2019 (9) TMI 1175 - AT - Income Tax

Exemption u/s. 11 denied - registration granted u/s. 12AA withdrawn - HELD THAT - Now this order of ld. CIT(E) u/s. 12AA(3) of the IT Act cancelling the registration earlier granted u/s. 12AA is already set aside by the tribunal and such Tribunal order is upheld by Hon'ble Karnataka High Court and therefore, we feel it proper to restore the matter back to the file of AO to decide the issue on merit regarding the eligibility of assessee for exemption u/s. 11 of the IT Act. We order accordingly. We want to make it clear that the AO should pass necessary order as per law after providing adequate opportunity of being heard to assessee. We do not make any comment regarding the allowability of exemption to the assessee u/s. 11 of the IT Act.

Summary

Issues:
1. Condonation of delay in filing the appeal before the CIT(A)
2. Eligibility for exemption under section 11 of the Income Tax Act

Condonation of Delay in Filing the Appeal:
The appeal was filed by the assessee against the order of the CIT(A) for Assessment Year 2011-12. The grounds raised by the assessee included opposition to the CIT(A)'s order, error in confirming the assessment order, rejection of the application for condonation of delay, and failure to appreciate written submissions. The CIT(A) rejected the application for condonation of delay but proceeded to decide the issue on merit, implying that the delay might have been condoned. The Tribunal noted this and did not delve further into the delay issue.

Eligibility for Exemption under Section 11:
The AO had rejected the assessee's claim for exemption under section 11 of the IT Act due to the cancellation of registration under section 12AA. However, the Tribunal had set aside the order cancelling registration, which was upheld by the High Court. As a result, the Tribunal directed the matter back to the AO to decide on the assessee's eligibility for exemption under section 11. The Tribunal emphasized that the AO should provide a fair opportunity for the assessee to be heard and make a decision in accordance with the law. The Tribunal did not comment on the actual allowability of exemption under section 11 but ordered the matter to be reconsidered by the AO.

In conclusion, the appeal filed by the assessee was allowed concerning the issues of condonation of delay and eligibility for exemption under section 11. The Tribunal's decision was based on the Tribunal's earlier order setting aside the cancellation of registration under section 12AA and the subsequent confirmation of this decision by the High Court. The Tribunal emphasized the importance of a fair hearing and lawful decision-making by the AO in determining the assessee's eligibility for exemption under section 11 of the IT Act.