2012 (6) TMI 376 - AT - Income Tax

Registration under section 12A of the Act - application for renewal under section 80G(5)(vi) of the Act - competent authority, the Ld. CIT, failed to take appropriate action in the matter within prescribed time limit under Rule 11AA(6) of the Income-tax Rules, 1962 - no specific provision prescribing consequences for non-passing of such order Held that - assessee-appellant, cannot be kept at the mercy of the revenue authority, having complied with his part in the matter, assessee is legitimately entitled for approval of renewal, as applied for, appeal of the assessee is allowed

Summary

Issues:
- Rejection of application for approval under section 80G(5)(vi) of the Income-tax Act, 1961
- Compliance with the time limit for passing the order by the Commissioner of Income-tax
- Legal interpretation of deemed approval in case of non-adherence to prescribed time limits
- Comparison of provisions under section 80G(5)(vi) and section 12AA(3) of the Act

Analysis:
The appeal before the Appellate Tribunal ITAT Amritsar concerned the rejection of an application for approval under section 80G(5)(vi) of the Income-tax Act, 1961, by the Commissioner of Income-tax, Jalandhar. The primary contention raised by the assessee was regarding the time limit within which the Commissioner should pass an order, as per Rule 11AA(6) of the Income-tax Rules, 1962. The assessee argued that the order passed by the Commissioner was beyond the prescribed time limit, invoking the principle of deemed approval based on legal precedents. The Tribunal noted that the order should have been passed within six months from the date of application, as per Rule 11AA(6).

The Tribunal analyzed the legal interpretation of deemed approval in cases of non-adherence to prescribed time limits, citing the decision of the Hon'ble Allahabad High Court in a similar context. The Tribunal highlighted that failure to adhere to the time limit could result in deemed approval to prevent undue hardships on the assessee. The Tribunal emphasized the importance of timely decision-making by the revenue authority to uphold the rule of law and prevent the assessee from being left at the mercy of the authority.

Furthermore, the Tribunal compared the provisions under section 80G(5)(vi) and section 12AA(3) of the Act concerning the renewal and cancellation of approvals granted by the Commissioner. While section 12AA(3) provides for cancellation of registration under specific circumstances, there is no provision for withdrawal or renewal of approval under section 80G(5)(vi). The Tribunal underscored the need for the revenue authority to act diligently and judiciously in such matters to protect the rights of the assessee.

Based on the legal and factual discussions, including the decision cited by the assessee and the lack of specific consequences for non-passing of the order, the Tribunal concluded that the assessee was entitled to the approval of renewal as applied for. The Tribunal allowed the appeal of the assessee, emphasizing the importance of upholding the rule of law and ensuring timely and fair decision-making by the revenue authority to prevent undue hardships on the taxpayer.