2012 (6) TMI 910 - AT - Income Tax

Summary

Issues Involved:
1. Reopening of assessment u/s 147.
2. Denial of exemption u/s 11 due to lack of registration u/s 12A.

Summary:

Reopening of Assessment u/s 147:
The first issue raised by the assessee was that the Commissioner of Income Tax (Appeals) should have considered the reopening of the assessment as bad and against the principles of natural justice, as the reasons for reopening were not supplied until the filing of the appeal before the Tribunal. The Tribunal noted that the Assessing Officer is bound to furnish reasons for reopening of assessment u/s 147 to the assessee, referencing the decision of the Hon'ble Supreme Court in the case of G.K.N. Driveshafts (India) Ltd. v. ITO & Others [259 ITR 19]. Consequently, the Tribunal set aside the orders of the lower authorities and remitted the issue back to the Assessing Officer for fresh examination in accordance with the law, ensuring the assessee is provided with adequate opportunity to be heard.

Denial of Exemption u/s 11:
The second issue was the denial of exemption claimed u/s 11 of the Act. The assessee contended that it had been registered u/s 12A since 1973 and had been claiming exemptions accordingly. However, due to the loss of the registration certificate, the exemption was denied for the assessment year 2002-03. The Tribunal observed that the assessee trust had been filing returns and claiming exemptions under section 11 since 1973, which were accepted by the Department until the assessment year 2001-02. The Tribunal referenced a similar case, M/s. Sadras Venkatarama Chetty's Charities vs. DDIT(E), where it was held that the absence of a formal registration order under section 12A did not justify denying the exemption if the trust was recognized and assessed as a charitable trust in previous years.

The Tribunal noted that the provisions of section 12AA, which came into effect from 01.04.1997, required a written order for granting or refusing registration, but no such requirement existed under section 12A prior to this date. The Tribunal emphasized that the Assessing Officer should have verified earlier records to ascertain the registration status of the trust before denying the exemption. Consequently, the Tribunal set aside the orders of the lower authorities and remitted the issue back to the Assessing Officer to re-examine the matter afresh, ensuring compliance with the law and providing the assessee with an opportunity to be heard.

Conclusion:
The appeal of the assessee was allowed for statistical purposes, and the issues were remitted back to the Assessing Officer for fresh examination in accordance with the Tribunal's observations and legal provisions. The order was pronounced on Tuesday, the 12th of June, 2012, at Chennai.