2015 (2) TMI 444 - AT - Income Tax

Registration u/s 12AA rejected - date of the order on which the application was disposed should be served on the assessee before the period of limitation provided u/s 12AA - Held that - Identical issue was examined by the Madras High Court in DIT (Exemption) vs Anjuman-E-Khyrkhah-E-Aam (2010 (12) TMI 957 - Madras High Court) and found that when the order was passed by the Commissioner within the period of six months it cannot be held to be violative of section 12AA of the Act. This Tribunal is of the considered opinion that in view of the language employed by the Parliament consciously, wherever there is prohibition from passing the order after the specified period, the order shall go out of the control of the officer who has passed the order before the specified period. However, wherever, the order shall be passed is mentioned, then, it shall be served on the assessee within a reasonable period so as to enable the concerned person to challenge the same in case the concerned person felt aggrieved. Once the order is served on concerned person, the effect of the order will come into force. Since the order is admittedly served within a period of two weeks this Tribunal is of the considered opinion that the impugned order passed by the Commissioner is not barred by limitation. - Decided against assessee. Violation of provisions of section 13(1)(c) - report called for by the Commissioner was not confronted to the assessee and that the financial transaction of the assessee with the managing director which was found in the assessment order of the managing director, was not admitted - Held that - Though the assessment order relied upon by the Commissioner is that of the managing trustee, the ld.representative now claims that no admission is made in respect of cash deposit of ₹ 38,81,545. As rightly submitted by the ld.representative for the assessee, an opportunity shall be given to the assessee to explain the circumstances under which the deposit was made in SBI to the extent of ₹ 38,81,545. Since such an opportunity was not given, this Tribunal is of the considered opinion that the matter needs to be reconsidered. Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Barred by limitation - Order of Commissioner rejecting application for registration u/s 12AA of the Act.
2. Merit of the appeal - Allegations of genuineness of trust funds and violation of provisions of section 13(1)(c) of the Act.

Issue 1: Barred by Limitation - Order of Commissioner rejecting application for registration u/s 12AA of the Act:
The appeal contested the rejection of the application for registration u/s 12AA of the Act by the Administrative Commissioner. The appellant argued that the Commissioner's order was beyond the stipulated time limit of six months for disposal under section 12AA(2) of the Act. The appellant relied on judgments by the Kerala High Court to support the claim that an order should be communicated to the assessee within the specified time frame to be considered valid. The Commissioner's order dated 25-02-2014 was served on the assessee on 11-03-2014, which the appellant argued was beyond the six-month period. However, the Departmental Representative contended that the order was within the time limit as it was passed on 25-03-2014 and served on the assessee on 11-03-2014. The Tribunal referenced a Madras High Court case to support the view that as long as the order was passed within the stipulated period, it complied with the law. The Tribunal concluded that the Commissioner's order was not barred by limitation.

Issue 2: Merit of the Appeal - Allegations of Genuineness of Trust Funds and Violation of Provisions of Section 13(1)(c) of the Act:
Regarding the merit of the appeal, the appellant argued that the Commissioner did not provide a fair opportunity to rebut the allegations made against the trust. The appellant claimed that the managing trustee did not admit that certain funds were the income of the trust, and the appellant was not given a chance to respond to the allegations properly. The Departmental Representative contended that the Commissioner's decision was based on a thorough inquiry that revealed discrepancies in the trust's financial transactions. The Tribunal noted that the Commissioner had relied on the assessment order of the managing trustee but agreed with the appellant that proper opportunity must be given to explain the circumstances of financial transactions. Consequently, the Tribunal set aside the Commissioner's order and remitted the issue of registration back for reconsideration, directing the Commissioner to provide materials and allow the appellant a reasonable opportunity to respond.

In conclusion, the Tribunal ruled in favor of the appellant for statistical purposes, allowing the appeal and ordering a fresh consideration of the registration issue by the Commissioner with proper opportunity for the appellant to address the concerns raised.