Deemed Registration u/s 12AA-Supreme Court admits SLP to consider if provisions are directory or mandatory

Deemed Registration u/s 12AA-Supreme Court admits SLP on the issue as to whether provisions of Section 12AA of the Income Tax Act, 1961 are directory or mandatory

ABCAUS Case Law Citation:
ABCAUS 3098 (2019) (08) SC

The Sub-section 2 of Section 12AA of the Income Tax Act, 1961 (the Act) stipulates that an order granting or refusing the registration shall be passed before the expiry of the six months from the end of the month, in which, application was received by the Commissioner.

Deemed Registration u/s 12AA-Whether directory or mandatory?

The question arises whether non-disposal of application for registration u/s 12AA within the prescribed period would give rise to a deemed grant of registration?

On this issue, a Division Bench of the Allahabad High Court, in the case of Society for the Promotion of Education, Adventure Sport & Conservation of Environment,  had held that non disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) would result in deemed grant of registration. However, this decision was reversed by the Full Bench of the Allahabad High Court.

The case of Society for the Promotion of Education, Adventure Sport & Conservation of Environment traveled to Hon’ble Supreme Court which was decided in favour of the respondent assessee. However, the Hon’ble Supreme Court left “all other questions of law open”. 

In view of the above said judgment of the Apex Court though the lower courts/Tribunal had consistently held that that non-disposal of application within a period of six months amounts to deemed grant of registration u/s 12AA of the Act, the Revenue consistently kept the litigating alive on the issue whether the limitation of six months for grant of Registration u/s 12AA is mandatory or directory?

In view of the above, the Hon’ble Supreme Court has admitted a Special Leave Petition on the issue as to whether the provisions of Section 12AA of the Income Tax Act, 1961 are directory or mandatory.

Once the Hon’ble Supreme Court settles the law in this regard it will put to rest unending litigation on the issue.

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