2015 (1) TMI 426 - HC - Income Tax

Registration u/s 12AA - Registration applied after more than 12 years - Held that - the Income Tax Appellate Tribunal, by Ext.P9 order dated 03.11.2009, had set aside Ext.P6 order passed by the 5th respondent and directed him to pass a fresh order, on the application preferred by the petitioner, on merits. The order to be passed by the 5th respondent, pursuant to the directions of the Appellate Tribunal in Ext.P7 order, would have a bearing on the eligibility of the petitioner for exemption in respect of the assessment years prior to 2005-2006. It is therefore necessary that the 5th respondent passes orders expeditiously on the application preferred by the petitioner, for granting the effect of the registration granted under Ext.P3 from 05.02.1992, the date on which the petitioner association was incorporated. Unless the 5th respondent passes orders pursuant to the directions in Ext.P7 order of the Tribunal, there will be no meaningful adjudication of the appeal preferred by the petitioner against Ext.P1 assessment for the assessment year 2003-2004, where the issue of whether or not the petitioner has a registration under Section 12AA of the Income Tax Act would have a bearing. - pending final orders to be passed by the 3rd respondent in the appeal preferred by the petitioner against Ext.P1 assessment order, no recovery steps for realisation of any differential tax amount shall be pursued against the petitioner. - Decided partly in favor of assessee.

Summary

Issues:
1. Registration under Section 12AA of the Income Tax Act.
2. Denial of exemption under the Income Tax Act for a specific assessment year.
3. Appeal against orders of the Income Tax Appellate Tribunal and the 3rd respondent.

Analysis:
1. The petitioner, a welfare and charitable organization of ex-servicemen, applied for registration under Section 12AA of the Income Tax Act. The registration was granted with effect from 01.04.2005, although the association was incorporated on 05.02.1992. The petitioner sought to have the registration backdated to the incorporation date, but the application was rejected by the 5th respondent due to a delay of more than 12 years. The Income Tax Appellate Tribunal set aside the rejection order and directed the 5th respondent to adjudicate the matter on merits. The High Court directed the 5th respondent to pass orders promptly on the application for backdating the registration within two months.

2. The petitioner was denied exemption under the Income Tax Act for the assessment year 2003-2004 due to the lack of registration under Section 12AA. Despite appealing to the 3rd respondent, the denial was upheld. The High Court found that the 3rd respondent's decision was based on the now-overturned order of the 5th respondent. Therefore, the High Court quashed the 3rd respondent's order and directed a fresh consideration of the appeal after the 5th respondent's new decision.

3. The High Court disposed of the writ petition by setting aside the 3rd respondent's order and directing a fresh consideration of the appeal. It also ensured that no recovery steps for any differential tax amount would be taken against the petitioner until final orders were passed by the 3rd respondent. The judgment emphasized the importance of timely and meaningful adjudication in tax matters to ensure fair treatment for taxpayers.