2013 (10) TMI 1174 - HC - Income Tax

Registration of assessee u/s 12AA of the Income tax Act rejected by CIT Held that - CIT failed to conduct an independent enquiry, disregarded the fact that the appellant was allowed exemption, under Section 10(23C)(iiiad) of the Act and in essence has raised inferences contrary to facts. The Tribunal has also held that the CIT has ignored that the appellant is running a school since its inception. The jurisdiction to allow or reject an application, filed under Section 12AA of the Act rests with the CIT. The CIT having ignored relevant facts and considered factors that were not germane to the controversy, the order of the Tribunal, declining to impose its own opinion on merits and remitting the matter to the CIT to decide a matter afresh is not faulted Decided in favor of revenue.

Summary

Issues:
Challenge to order of Income Tax Appellate Tribunal regarding exemption under Section 12AA(1)(b)(ii) of the Income Tax Act, 1961.

Analysis:
The appellant challenged the order of the Income Tax Appellate Tribunal, Delhi, 'C' Bench, which remanded the matter to the Commissioner of Income Tax (CIT) instead of granting exemption under Section 12AA(1)(b)(ii) of the Act. The Tribunal accepted the appellant's contentions regarding errors in the CIT's orders and held that the CIT had not conducted a proper inquiry into the genuineness of the activities of the society. The Tribunal emphasized that the society had been running a school since 2003 and had been granted exemption under a different section of the Act. It was noted that the CIT did not consider relevant aspects and raised inferences contrary to facts, leading to the remand of the matter.

The appellant contended that the Tribunal should have granted exemption itself, but the Tribunal's decision to remand the matter to the CIT was justified. The jurisdiction to allow or reject an application under Section 12AA of the Act lies with the CIT, and the Tribunal's role is not to impose its own opinion on the merits of the case. The Tribunal found that the CIT had not properly examined the activities of the society and had based its decision on irrelevant factors. Therefore, the Tribunal's decision to remand the matter for a fresh decision by the CIT was deemed appropriate.

The High Court, after considering the arguments and the Tribunal's findings, dismissed the appeal. It upheld the Tribunal's decision to remand the matter to the CIT for a fresh decision on the appellant's application under Section 12AA of the Act. The Court directed the Commissioner of Income Tax, Rohtak, to decide on the appellant's petition within three months from the receipt of the court's order.

In conclusion, the High Court affirmed the Tribunal's decision to remand the matter to the Commissioner of Income Tax for a fresh decision regarding the appellant's application for exemption under Section 12AA(1)(b)(ii) of the Income Tax Act, 1961.