2020 (8) TMI 708 - AT - Income Tax

Exemption u/s 11 - rejection of application of assessee for grant of registration u/s.12A - CIT(E) rejected the application of the assessee holding that the assessee trust does not exist for the purpose of charity, rather it is working commercially, which is defeating its own aims and objectives - HELD THAT - On perusal of the order of CIT(E), we find that the CIT(E) in its order observed that the assessee trust does not exist for the purpose of charity, rather it is working commercially, which is defeating its own aims and objectives. Considering the prayer of assessee we provide one more opportunity to the assessee to substantiate its claim before the CIT(E) with proper evidence/documents and the CIT(E) is directed to consider the submission of the assessee and pass the order accordingly after providing reasonable opportunity to the assessee. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Rejection of application for registration u/s.12A of the Act by the CIT(E).
2. Procedural delay in pronouncing the order beyond 90 days.

Issue 1: Rejection of Registration Application:
The appeal was filed against the CIT(E)'s order rejecting the application for registration u/s.12A of the Act. The CIT(E) found that the trust did not exist for charitable purposes but was operating commercially, contrary to its aims. The assessee contended that it met the conditions for registration and was not given a fair hearing. The Tribunal granted the assessee another opportunity to provide evidence to support its claim, directing the CIT(E) to reconsider the application after affording a reasonable hearing. The sole issue of rejection of registration u/s.12AA was allowed for statistical purposes.

Issue 2: Procedural Delay in Pronouncing the Order:
The Tribunal acknowledged that the order was pronounced after the expiry of 90 days from the conclusion of the hearing. Citing Rule 34(5) of the Income Tax Appellate Tribunal Rules, the Tribunal noted the requirement to pronounce orders within 90 days, with exceptions for extraordinary circumstances. Referring to a similar case, the Tribunal highlighted the impact of the nationwide lockdown due to the Covid-19 pandemic on judicial proceedings. The Tribunal excluded the lockdown period from the 90-day timeline, aligning with the pragmatic approach considering the unprecedented situation. Relying on judicial decisions and administrative directives, the Tribunal justified the delay in pronouncing the order and allowed the appeal for statistical purposes.

In conclusion, the judgment addressed the rejection of the registration application u/s.12A of the Act by providing the assessee with another opportunity to substantiate its claim. Additionally, it explained the procedural delay in pronouncing the order beyond the stipulated 90 days, attributing it to the extraordinary circumstances arising from the Covid-19 lockdown. The Tribunal's decision aimed to ensure fairness and practicality in the legal proceedings, ultimately allowing the appeal for statistical purposes.