Application for Registration u/s 12A can not be rejected for non filing of income-tax return

Application for Registration u/s 12A can not be rejected for mere not filing of income-tax return

In the instant case, the assessee had challenged the order passed by the Commissioner of Income-tax (Exemption) under section 12AA (1) (b) (ii) of the Income Tax Act, 1961 (the Act) rejecting the application of assessee for grant of registration u/s 12A of the Act.

ABCAUS Case Law Citation
ABCAUS 3547 (2021) (09) ITAT

Important case law relied referred:
Shri Shirdi Sai Darbar Charitable Trust vs.  CIT (exemptions)

The CIT(E) had rejected the said application on the ground that for the two assessment years, the assessee had surplus, which is their income, but it had not filed any income tax return. On this ground ld. CIT(E) refused to grant the registration sought.

The case of the assessee was that if the assessee had not filed any return of income, but as a matter of fact, was under legal obligation to file the same, in such condition, the authorities can always take remedial measures, but not filing of return is not a ground to reject the application for registration.

The assessee relied upon the judgment of the coordinate bench which held that in order to grant exemption, ld. CIT(E) had to satisfy that the objects of the assessee are charitable in nature and activities are genuine. Rest of the things are to be taken care at appropriate stage subsequent thereto.

The Tribunal opined that the CIT(E) did not examine the matter to appreciate the objectives of the assessee or activities thereof.

The Tribunal opined that as held by the coordinate bench, if the assessee is under legal obligation to file the income tax  return  and  did not file the same, it is always open to the authorities to take appropriate action for such lapses, but it cannot be a ground to reject the registration.

Accordingly, the Tribunal set aside the impugned order and restored the issue to the file of CIT(E) for fresh consideration. The appeal in favour of the assessee.

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