2012 (4) TMI 422 - HC - Income Tax

Saga of errors from both the assessee and the revenue - Society carrying on charitable activities formed in the year 1979 - no income tax return filed till 2003 - AO did not issue any notice U/S. 147/148 to the respondent-assessee calling upon them to file a return for the period prior to 1.4.2003 - school in Alwar treating itself as an assessee filing returns with the AO at Alwar society filed an application in Form 10A for registration under Section 12A - Order passed by Tribunal that the respondent-society shall be treated as registered under Section 12A w.e.f. 1.4.1997; the notices issued under Section 147/148 of the Act to the school will be treated as having been validly issued to the respondent-society and therefore, the Assessing Officer will assess the income of the respondent-society for the assessment year 1998-99 onwards for all the assessment years Revenue appeal to dis allow the registration on retrospective effect and there was delay of 3 years & 4 months in preferring an appeal against the order - Held that - if the order of the Tribunal is set aside it will be against and contrary to the interest of the Revenue as they would not be able to now assess required tax in respect of income right from 1998-99 onwards - as noticed lapses on both the sides and interfering with the impugned order will lead to difficulties and not in the interest of the Revenue when the respondent-assessee has not been issued notice under Section 147/148 for any of the assessment years - appeal is dismissed.

Summary

Issues:
1. Registration under Section 12A with retrospective effect.
2. Delay in filing an appeal against the order of the Director of Income Tax (Exemptions).
3. Validity of notices issued under Section 147/148 of the Income Tax Act to the school and the respondent-society.

Analysis:
1. The case involved the registration of a society claiming charitable activities under Section 12A of the Income Tax Act. The society, formed in 1979, had a school in Alwar and took over another school in Faridabad in 2002. The society applied for registration in 2003, which was granted from that year, not retrospectively. The Assessing Officer at Alwar reopened assessments for the school due to lack of registration, leading to appeals and jurisdictional issues.

2. Despite the registration granted from 2003, the society filed an appeal in 2008 seeking retrospective registration from 1997. The Tribunal consolidated appeals from Delhi and Jaipur, deciding in 2009 to treat the society as registered from 1997. The Revenue contended against retrospective registration and the delay in filing the appeal.

3. The Tribunal's order treated the society as registered from 1997, validating notices issued under Section 147/148 to the school as applicable to the society. The Revenue argued against retrospective registration and the delay in filing the appeal, but the Tribunal's decision was upheld to allow assessment of the society from 1998-99 onwards. The court noted errors on both sides but upheld the Tribunal's decision for practicality and the Revenue's interest.

In conclusion, the High Court dismissed the appeal, emphasizing that interfering with the Tribunal's decision would not be in the interest of the Revenue, especially as the society had not been issued notices for assessment. The judgment highlighted the complexities arising from the lapses on both sides and upheld the Tribunal's decision for the assessment of the society from 1998-99 onwards.