2019 (3) TMI 1602 - AT - Income Tax

Rectification u/s 254 - non disposal of certain grounds - Exemption u/s 11 - cancellation of sec 10(23C)(vi) retrospectively and for the cancellation of sec 12A(a) by PCIT - HELD THAT - Though the assessee has not argued the following grounds, since these grounds are there in the grounds of the respective appeals, on which the decision of the Tribunal was not rendered, the following issues are to be decided to that extent , therefore, the impugned orders 2018 (6) TMI 1571 - ITAT CHENNAI are recalled. It is made clear that the decision of this Tribunal stand unaffected or unmodified in respect of all other issues in the respective appeals. The Registry is directed to post the above appeals in due course. In the result, the above Miscellaneous Petitions are allowed to the above extent.

Summary

Issues:
1. Cancellation of registration under section 12AA of the Act.
2. Validity of the proceedings for cancellation of registration.
3. Delay in completion of first appellate proceedings.
4. Reliance on cancellation orders by authorities.
5. Disallowance under section 40(a)(ia).

Cancellation of registration under section 12AA of the Act:
The order of the Principal Commissioner of Income Tax, Central 2, Chennai canceling the registration of the appellant under section 12AA was challenged. The appellant argued that the cancellation was against the facts, law, and principles of equity and natural justice. It was contended that the entire proceeding for cancellation was invalid as the show cause notice issued was based on an issue that had already been finalized. The delay of nearly three years in proceeding with the cancellation after the appellant's reply was also criticized. The Tribunal recalled the impugned orders to decide on these grounds, clarifying that the decision on other issues remained unaffected.

Validity of the proceedings for cancellation of registration:
The appellant raised concerns regarding the validity of the proceedings for cancellation of registration under section 12AA. It was argued that the Principal Commissioner erred in initiating the cancellation process after a significant delay following the appellant's reply. The Tribunal acknowledged the appellant's grounds, leading to the recall of the impugned orders for further consideration specifically on these issues while maintaining the decision on other aspects of the appeals.

Delay in completion of first appellate proceedings:
In the appeals related to the Commissioner of Income Tax (Appeals)-18, Chennai, the appellant highlighted the intentional delay in completing the first appellate proceedings. The delay was seen as an attempt to allow other proceedings to be concluded, potentially impacting the relief available to the appellant. The Tribunal observed that the delay in completing the proceedings was substantial, and the appellant's concerns warranted a reevaluation of the impugned orders to address these issues separately from the rest of the appeal.

Reliance on cancellation orders by authorities:
The appellant contested the reliance placed by the authorities on cancellation orders issued by the Principal Commissioner and DGIT(Inv.). It was argued that these orders overlooked fundamental facts and provisions of the law, rendering them void-ab-initio. The retrospective nature of the cancellations was also questioned, emphasizing that such actions were not explicitly permitted by law. The Tribunal considered these arguments valid and decided to reexamine the impugned orders in light of these contentions.

Disallowance under section 40(a)(ia):
The appellant challenged the disallowance under section 40(a)(ia) concerning prior period expenses, deposit refunds, and salaries paid to the Managing Trustee. It was contended that these disallowances were contrary to the facts of the case and against the principles of law. The Tribunal acknowledged these contentions and allowed the Miscellaneous Petitions to the extent of reconsidering these specific issues, indicating a need for further examination of the impugned orders in this regard.

This detailed analysis of the judgment from the Appellate Tribunal ITAT CHENNAI highlights the various issues raised by the appellant and the Tribunal's decision to recall the impugned orders for a specific reconsideration of these issues while maintaining the decisions on other aspects of the appeals.