2007 (5) TMI 272 - AT - Income Tax

Summary

Issues Involved:
1. Justification of rejection of application u/s 12A(a) by CIT.
2. Condonation of delay in filing the application.
3. Eligibility for registration from the first day of Financial Year 2002-03.
4. Deemed acceptance of application due to delay in disposal by CIT.

Summary:

1. Justification of Rejection of Application u/s 12A(a):
The assessee questioned the rejection of its application u/s 12A(a) of the IT Act, 1961 by the CIT. The CIT rejected the application on the grounds that it was filed beyond the prescribed time limit and did not meet the mandatory requirements of s. 12A(a). The CIT noted that the application was belated by more than 28 years and 10 months and that the assessee did not provide sufficient cause for the delay. The CIT also observed that the assessee did not file the necessary accounts for the financial year 2001-02 along with the application, as required by r. 17 A(b) of the IT Rules.

2. Condonation of Delay in Filing the Application:
The assessee argued that the delay in filing the application was due to a bona fide belief that its income was exempt under s. 10(22) of the IT Act, 1961, and that it was unaware of the need to file for registration under s. 12A(a) until the law was amended. The Tribunal found that there were sufficient causes for condonation of delay, noting that the assessee was under the impression that it was not required to file an application for registration until it received a notice u/s 133(6) on 13th May, 2002. The Tribunal held that the delay should be considered only for the period from the assessment year 1999-2000 to 30th May, 2002, and not from 1st July, 1973, as reckoned by the CIT.

3. Eligibility for Registration from the First Day of Financial Year 2002-03:
The Tribunal found that the requirement under r. 17 A(b) to file accounts along with the application is procedural and cannot override the Act. The Tribunal noted that the assessee had filed the necessary accounts before the AO and the CIT during the course of hearing. The Tribunal held that the CIT was not justified in rejecting the application on this basis and that the assessee was eligible for registration from the first day of Financial Year 2002-03.

4. Deemed Acceptance of Application Due to Delay in Disposal by CIT:
The Tribunal disagreed with the CIT's finding that the application was invalid and that the limitation of s. 12AA(2) was not applicable. The Tribunal held that the CIT was required to dispose of the application within six months from the end of the month in which it was received, i.e., by 30th Nov., 2002. Since the CIT disposed of the application on 18th Nov., 2005, the Tribunal held that the application should be deemed to be accepted. The Tribunal directed the CIT to grant registration to the assessee on the application u/s 12A(a) dated 30th May, 2002.

Conclusion:
The Tribunal allowed the appeal, set aside the CIT's order, and directed the CIT to grant registration to the assessee on the application u/s 12A(a) dated 30th May, 2002. The issues raised in the grounds were decided in favor of the assessee.