Order denying Registration u/s.12AA without verification is not permissible, the Hyderabad Bench of the Income Tax Appellate Tribunal (ITAT)has held as above.
M/s. Society for Economic Development, the assesseechallenged the order dated 30.09.2019 passed by the CIT(E), Hyderabad rejecting therequest for grant of registration u/s. 12A of the Income Tax Act, 1961.
The assessee e-filed application in Form No.10A seeking registration u/s. 12A of the Act on 30.03.2019. The learned CIT(E) noted thatundue benefit has been given to President Smt.Kranthi and Treasurer Mr Ramesh Raja have been given salaries of Rs. 6 lacs and Rs.4,80,000/- per annum respectively.
Further,society has reimbursed their mobile bills and no attendance register nor any appointment letter was produced to explain the genuineness of the salary paid to them.There was a violation of the provision of section 13 of the I.T.Act for which, the assesseewas not eligible for registration u/s. 12A of the Act.
It was contended by the assessee that they are looking after 10 centres and the salary paid to them was commensurate with their qualification and the area of operation. Further argued that the cash withdrawals made were utilized for payment of salary and various other expenses and there was no violation of section.40A(3) of the I.T. Act. Shri SolgyJosatKottaram, counsel for the revenue relied on the order by CIT(E).
In light of the arguments advanced by Shri Narayana, P.S., the Counsel for the assessee, it was observed that the issue has not been properly appreciated by the CIT(E) while denying registration u/s.12AA of the I.T.Act.
A Coram of Shri Rama Kanta Panda, Accountant Member and Shri Laliet Kumar, Judicial Member held that “the matter requires a revisit to the file of the PCIT for deciding the issue afresh and bythe law after giving due opportunity of being heard to the assessee”. The appeal filed by the assesseewas allowed for statistical purposes.
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