2015 (10) TMI 473 - AT - Income Tax

Registration granted u/s. 12AA withdrawn - derecognizing approval granted u/s. 80G(5) - Held that - There was no requirement of making an application for renewal of recognition granted u/s. 80G of the Act, as the recognition granted to the assessee will hold good in perpetuity. In such circumstances, the proper course to have been adopted by the CIT was to have filed the application of the assessee seeking extension of recognition u/s. 80G(5) of the Act. The action of the CIT in further withdrawing registration already granted to the assessee u/s. 12AA of the Act is also not proper. CIT has proceeded on the basis of an incorrect appreciation of facts inasmuch as, he has presumed that the assessee existed for religious purpose and not for charitable purpose. It appears that the assessee has also not explained the position properly in the proceedings before the CIT, as to the true nature of the use of land. We are therefore of the view that it would be just and proper to set aside the orders of the CIT and remand the issue of withdrawing recognition u/s. 12AA of the Act for fresh consideration by the CIT. As far as recognition u/s. 80G(5) of the Act is concerned, we hold that the recognition already granted will continue to operate and the order passed by the CIT provided the registration u/s.12AA of the Act continues. Insofar as order passed u/s. 12AA(3) is concerned, the issue will be considered afresh by the CIT after affording the assessee opportunity of being heard. We may also clarify that in the event of registration u/s. 12AA of the Act being withdrawn, the CIT is at liberty to take appropriate action for withdrawing recognition granted u/s. 80G of the Act to the assessee. - Decided in favour of assessee for statistical purposes

Summary

Issues:
1. Condonation of delay in filing appeals by the assessee.
2. Withdrawal of registration granted u/s. 12AA of the Income-tax Act.
3. Derecognition of approval granted u/s. 80G(5) of the Act.

Condonation of Delay:
The assessee filed appeals against orders withdrawing registration u/s. 12AA and derecognizing approval u/s. 80G(5) of the Act after a delay of 730 days. The delay was attributed to the accountant leaving without notice, resulting in the appeals not being filed on time. The assessee's secretary verified the reasons for delay. The counsel argued for condonation, citing genuine reasons and precedents supporting such cases. The tribunal, following precedents, accepted the reasons and condoned the delay, emphasizing substantial justice over technicalities.

Withdrawal of Registration u/s. 12AA:
The CIT withdrew the registration granted u/s. 12AA due to the assessee's failure to provide details of charitable activities and proof of genuineness. The CIT also noted the purchase of agricultural land for religious purposes without proper documentation. The tribunal found the withdrawal unjustified, as it did not meet the conditions specified in the Act for cancellation of registration. The tribunal set aside the CIT's order and remanded the issue for fresh consideration, allowing the assessee an opportunity to be heard.

Derecognition of Approval u/s. 80G(5):
The CIT derecognized approval granted u/s. 80G(5) based on the same grounds as the withdrawal of registration u/s. 12AA. However, the tribunal held that the approval granted should continue to operate as per statutory provisions. The tribunal directed that if the registration u/s. 12AA is withdrawn, appropriate action can be taken to withdraw the 80G approval. The tribunal allowed one appeal and treated the other as allowed for statistical purposes.

This detailed analysis covers the issues of condonation of delay, withdrawal of registration u/s. 12AA, and derecognition of approval u/s. 80G(5) comprehensively, highlighting the tribunal's findings and decisions on each matter.