2021 (4) TMI 990 - AT - Income Tax

Denying u/s. 11 exemption for want of Section 12AA registration - HELD THAT - We notice from a perusal of the Revenue's paper book that the CIT(E), Hyderabad has filed his clarification that the assessee's returns/acknowledgments upto A.Y. 2005-06 bear registration number u/s. 12A 2B-ACCTS-718-10A-VOL-AI-0665 which could not be traced despite the best of the efforts made from the departmental authorities' side. The fact also remains that this is not the Revenue's case that there has been any change in assessee's activity undertaken all along. We therefore reverse the DCIT's order under challenge in the instant 12AA registration process for want of jurisdiction and restore Section 12AA issue back to the CIT(Exemptions) for his appropriate adjudication as per law within three effective opportunities of hearing. It is made clear that assessee shall be at liberty to file all the relevant evidence not only qua to its activities carried out throughout but also that pertaining to the exemption relief granted in the preceding assessment years. This assessee's appeal is accepted for statistical purpose in above terms.

Summary

Issues:
1. Denial of Section 11 exemption for lack of Section 12AA registration.
2. Jurisdiction of DCIT in dealing with Section 12AA registration.
3. Validity of curative application for registration.
4. Restoration of Section 11 exemption appeals to CIT(A) for final outcome.

Analysis:

1. The batch of seven cases involved a single assessee, M/s. Association of Indian Management Schools, challenging orders related to A.Ys. 2010-11 to 2017-18 under the Income Tax Act, 1961. The primary issue in six appeals was the denial of Section 11 exemption due to the absence of Section 12AA registration, as per the decision in UP Forest Corporation Vs. DCIT [297 ITR 1] (SC).

2. The DCIT's jurisdiction in handling Section 12AA registration was questioned. The DCIT's order in one appeal (ITA No. 49/Hyd/2016) was challenged for rejecting the curative application for registration, claiming lack of jurisdiction. The Tribunal held that only the CIT(Exemptions) had the authority to accept such applications under the legislative scheme.

3. The contention that the assessee was already registered under Section 12AA in Bangalore and thus the curative application was not maintainable was dismissed. The Tribunal noted discrepancies in the registration number and activities of the assessee, leading to the reversal of the DCIT's order. The matter was referred back to the CIT(Exemptions) for appropriate adjudication within three hearings.

4. Regarding the Section 11 exemption appeals, the Tribunal decided to send them back to the CIT(A) for a final decision based on the outcome of the Section 12AA registration issue. This step aimed to avoid conflicting findings and any delays were not to be attributed to the department authorities. The appeals were treated as allowed for statistical purposes.

In conclusion, the Tribunal's judgment addressed the issues of Section 12AA registration, jurisdiction of the DCIT, validity of curative applications, and restoration of Section 11 exemption appeals, ensuring a fair and comprehensive adjudication process for the assessee.