2021 (2) TMI 648 - HC - Income Tax

Deemed approval of application u/s 12A - application u/s 12A not decided within a period of six months - HELD THAT - Looking into the substantial question of law and after hearing of the learned counsel for the parties as the factum of submission of application has not been considered by the Tribunal, it is the assessee who has established that he has submitted an application under Section 12A of the Act and therefore, the Tribunal has erred in law and facts in accepting the genuineness of application. Resultantly, the matter is remanded back to the Tribunal and the parties shall be free to place all documents and shall be free to put forth their contentions in respect of the aforesaid issue. Parties shall appear before the Tribunal on 15.02.2021.

Summary

Issues:
1. Application for exemption under Sections 10(23C)(iiiab), 12A, and 80G of the Income Tax Act, 1961.
2. Deemed approval of application under Section 12AA.
3. Validity of application submission without the existence of the office of CIT, Belagavi.
4. Tribunal's error in accepting the genuineness of the application under Section 12A.

Analysis:
1. The case involved an appeal arising from the Income Tax Appellate Tribunal's order regarding exemption applications filed by an educational institution. The institution, Visveswaraya Technological University, applied for exemptions under Sections 10(23C)(iiiab), 12A, and 80G of the Income Tax Act. While the institution was granted exemptions under Section 80G for specific periods, the dispute arose concerning the application under Section 12A.

2. The Tribunal accepted the institution's contention that there was a deemed approval of the application under Section 12A as it was not decided within the stipulated time frame. However, the Department challenged this decision by presenting documents indicating discrepancies in the application submission process. The Department argued that the application bore the seal of an office that did not exist at the time of submission, raising doubts about the authenticity of the application.

3. The High Court, after considering the submissions and the failure of the Tribunal to address the submission process, concluded that the Tribunal erred in accepting the genuineness of the application under Section 12A. The Court emphasized the importance of verifying the submission details and remanded the matter back to the Tribunal for a thorough review. The parties were directed to present all relevant documents and arguments before the Tribunal on a specified date.

4. The Court left other issues open for further consideration and allowed the Department to file a fresh appeal after the Tribunal's decision. The appeal was disposed of, and any pending applications were also resolved accordingly. The judgment highlighted the need for a detailed examination of application submissions and the significance of verifying the authenticity of documents in such cases to ensure compliance with the Income Tax Act.