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Issues involved: Challenge to order u/s 11 of Income-tax Act, 1961 for period prior to April 1, 1993; refusal to grant benefit of provisions u/s 12A; rejection of request for benefit from date of registration of society.
In the present case, the petitioner-society challenged the order dated November 3, 1993, passed by the Commissioner of Income-tax, Bhopal, which declined to grant the benefit of section 11 of the Income-tax Act, 1961, for the period before April 1, 1993. The petitioner applied for registration u/s 12A by application dated July 13, 1993, which was granted only with effect from April 1, 1993, not from the date of establishment. The refusal to condone the delay in making the application led to the filing of this petition. The main contention was that the application for registration was made within nine months of the prescribed period, not after one year and six months as claimed by the Commissioner. The rejection of the prayer for benefit from the date of registration was challenged on the grounds of factual error and misinterpretation of the prescribed period. The Court analyzed section 12A which allows for the application of sections 11 and 12 from the date of creation of the trust or institution if sufficient reasons prevented timely application. The Commissioner's decision was found to be flawed as it did not consider whether there were sufficient reasons for the delay within the prescribed one-year period, rather than focusing on the total elapsed time before application. Moreover, the Court noted that the Commissioner's conclusion of "not satisfactory" reasons was insufficient without providing specific justifications for why the explanation for the delay was deemed unsatisfactory. The lack of opportunity for the petitioner to be heard on the matter was also highlighted, emphasizing the importance of natural justice principles in such cases. Consequently, the petition was partly allowed, and the matter was remitted back to the Commissioner for reconsideration of the application for benefit u/s 11 from the date of society's registration, with a directive to decide in accordance with the law. No costs were awarded in this decision.
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