2015 (10) TMI 1456 - AT - Income Tax

Registration under section 12AA(3) cancelled - Commissioner of Income-tax s order has been passed ex parte - The assessee submits not to have received the Commissioner of Income-tax s notice proposing cancellation of registration. He has proceeded to cancel its registration for non-filing of return -- Held that - A perusal of section 12AA(3) makes it clear that such a power can be exercised only if the concerned charitable trust s or institution s activities not genuine or are not been carried out in accordance with its objects as the case may be. Needless to say, non-filing of a return does not find a mention as a cause for cancellation of section 12AA registration. We make it clear that we are dealing with a tax statute wherein the powers of the Revenue have to be literally interpreted. The Revenue fails to quote any case law widening scope of section 12AA(3) in facts of the case. Therefore, we reject the assessee s technical argument of non-service of notice and reverse the Commissioner of Income-tax s order on this legal aspect itself. - Decided in favour of assessee.

Summary

Issues Involved:
Cancellation of registration under section 12AA(3) of the Income-tax Act, 1961 based on non-filing of return and genuineness of charitable activities.

Analysis:
1. Cancellation of Registration for Non-Filing of Return:
The appeal in this case pertains to the cancellation of registration under section 12AA(3) of the Income-tax Act, 1961 due to the non-filing of a return by the trust. The Commissioner of Income-tax cancelled the registration based on the trust's failure to file its return of income despite being granted registration since June 7, 2010. The Commissioner issued a show-cause letter to the trust, requiring reasons for non-filing the return and relevant financial statements. The letter was returned unserved, leading to the inference that the trust was not in existence. Section 12AA(3) allows cancellation if the activities of the trust are not genuine or not in line with its objectives. However, non-filing of a return is not explicitly mentioned as a ground for cancellation under this section.

2. Legal Interpretation and Decision:
The Tribunal noted that the Commissioner's order was passed ex parte as the trust claimed not to have received the notice proposing cancellation. The Tribunal emphasized the literal interpretation of tax statutes and the need for specific grounds for cancellation under section 12AA(3). The Tribunal rejected the technical argument of non-service of notice by the trust and reversed the Commissioner's order solely on this legal aspect. The Tribunal highlighted the absence of case law supporting the broad interpretation of section 12AA(3) in this context.

3. Conclusion:
Ultimately, the Tribunal allowed the appeal of the assessee, setting aside the cancellation of registration under section 12AA(3) based on non-filing of return. The decision was made on the grounds of the specific legal provisions and the lack of evidence supporting the cancellation for this reason. The judgment was delivered on February 27, 2015, in Chennai, by the Appellate Tribunal ITAT Chennai.