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2022 (3) TMI 290 - AT - Income TaxExemption u/s 11 denied - assessee was not having registration u/s. 12A - AO while passing the re-assessment u/s. 143(3) r.w.s. 147 of the Act, the assessee was not in a possession of registration u/s. 12AA - Scope of amendment brought to the Finance (No. 2), Act, 2014 by inserting first proviso after sub-section (2) to Section 12A of the Act w.e.f. 01.10.2014 - as per revenue first proviso to section 12A(2) of the Act cannot be applied to the present assessee as on the date of grant of registration i.e. on 21.06.2019 no assessment proceedings were pending before the AO, therefore, the registration u/s. 12A of the Act cannot be given effect in A.Y. 2009-2010 - HELD THAT - Appellate proceedings before the appellate authorities are deemed to be assessment proceedings pending before the Assessing Officer. Accordingly, respectfully following the above order of Amritsar Bench of the Tribunal in the case of St. Joseph's Convent School 2017 (2) TMI 1511 - ITAT AMRITSAR we hold that the subsequent grant of registration will operate retrospectively for the assessment year under consideration also i.e. A.Y. 2009-2010 as the appeal before the CIT(A) against reassessment order dated 18.07.2011 was pending before CIT(A) which was decided on 29.07.2019 and on the date of grant of registration u/s. 12A of the Act i.e. on 21.06.2013, the first appeal was pending which has to be considered as in continuation of reassessment proceedings. Assessee/appellant trust was entitled to enjoy benefits of registration u/s. 12A of the Act w.e.f. A.Y. 2009-2010 under the benefit of first proviso to Section 12A(2) of the Act inserted by the Finance Act (No. 2), 2014 w.e.f. 01.10.2014. The authorities below have decided the matter considering that the assessee was not having registration u/s. 12A of the Act for A.Y. 2009-2010 but as per foregoing discussion, we have reached to a logical conclusion that the benefit of registration u/s. 12A of the Act is available for the assessee for A.Y. 2009-2010 also after insertion of first proviso to Section 12A(2) of the Act. Therefore, the orders of the authorities below are set aside and the case is restored back to the file of the AO for de novo reassessment keeping in view that the assessee was entitled to have benefit of registration u/s. 12A of the Act for A.Y. 2009-2010 - Appeal of the assessee is allowed for statistical purposes.
Issues Involved:
1. Denial of registration under section 12AA for the assessment year 2009-10. 2. Reopening of assessment under section 148. 3. Application of the first proviso to section 12A(2) inserted by Finance Act (No. 2) 2014. 4. Violation of principles of natural justice by not providing remand reports to the assessee. 5. Retrospective application of registration granted under section 12AA. Detailed Analysis: 1. Denial of Registration under Section 12AA for AY 2009-10: The assessee, a charitable educational trust, applied for registration under section 12AA on 05.02.2010, which was initially rejected by the CIT on 03.08.2010. The ITAT set aside this order for reconsideration, but the CIT again rejected the application due to non-response from the assessee. Eventually, the CIT granted registration on 21.06.2013, effective from AY 2010-11. The assessing officer denied the benefit of sections 11 and 12 for AY 2009-10, as the registration was not available for that year. 2. Reopening of Assessment under Section 148: The assessing officer reopened the assessment for AY 2009-10 on 30.08.2010, on the grounds that the assessee was not entitled to registration for that year. The reassessment was completed on 18.07.2011, denying the benefits of sections 11 and 12, and treating the income as taxable. 3. Application of the First Proviso to Section 12A(2) Inserted by Finance Act (No. 2) 2014: The assessee argued that the amendment to section 12A(2) by Finance Act (No. 2) 2014, which has retrospective effect, should apply. This proviso states that if registration is granted, the benefits of sections 11 and 12 should apply to any pending assessment proceedings for preceding years. The CIT(A) did not consider this amendment, relying instead on earlier judicial decisions that were rendered before the amendment. 4. Violation of Principles of Natural Justice: The assessee contended that the CIT(A) failed to provide copies of the remand reports submitted by the ITO, Exemption, Madurai, for their objection/comments, which constitutes a violation of natural justice. This procedural lapse was highlighted as a significant grievance by the assessee. 5. Retrospective Application of Registration Granted under Section 12AA: The ITAT Amritsar Bench's decision in St. Joseph's Convent School was cited, which held that appellate proceedings are a continuation of assessment proceedings, and therefore, the benefits of registration should apply retrospectively. The Tribunal agreed with this view, noting that the registration granted on 21.06.2013 should be deemed effective from 03.08.2010, thus applicable for AY 2009-10. Conclusion: The Tribunal concluded that the assessee trust was entitled to the benefits of registration under section 12A for AY 2009-10, following the insertion of the first proviso to section 12A(2) by the Finance Act (No. 2) 2014. The orders of the authorities below were set aside, and the case was remanded back to the assessing officer for a de novo reassessment, considering the trust's entitlement to registration benefits for AY 2009-10. The appeal was allowed for statistical purposes.
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