2011 (5) TMI 1061 - AT - Income Tax

Summary

Issues involved: Appeals against orders u/s 263 of the Income-tax Act, 1961 for Assessment Years 2002-03 to 2008-09.

Summary:
1. The appeals were filed by the assessee challenging the jurisdiction of the Commissioner of Income-tax u/s 263 of the Act, which set aside the assessment orders and directed the Assessing Officer to reframe the orders de novo due to withdrawal of registration granted u/s 12AA.

2. The Tribunal considered the arguments of the assessee and the Department. The registration granted to the assessee trust u/s 12AA was withdrawn by the CIT, leading to the assessment orders being deemed erroneous and prejudicial to the Revenue's interest. The CIT set aside the original assessment orders based on this withdrawal.

3. The Tribunal reviewed a previous order where the registration u/s 12AA was restored to the assessee trust, rendering the basis for considering the assessment orders as erroneous and prejudicial to the Revenue's interest by the CIT as non-existent. As the Tribunal had already restored the registration, the assessment orders could not be deemed erroneous or prejudicial, leading to the appeals of the assessee being allowed.

Separate Judgement by Tribunal:
- The Tribunal, in a separate judgment, held that the withdrawal of registration granted to the assessee under sec.12AA was not sustainable in law. The Tribunal found that the reasons cited by the CIT for canceling the registration were not valid, especially regarding the acceptance of capitation fees and diversion of funds. The Tribunal directed the CIT to vacate the order canceling the registration and restore the registration granted under sec.12AA.

Conclusion:
The Tribunal's decision to restore the registration u/s 12AA to the assessee trust invalidated the grounds on which the assessment orders were considered erroneous and prejudicial by the CIT. As a result, the orders of the CIT were set aside, and the appeals of the assessee were allowed.