1999 (12) TMI 104 - AT - Income Tax

Summary

Issues:
Appeal against order under section 263 denying benefit under section 11 due to lack of registration under section 12A.

Analysis:
The appeals were filed against a common order passed under section 263 by the Director of Income-tax (Exemption), denying the benefit under section 11 to the assessee as no registration was granted under section 12A. The assessee argued that they had applied for registration within the prescribed time, complying with section 12A(a), and it was the CIT's prerogative to grant or refuse registration. The assessee cited the judgment of the Bombay High Court to support their argument that no action could be taken against them for the Department's default. The Hon'ble Supreme Court's decision in another case was also referred to, emphasizing the need for registration under section 12A for availing benefits under section 11.

The assessee contended that the delay in granting registration by the CIT, after 26 years of application, was unreasonable. They relied on various judgments to support their argument that action must be taken within a reasonable time when no specific limitation period is prescribed. The assessee challenged the order under section 263, claiming it was unwarranted and non-speaking. They argued that the Assessing Officer's order under section 143(3) was not erroneous, and the Director of Income-tax (Exemption) passed a non-speaking order, failing to address the objections raised by the assessee.

The Tribunal considered the rival contentions and analyzed the provisions of section 12A(a) in light of Heydon's Mischief Rule. The Finance (No. 2) Act, 1996 introduced the requirement of registration as a condition for income-tax exemption, effective from 1-4-1997. Prior to this amendment, only applying for registration within the specified time was necessary. The Tribunal found no fault on the part of the assessee in applying for registration within the stipulated time, and the delay in granting registration was due to the CIT's inaction. The Tribunal held that the registration should be deemed effective from the date of filing, granting the benefit of section 11 to the assessee for both assessment years. The order under section 263 was quashed, and the appeals were allowed.