2018 (9) TMI 601 - AT - Income Tax

Grant of registration u/s 12AA - denying the exemption to the assessee u/s 11 and 12 in absence of registration u/s 12AA for the respective years - Held that - On the basis of information available on record, the ld CIT(E) held that as assessee is already registered u/s 12AA fresh registration cannot be granted. It is apparent that before the CIT(E) all other correspondence as well as the order of the CBDT condoning the delay was not available before him. The assessee has also stated that it received the query letter dated 18.11.2016 only on 26.11.2016 and immediately on 29.11.2016 it prepared a reply and sent by Speed Post on 30.11.2016. Looking to the whole time chart, it is apparent that assessee could not furnish complete details before the ld CIT(E). Therefore, we set aside the whole issue back to the file of the ld CIT(E), Lucknow with a direction to the assessee to submit all the details which are furnished before us including the order of the CBDT. CIT(E) is also directed to consider the order of the CBDT dated 04.05.2016 and pass speaking order on the application u/s 12AA of the assessee after granting proper opportunity of hearing. Appeal filed by the assessee is allowed for statistical purposes with above direction.

Summary

Issues Involved:
1. Grant of registration under Section 12AA of the Income Tax Act.
2. Denial of exemption under Sections 11 and 12 of the Income Tax Act due to absence of registration under Section 12AA.
3. Condonation of delay in filing the application for registration under Section 12AA.
4. Diversion of funds to the Infrastructure Development Fund by an overriding title as per the State Government order.

Issue-wise Detailed Analysis:

1. Grant of Registration under Section 12AA of the Income Tax Act:
The assessee filed an appeal against the order of the CIT(E), Lucknow, dated 02.12.2016, which rejected the application for registration under Section 12AA. The assessee argued that the CIT(E) erred in rejecting the application despite the Central Board of Direct Taxes (CBDT) condoning the delay in filing the application for the period from AY 2004-05 to 2009-10. The CIT(E) had granted registration effective from 23.07.2009, but the assessee sought registration from 01.04.2003. The Tribunal noted that the CIT(E) rejected the application because the assessee did not appear on the appointed date and failed to provide necessary details. The Tribunal set aside the issue to the CIT(E) for reconsideration, directing the assessee to submit all relevant details, including the CBDT order, and for the CIT(E) to pass a speaking order after granting a proper opportunity of hearing.

2. Denial of Exemption under Sections 11 and 12 of the Income Tax Act:
For AY 2007-08, 2008-09, and 2009-10, the CIT(A) upheld the Assessing Officer's decision to deny exemptions under Sections 11 and 12 due to the absence of registration under Section 12AA. The Tribunal noted that the original assessments were made without granting exemptions as the assessee was not registered under Section 12AA at the relevant times. The Tribunal set aside these issues to the Assessing Officer to decide afresh after the CIT(E), Lucknow, passes a decision on the registration application pursuant to the Tribunal's order in ITA No. 533/Del/2017.

3. Condonation of Delay in Filing the Application for Registration under Section 12AA:
The assessee had filed an application for condonation of delay under Section 119(2)(b) of the Income Tax Act for AY 2004-05 to 2009-10, which the CBDT condoned. Despite this, the CIT(E) did not grant registration for the retrospective period. The Tribunal directed the CIT(E) to consider the CBDT's order condoning the delay and to pass a speaking order on the application under Section 12AA after granting a proper opportunity of hearing to the assessee.

4. Diversion of Funds to the Infrastructure Development Fund by an Overriding Title as per the State Government Order:
For AY 2007-08, the CIT(A) upheld the addition of ?4,64,67,240 by the Assessing Officer on account of diversion of funds to the Infrastructure Development Fund as per the State Government order. Similar issues were noted for AY 2008-09 and 2009-10, with additions of ?2,63,14,404 and ?5,28,15,855, respectively. The Tribunal noted that these issues were also linked to the registration under Section 12AA and set aside these appeals to the Assessing Officer to adjudicate afresh after the CIT(E)'s decision on the registration application.

Conclusion:
The Tribunal allowed the appeals for statistical purposes, setting aside the issues to the CIT(E) and the Assessing Officer for fresh adjudication based on the CIT(E)'s decision on the registration application under Section 12AA, considering the CBDT's order condoning the delay. The Tribunal emphasized the need for a proper opportunity of hearing and submission of all relevant details by the assessee.