regular and proper books of account on cash system of accounting. All supporting records are kept. accounts, vouchers and supportings are maintained as required under Act. Its accounts are being audited by auditors of Department of local self-Government. board is not carrying on activity for profit. Board has to carry out purposes specified in s. 22J of said Act. fund or surplus has to be utilized by Board for purposes specified in s. 22J of said Act. surplus, if any, is not to be disturbed or shared by any person but has to be accumulated for objects and purposes stated under said Act. 3. Board is State organ and its income or surplus, if any, is not liable to be taxed under Art. 289 of Constitution. Income of Board is immuned from union taxation. No tax under IT Act has been levied on Board since its constitution i.e. 1974 till date. IT authorities treated Board and Agricultural Marketing Samitees as local authority and its income exempt under s. 10(20) of Act. Explanation has been added by Finance Act, 2002 to take effect from 1st April, 2003 i.e. with effect from asst. yr. 2003-04. IT Department is of view that Agricultural Marketing Board and Agricultural Marketing Samitees are not entitled to any exemption from income-tax under said section or any other section and are liable to income-tax on and from asst. yr. 2003-04. IT Department issued notices to some of Samitees including Krishi Upaj Mandi Samitee, Kota. said Samitee filed DB Civil Writ Petn. No. 1493 of 2005 before Hon ble High Court of judicature, Rajasthan at Jaipur on 26th Feb., 2005 challenging legality, validity, propriety, jurisdiction to assess under IT Act and claiming that it is in violation of Art. 289 r/w Art. 265 of Constitution. Hon ble Court heard on 3rd March, 2005 provided time to respondents to file reply, time to petitioner s counsel to file rejoinder and thereafter to fix for final disposal at admission stage. writ is still pending. 4. Punjab State Agricultural Marketing Board, Haryana State Agricultural Marketing Board, etc. were advised to make application under s. 12A of IT Act to concerned CITs. CITs rejected applications. applicants filed appeals before Tribunal, Delhi Bench, Delhi. Hon ble Tribunal by order dt. 14th March, 2005 allowed appeals and directed CITs to grant registration after condoning delay in applications. order is reported as Market Committee, Sullar Gharat & Ors. vs. CIT (2005) 94 TTJ (Del) 692. Hon ble Tribunal held that applicants are charitable institutions. It also allowed condonation of delay. It rejected objections as to audit of accounts by chartered accountant under Explanation below sub-s. (2) of s. 2 8 8 . It also observed that such objections are beyond provisions and unsustainable. Same view has been expressed by Nagpur Bench of Tribunal in Agricultural Produce & Market Committee, Telhara & Ors. vs. CIT (2005) 97 TTJ (Nag) 165. There were assurances by Union Finance Minister for exemption under ss. 11-13 of Act. CIT, Pune and some other CITs have granted registration under s. 12A. CIT, Chandigarh by order dt. 3rd May, 2005 granted registration to Punjab State Agricultural Marketing Board in compliance to order of Hon ble Tribunal dt. 14th March, 2005. 5. On advice and after seeking sanction, appellant made application for granting of registration under s. 12A(a) of Act in Form No. 10A to Chief CIT, Jaipur on 16th July, 2005. application for condonation of delay was submitted. Delay was duly explained in writing. It was orally submitted that appellant was under bona fide belief and on account of abovestated reasons was prevented from filing application earlier. Delay if any was neither wilful nor intentional and appellant is State Government agency for benefit of people of Rajasthan. However, by order dt. 16th Nov., 2005, CIT, Jaipur-II, Jaipur held that application does not meet with mandatory conditions laid down under s. 12A and rejected in limine. Hence appeal. 3. Ground Nos. 1, 1.1, 1.3 and 1.4 : 3.1 In these grounds issue raised is that as to whether learned CIT was justified in not condoning delay while rejecting application under s. 12A filed on 16th July, 2005. We find from order of learned CIT that he has rejected application for condonation of delay in filing application under s. 12A on 16th July, 2005 on basis that application for registration had to be made within one year from date of establishment and there was no reasonable cause on part of assessee for delay. 3.2 submission of learned Authorised Representative in this regard remained that assessee was under bona fide belief that income in case of assessee is not taxable under s. 10(20) of Act as Board was exempted of income-tax liability under s. 10(20) of IT Act prior to amendment vide Finance Act, 2002. Department also did not issue any notice till asst. yr. 2002-03 to assessee in this regard. As per Art. 289(1) of t h e Constitution of India income of property of State cannot be taxed. He placed reliance on decision of Hon ble Allahabad High Court in case of Krishi Utpadan Mandi Samiti vs. Union of India & Anr. (2004) 188 CTR (All) 556 : (2004) 267 ITR 460 (All). learned Authorised Representative submitted further that decision of Delhi Bench of Tribunal in case of Market Committee, Sullar Gharat & Ors. vs. CIT (2005) 94 TTJ (Del) 692 holding that Agricultural Market Committee/Boards established under statutes having objects of general public utility are eligible for registration under s. 12A, came to notice of assessee later on and in view thereof assessee applied for registration under s. 12A with application for condonation of delay. learned Authorised Representative referred para No. 4 of order impugned in this regard. It was pointed out that identical issue of condonation of delay was raised before Delhi Bench of Tribunal under almost similar circumstances in case of Market Committee, Sullar Gharat & Ors. vs. CIT (supra) and Tribunal held that approach of learned CIT in rejecting application for condonation of delay was not justified having regard to fact that change in statutory provision compelled assessee to file application for registration, hence delay in submission of application is liable to be condoned. learned Authorised Representative also referred following decisions in support : (i) Collector, Land Acquisition vs. Mst. Katiji & Ors. (1987) 62 CTR (SC) 23 : (1987) 167 ITR 471 (SC); (ii) Bharat Auto Center vs. CIT & Anr. (2006) 200 CTR (All) 289 : (2006) 282 ITR 366 (All). 3.3 learned Departmental Representative, on other hand, opposes contentions raised in support of ground Nos. 1, 1.1, 1.3 and 1.4 with this submission that there was no reasonable cause for condonation of delay in filing application for registration on part of applicant. reasonable cause has been defined in Order IX r. 7 of CPC wherein under r. 13 sufficient cause has also been defined. sufficient cause is diluted word of reasonable cause, which should be strictly construed. reason shown by applicant that they were not aware of law is not excusable and thus unawareness of law is not sufficient reason for delay. He referred decision of Hon ble Supreme Court in this regard in case of Vinod Bihari Singh vs. Union of India (1993) 1 SCC 572. 3 . 4 In rejoinder learned Authorised Representative submitted that sufficient cause is synonymous to reasonable cause and placed reliance in case of Collector, Land Acquisition vs. Mst. Katiji & Ors. (supra). He submitted further that reasonable cause has to be liberally construed. There was no negligence on part of assessee and placed reliance on decision of Hon ble Supreme Court in case of Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Ors. (1979) 118 ITR 326 (SC). 3.5 After considering above arguments advanced by parties in view of order of learned CIT and decisions relied upon by them, we find substance in aforesaid submissions of learned Authorised Representative. applicant had to explain delay from 1st April, 2003 to 19th July, 2005 in filing application for registration under s. 12A. explanation of applicant in this regard remained that till asst. yr. 2002-03 applicant was under this belief that applicant was exempt under s. 10(20) of Act i.e. prior to amendment by Finance Act, 2002. Explanation was introduced to s. 10(20) of Act w.e.f. 1st April, 2003 i.e. asst. yr. 2003-04. Thereafter decision dt. 14th March, 2005 in case of Market Committee, Sullar Gharat & Ors. vs. CIT (supra) came to notice of applicant that exemption enjoyed by applicant under s. 10(20), taken away by inserting Explanation in s. 10(20) by Finance Act, 2002 can be enjoyed by such assessee by claiming exemption under s. 11 on fulfilment of certain conditions like assessee will have to apply for registration under s. 12A and that market committee established under statute can be treated as charitable institution and exemption can be allowed under ss. 11 and 12 subject to specific restriction under ss. 11 to 13 of Act, applicant applied for granting of registration under s. 12A(a) of Act in Form No. 10A to learned Chief CIT, Jaipur along with application for condonation of delay on 16th July, 2005, which as per learned CIT (para No. 4) was received on 19th July, 2005. Considering these explanations in totality of facts and circumstances of case and especially that applicant is not individual but institution/body under supervision of Government, and there was not any inaction on part of applicant, we find that there was reasonable cause for delay in filing application under s. 12A(a) of Act for registration. We thus condone delay in filing application under s. 12A(a) to prefer to decide matter on its merits. 4. Ground Nos. 1.2, 1.3 and 1.5 : 4 . 1 learned CIT while rejecting application for registration raised several objections and one of those objections was that from copies of accounts filed along with application it is noticed that excess of income (earned by Board) over expenditure in various years is as below : Fin. yrs. Surplus of income over expenditure 1999-2000 Rs. 6,78,21,357 2000-01 Rs. 5,96,43,946 2001-02 Rs. 17,57,214 2002-03 Rs. 7,68,55,670 2003-04 Rs. 3,46 5,748 4.2 learned CIT observed that Board is gathering huge surpluses year after year, which indicates that activities of Board are not charitable in nature. applicant was required to explain as to how activities of Board can be considered as charitable. explanation of assessee in this regard remained that all surplus will be utilized only for advancement of purpose of general public utility and applicant does not work for personal benefit. learned CIT did not accept this explanation on basis that s. 12A(b) provides for audit of accounts of institution by accountant as defined in Explanation below sub-s. (2) of s. 288 and such audited accounts are required to be filed along with return of income for relevant assessment years whereas applicant has not filed audited accounts with relation to financial years 2001-02, 2002-03 and 2003-04, even though surplus of income over expenditure was much higher than limit of Rs. 50,000 laid in s. 12A(b). 4 . 3 In support of this ground learned Authorised Representative submitted that audited account signed on 1st Feb., 2006 for asst. yr. 2003-04 was filed on 7th Feb., 2006, copy whereof has been placed at page Nos. 7 to 1 2 of paper book-I. learned Authorised Representative also referred page Nos. 49 to 82 of paper book-II i.e. copy of return and audited account for asst. yr. 2005-06 filed on 10th April, 2006. He pleaded that audit report can be furnished any time before assessment and referred CBDT circular dt. 9th Feb., 1978 in this regard placed at page Nos. 15 to 17 of paper book Vol. I, wherein it has been made clear that in case where for reasons beyond control of assessee some delay has occurred in filing auditors report, exemption as available to such trust under ss. 11 and 12 may not be denied merely on account of delay in furnishing auditors report and ITO should record reasons for accepting belated audit report. learned Authorised Representative also referred decision of Delhi Bench of Tribunal in case of Market Committee, Sullar Gharat vs. CIT (supra) wherein also as evident from page No. 698 of decision, copies of audited accounts required under r. 17B were not filed, Tribunal at page No. 713 of t h e decision has held that having regard to fact that assessees are constituted under statute and are compulsorily required to get their accounts audited and further, IT returns must accompany audited accounts, there was no much force in objection raised on behalf of Revenue. It was held further that as per provisions laid down under s. 12A(a), learned CIT on basis of information placed by assessee or other information gathered by him has to record his satisfaction about genuineness of activities of trust or institution (in present case boards or committees) and thereafter pass order in writing registering institution if he (is) satisfied about objects of trust or institution and genuineness of its activity. 4.4 learned Departmental Representative on other hand submitted that requirement under s. 12A(b) of filing audit report along with return of income is mandatory so as to disentitle trust from claiming exemption under ss. 11 and 12 in case of omission to furnish such report in prescribed form along with return. learned CIT in present case was neither satisfied with genuineness of object nor activities in absence of documents like audited account. account must be audited to secure that it is free from discrepancies. If accounts are not audited it indicates lapses on part of assessee. Registration in IT Act is entirely different from registration under Societies Registration Act since in case of income-tax assessee is going to enjoy exemption from taxpayers pocket. audited account is pre- requirement for application for registration. In Art. 245(a) to (z) to Constitution of India there is drastic change w.e.f. 1st June, 1993 leading to certain definition about local body, which required amendment in s. 10(20) of IT Act. assessee was thus out from definition of local body w.e.f. 1st June, 1993 and only option left with assessee was to apply for registration under s. 12A for exemption under ss. 11 and 12 of IT Act. learned Departmental Representative referred objects of Samiti shown in ss. 3, 17 and 18 of Rajasthan Krishi Upaj Mandi Adhiniyam, 1961 with submission that assessee is acting like share broker to purchase produce on charging fee, which has no nexus or connection with any charitable purpose. word in statute is to be strictly construed as per established position of law, submitted learned Departmental Representative. 4.5 learned Authorised Representative submitted in rejoinder that requirements laid down under s. 12A should not be examined at this stage and what are to be examined at this stage of registration are requirements laid down under s. 12AA of IT Act. It is not consequential that after registration under s. 12A, there would be no check of Department on assessee. fee was collected by applicant from farmers to regulate purchases and sales in market. learned Authorised Representative referred ss. 18, 19 and 22J of Rajasthan Krishi Upaj Mandi Adhiniyam, 1961 while throwing light on purposes for which applicant has been formed. He also referred r. 55 framed under said Adhiniyam wherein it has been made clear that assessee has to get their account audited. learned Authorised Representative again referred decision of Delhi Bench of Tribunal in case of Market Committee, Sullar Gharat & Ors. vs. CIT (supra), and that of Nagpur Bench of Tribunal in case of Agricultural Produce & Market Committee, Telhara vs. CIT (2005) 97 TTJ (Nag) 164 wherein purposes of similar Adhiniyam in other States within jurisdiction of those Benches of Tribunal have been discussed while arriving at conclusion that marketing committee was having charitable object and purpose. 4 . 6 Considering aforesaid arguments advanced by parties, specially in view of decisions of Delhi Bench of Tribunal in case of specially in view of decisions of Delhi Bench of Tribunal in case of Market Committee, Sullar Gharat & Ors. vs. CIT (supra) and that of Nagpur Bench of Tribunal in case of Agricultural Produce & Market Committee, Telhara vs. CIT (supra), we find substance in submissions of learned Authorised Representative discussed hereinabove. relevant extracts of decision of Delhi Bench of Tribunal in aforesaid case on issue of objection raised by Revenue regarding non-filing of auditors report along with return are being reproduced hereunder for ready reference : "15. In some cases, learned CITs have also raised objection that audited accounts as required under Explanation below sub-s. (2) of s. 288 were not submitted. assessees have placed copies of audited accounts in all cases. Even otherwise, it is well known that these committees and boards are required to get their accounts audited under statute. Otherwise, heavy penalty is provided for not getting accounts audited. Therefore, having regard to fact that assessees are constituted under statute and are compulsorily required to get their accounts audited and further IT returns must accompany audited accounts, we do not find much force in objection raised on behalf of Revenue. 16. provisions of s. 12AA quoted above are relevant and important. As per above provision, learned CIT on basis of information placed by assessee or other information gathered by him has to record his satisfaction about genuineness of activities of trust or institution (in present case, boards or committees) and thereafter pass order in writing registering institution if he is satisfied about objects of trust or institution and genuineness of its activities. In present appeals, CIT has not brought any material nor recorded any finding to hold that activities of assessees were not genuine. In our opinion, it is not easy, in case of statutory body like market board or market committee controlled by Governments to hold that activities of such bodies are not genuine. We are, therefore, unable to agree that these cases were not fit cases for recording satisfaction as required under s. 12AA of IT Act. About object of institutions, we have already held that those are genuine and are of charitable nature." 4.7 We, thus, do not find substance in objection raised by learned CIT that auditors report on accounts was not filed with return for relevant assessment years hence registration cannot be granted on application moved by applicant in this regard as at stage of registration learned CIT has only to record his satisfaction about genuineness of activities of institution and its charitable purposes. non-filing of audited accounts along with return in our view was thus not causing any hurdle in claim of assessee relating to registration under s. 12A of IT Act. We thus allow ground No. 1.5 of appeal raised in this regard in favour of assessee. 4.8 learned CIT also raised objection about non-furnishing of return for asst. yrs. 2004-05 and 2005-06 (questioned in ground No. 1.2 herein). learned Authorised Representative submitted that same is not required under s. 12A of Act and it is outside purview of examination to be made under s. 12A of Act as it is not condition precedent for availing registration. He placed reliance on following decisions in this regard : (i) Fifth Generation Education Society vs. CIT (1990) 87 CTR (All) 169 : (1990) 185 ITR 634 (All); (ii) M.K. Nambyar Saarc Law Charitable Trust vs. Union of India & Ors. (2004) 190 CTR (Del) 29 : (2004) 269 ITR 556 (Del). 4.9 He submitted further that genuineness of objects and activities is to be examined under s. 12AA of Act at stage of granting registration. learned Authorised Representative referred decision of Delhi Bench of Tribunal in case of Market Committee, Sullar Gharat vs. CIT (supra) specially contents of page Nos. 706, 710 and 711 paras 9, 13 thereof dealing with similar projects and activities as in present case. learned Authorised Representative also referred s. 2(15) of Act wherein "charitable purpose" has been shown includes relief of poor, education, medical relief and advancement of any other object of general public utility. learned Authorised Representative submitted that object and purpose of applicant is of general public utility as Hon ble Rajasthan High Court has also held Rajasthan Agricultural Produce Markets Act to be for public purpose in case of Narayan Harishankar vs. State 1977 RLW 485. learned Authorised Representative also placed reliance on decision of Nagpur Bench of Tribunal in case of Agricultural Produce & Market Committee, Telhara (supra) on issue. He also placed reliance in case of Gujarat Industrial Development Corporation vs. CIT (2006) 103 TTJ (Ahd) 928. 4.10 learned Departmental Representative, on other hand, justified order of learned CIT while adopting similar arguments as advanced by him opposing ground No. 1.5 hereinabove. 4 . 1 1 After having gone through different provisions of Rajasthan Agricultural Produce Markets Act, 1961, we find that whole object of Act is supervision and control of transactions of purchase by traders from agriculturist in order to prevent exploitation of latter. Under s. 22J purposes for which marketing development fund shall be utilized have been explained and cl. (v) thereof states as "undertaking education and publicity in relation to matters connected with regulated marketing of agricultural produce in State". Under similar set of facts and circumstances, Delhi Bench of Tribunal in case of Market Committee, Sullar Gharat & Ors. vs. CIT (supra) held as "...the object to establish market committee and board is to regulate purchase, sale, storage and processing of agricultural produce through establishment of market committees, market yards and trusts. dominant objects of board and committees are to save agriculturists from exploitation of middleman and to provide remunerative price to agriculturists. It is further to provide better facilities for storage and transportation of foodgrain. Accordingly, we hold that object of board and committees is to advance objects of general public utility. learned CITs in impugned orders have not brought any material on record to show that assessees were non-charitable institutions, established for personal or private gains. Therefore, prima facie we do not find any objectionable material to treat these institutions as non-charitable. registration is compulsory to claim exemption under ss. 11 to 13 of IT Act but registration per se cannot be treated as conclusive. It is open to Revenue authorities, while processing returns of income of these assessees, to examine claim of assessees under ss. 11 to 13 of IT Act and give such status to claim of assessees under ss. 11 to 13 of IT Act and give such status to these institutions as is warranted by facts of case. We hold accordingly." (para No. 13) 4.12 Tribunal held further that some other objections have been raised by Revenue in impugned orders and during course of arguments before Bench, like committees and boards being managed by public servants, collection of fines by committees, no voluntary contribution by outsiders, etc. Tribunal did not find any substance in these objections. It held that at stage of registration, learned CIT has only to record his satisfaction about genuineness of activities of institution and its charitable purposes. Tribunal, therefore, did not see any hurdle in their claim relating to registration under s. 12AA of IT Act. (para No.14). 4.13 We are thus of view that learned CIT was not justified in raising other objections like non-filing of return, etc. instead of examining genuineness of charitable objects of applicant, which as per Delhi Bench of Tribunal in aforesaid case of Market Committee, Sullar Gharat (supra) under similar provisions in State of Punjab held as charitable and entitled for registration under s. 12A(a) of Act. We accordingly allow ground Nos. 1.2, 1.3 and 1.5 in favour of assessee. 5. In result while setting aside order in question, we direct learned CIT to allow application under s. 12A(a) of Act filed by assessee for registration for purpose of exemption under ss. 11 and 12 of Act for claimed assessment years. 6. appeal is, thus, allowed in favour of assessee. *** RAJASTHAN STATE AGRICULTURAL MARKETING BOARD v. COMMISSIONER OF INCOME TAX