2014 (6) TMI 298 - AT - Income Tax

Denial of registration u/s 12AA of the Act Held that - The effect of non-consideration of the application for registration within the time fixed by section 12AA(2) would be a deemed grant of registration there was no reason to make the assessee suffer because the IT Department is not able to keep its officers under check and control, so as to take timely decisions in such simple matters such as consideration of applications for registration even within the large six month period provided by s. 12AA(2) of the Act - Commissioner does not pass any orders even after six months from receipt of Tribunal s order remitting the matter to him - The registration will be deemed to have been granted thus, the preliminary objection raised by the assessee is upheld and the Commissioner is directed to issue approval of registration Decided in favour of Assessee. Denial of approval u/s 80G of the Act Held that - As the registration u/s12AA is granted - The very foundation for denial of approval u/s 80G thus ceases to hold good in law Decided in favour of assessee.

Issues:
1. Denial of registration u/s. 12AA of the Income Tax Act 1961.
2. Delay in decision-making process by the Commissioner of Income Tax.
3. Interpretation of the law regarding the deemed grant of registration.
4. Denial of approval u/s. 80G based on the denial of registration u/s. 12AA.

Issue 1: Denial of registration u/s. 12AA:
The appellant raised a grievance against the denial of registration u/s. 12AA by the Commissioner of Income Tax. The appellant argued that due to the delay in the decision-making process, the registration should be deemed to have been granted. The appellant relied on the principle established in the case of Society for the Promotion of Education, Adventure Sports and Conservation of Environment, where it was held that the non-consideration of the application for registration within the specified time would result in a deemed grant of registration. The ITAT Lucknow upheld the appellant's objection and directed the Commissioner to issue the approval of registration promptly.

Issue 2: Delay in decision-making process:
The appellant highlighted the delay in the decision-making process by the Commissioner, which took almost three years to dispose of the remanded matter. The appellant argued that such a delay was contrary to the scheme of the law and should result in the deemed grant of registration. The Departmental Representative acknowledged the delay but urged the Tribunal to proceed on merits due to the heavy workload on the Commissioner. However, the ITAT Lucknow, considering the judgment in the Society for Promotion of Education case, held that the registration should be deemed granted when the Commissioner fails to pass orders even after six months from the receipt of the Tribunal's order.

Issue 3: Interpretation of the law regarding the deemed grant of registration:
The ITAT Lucknow interpreted the law based on the judgment in the Society for Promotion of Education case, emphasizing that the effect of non-consideration of the application for registration within the specified time would lead to a deemed grant of registration. The Tribunal directed the Commissioner to issue the approval of registration promptly in line with this interpretation.

Issue 4: Denial of approval u/s. 80G based on the denial of registration u/s. 12AA:
The appellant challenged the denial of approval u/s. 80G, which was based on the denial of registration u/s. 12AA. However, since the registration u/s. 12AA was granted by the ITAT Lucknow, the foundation for the denial of approval u/s. 80G ceased to hold good in law. Consequently, the ITAT Lucknow reversed the order denying approval u/s. 80G and directed the Commissioner to grant the approval.

In conclusion, both appeals were allowed by the ITAT Lucknow, and the orders for denial of registration u/s. 12AA and approval u/s. 80G were reversed based on the deemed grant of registration and the subsequent approval.

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