2012 (11) TMI 500 - AT - Income Tax

Registration u/s 12AA - CIT granted registration from A.Y 2009-10 and not from A.Y 2007-08 - rectification application filled by assessee against CIT(A) s order - Held that - A bare perusal of the provisions of section 154 clearly reveals that mistake apparent from record must be obvious and patent mistake and not something which can be established by a long drawn process of reasoning, on points on which there may be conceivably two opinions. A decision on merit on a debatable issue does not constitute mistake apparent from record u/s 154 as confirmed in T.S. Balaram, ITO v. Volkart Bros. 1971 (8) TMI 3 - SUPREME COURT . The assessee or the revenue is not entitled to seek review and reversal of the issues decided, in the order, on merit, in the guise of rectification application u/s 154. In the present case there does not exist rectifiable mistake in the impugned order of the CIT, thus the provisions of section 154 cannot be invoked. The rectification application of the appellant has been rightly rejected by the CIT, as the issue has been considered and decided by him in consonance with the fact situation and the provisions of section 12A(2) r.w. second proviso to Section 12A(1)and its sub-clause (aa). A drastic amendment has been made curbing the power of condonation for registration covering the past years by addition of a proviso and sub-clause (aa) to Section 12A(1)(ii) and substitution clause (b) in the proviso w.e.f. 1.6.2007 by the Finance Act, 2007. Any application filed on or after 1.6.2007 is entitled to registration only for the F.Y during which registration is filed. Further, no merit in the appeal filed by the assessee, as the CIT has granted registration u/s 12AA w.e.f. A.Y 2009-10, having regard to the fresh application dated 14.4.2008, filed by the appellant. The issue involved in the rectification application filed by the assessee, before the CIT(A) is highly debatable much less the mistake apparent from record - Also the condonation of delay application of the assessee is dismissed in absence of proving sufficient cause - against assessee.

Issues Involved:
1. Grant of registration under Section 12AA with effect from the wrong assessment year.
2. Condonation of delay in filing the appeal.
3. Disallowance of interest on FDR and expenditure incurred on 400th year Martyrdom.
4. Rectification application under Section 154 of the Income-tax Act.

Issue-wise Detailed Analysis:

1. Grant of Registration under Section 12AA with Effect from the Wrong Assessment Year:
The appellant contended that the CIT erred in granting registration under Section 12AA of the Income-tax Act, 1961, effective from Assessment Year (A.Y.) 2009-10 instead of A.Y. 2007-08. The appellant argued that no order refusing registration was passed on their application dated 18.12.2006 within the prescribed period, thereby entitling them to deemed registration from A.Y. 2007-08.

2. Condonation of Delay in Filing the Appeal:
The appellant filed an application under Section 253(5) of the Act for condonation of delay in filing the appeal against the order dated 2.7.2008. The delay was attributed to the appellant's inability to immediately understand the period of grant of registration under Section 12AA of the Act. The Tribunal examined whether the delay of 921 days constituted 'sufficient cause' under Section 253(5) of the Act.

The Tribunal noted that the appellant was informed by the CIT in a letter dated 22.6.2007 that the application could not be considered favorably due to a clause in the trust deed. The appellant's subsequent actions and communications indicated awareness of the issue. The Tribunal found the appellant's explanation for the delay unconvincing, highlighting that the appellant, being a government concern with professional guidance, should have understood the issue promptly. The Tribunal concluded that the appellant's negligence and inaction did not constitute 'sufficient cause' for condonation of delay.

3. Disallowance of Interest on FDR and Expenditure Incurred on 400th Year Martyrdom:
For A.Y. 2007-08 and 2008-09, the appellant challenged the disallowance of interest on FDR and expenditure incurred on the 400th year Martyrdom. The appellant argued that they were eligible for exemption under Section 11 as they had applied for registration under Section 12AA on 18.12.2006, and in the absence of an order within the stipulated time, they should be deemed registered from A.Y. 2007-08.

The Tribunal dismissed these appeals, noting that the CIT and Assessing Officer treated the appellant as non-registered under Section 12AA for the relevant assessment years. Since the application for condonation of delay in filing the appeal against the order under Section 12AA was rejected, the appeals for A.Y. 2007-08 and 2008-09 were also dismissed.

4. Rectification Application under Section 154 of the Income-tax Act:
The appellant filed an appeal against the order dated 4.12.2009 passed by the CIT under Section 154 of the Act, which rejected the appellant's request for rectification of the order granting registration from A.Y. 2009-10 instead of A.Y. 2007-08. The Tribunal examined whether there was a mistake apparent from the record that could be rectified under Section 154.

The Tribunal reiterated that a mistake apparent from the record must be obvious and not debatable. The CIT had granted registration from A.Y. 2009-10 based on a fresh application filed on 15.4.2008, in accordance with the amended provisions of Section 12A(2) of the Act. The Tribunal found no apparent mistake in the CIT's order and upheld the rejection of the rectification application.

Conclusion:
The Tribunal dismissed all four appeals of the appellant. The application for condonation of delay was rejected due to the lack of 'sufficient cause.' Consequently, the appeals for A.Y. 2007-08 and 2008-09 were dismissed as the appellant was treated as non-registered under Section 12AA. The appeal against the rectification order was also dismissed, as there was no apparent mistake in the CIT's order granting registration from A.Y. 2009-10.

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