Refusal to grant registration us 12AA for not contesting earlier rejections is contrary in the eyes of law – ITAT
ABCAUS Case Law Citation:
ABCAUS 1243 (2017) (05) ITAT
The Grievance:
The appellant assessee was aggrieved by the order passed by the Commissioner of Income Tax(Exemptions) [CIT(E)] refusing to grant registration u/s 12AA of the Income Tax Act, 1961 (‘the Act’) to the trust merely on the basis that assessee has not challenged the earlier rejection order.
Date/Month of Pronouncement: May, 2017
Grounds raised by the appellant assessee:
The assessee challenged the order of the CIT(E) on the ground(s) that:
(1) CIT(A) grossly erred in refusing to grant registration u/s 12AA even after satisfying with the objects/activities of the society merely on the basis that assessee has not challenged the earlier rejection order.
(2) CIT(E) did not appreciate the fact that assessee was running an educational institution and the cases of earlier years were accepted u/s. 143(3) only after considering activities as charitable in terms of section 10(23C)(iiiad).
(3) CIT(E) did not appreciate the fact that registration in earlier year was refused merely for noncompliance without any adverse finding and assessee had chosen to file fresh application instead of going in appeal as case was already covered u/s 10(23C)(iiiad) till that year.
Observations made by the Tribunal:
The Tribunal considered the current order passed by the CIT(E) refusing registration u/s 12AA as well as the previous CIT(E)’s order passed in 2015. It was found that CIT(E) had refused the registration by referring to the order passed in 2015 and observing that the previous application was rejected by the Commissioner of Income tax (Exemptions)and the applicant had not challenged the order passed in 2015 before the Hon’ble ITAT. According to the CIT(E), there was no change in facts of the case since the registration was previously rejected in the year 2015. Accordingly he had refused the registration.
The ITAT opined that CIT(E) had passed the impugned order by refusing to grant registration u/s 12AA of the Act merely on the basis that assessee had not challenged the earlier rejection order of 2015, which was contrary in the eyes of law.
It was also observed that the CIT(E) had also not taken into consideration the fact that assessee was running educational institution in terms of objects, whose cases of earlier years were also accepted u/s 143(3) only after considering activities as charitable in terms of section 10(23C)(iiiad).
It was further noted that CIT(E) while rejecting the registration to the applicant had wrongly adopted the view that registration in earlier year was refused due to non-compliance without any adverse finding and passed the nonspeaking order which was not sustainable in the eyes of law.
Held:
The matter was remitted back to the file of the CIT(E) for fresh consideration for passing a speaking order after giving adequate opportunity of being heard to the assessee.
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