2019 (4) TMI 1530 - HC - Income Tax

Stay of demand - Exemption u/s 11 - society registered u/s 12AA - competency of Dy CIT (E) Circle, Ranchi, to revoking the exemption granted u/s 11 and 12 - direction to make a deposit of 20% of the disputed demand - HELD THAT - For ascertaining as to whether the petitioner enjoys registration under Section 12AA of the Act, we had allowed time to learned counsel for the Income Tax Department to clarify as to the source of power for the Deputy Commissioner, Income Tax to revoke the registration under Section 12AA of 'the Act'. A supplementary counter affidavit is filed and which is silent on any such order of revocation. We are certainly satisfied to interfere with the order passed by the Commissioner, Income Tax(Exemptions) in so far as it requires the petitioner to make a pre-deposit of 20% of the tax assessed amount before the appeal(s) can be heard and which order is hereby set aside. We also hereby issue direction to the Commissioner (Appeals) to consider the appeal preferred by the petitioner for the respective years and dispose of the same in accordance with law within a maximum period of 6 weeks from today and until such disposal, the respondents are restrained from taking coercive measures for realization of the demand which are subject matter of appeals.

Summary

Issues:
1. Jurisdiction of Deputy Commissioner to revoke benefit under Sections 11 and 12 of the Income Tax Act.
2. Requirement of pre-deposit pending appeal.
3. Authority to revoke registration under Section 12AA of the Act.

Analysis:
1. The judgment addresses the issue of the Deputy Commissioner's jurisdiction to revoke the benefit under Sections 11 and 12 of the Income Tax Act. The petitioner argued that the Deputy Commissioner had no authority to revoke the benefits granted under Section 12AA registration, as such power is exclusively reserved for the Commissioner. The court refrained from delving into the merits of income computation, focusing on whether a pre-deposit was necessary when the petitioner's registration under Section 12AA remained intact. The court found the Deputy Commissioner's order requiring a pre-deposit to be without jurisdiction and set it aside.

2. The judgment also discusses the requirement of a pre-deposit pending appeal. The court emphasized that as long as the petitioner's registration under Section 12AA was not revoked by a competent authority, there was no need for a pre-deposit. The court directed the Commissioner (Appeals) to consider the appeal within a maximum period of 6 weeks and restrained the respondents from taking coercive measures for demand realization during the appeal process. This decision aimed to protect the petitioner's rights pending the appeal's disposal.

3. Lastly, the judgment deals with the authority to revoke registration under Section 12AA of the Act. The court examined the Deputy Commissioner's power to revoke such registration and found no evidence or clarification provided by the Income Tax Department regarding the source of this power. In the absence of any proof of revocation, the court intervened and set aside the order requiring a pre-deposit. The decision resulted in the removal of any attachment orders issued, thereby safeguarding the petitioner's interests.