The Income Tax Appellate Tribunal (ITAT), Surat Bench, has recently, in an appeal filed before it, held that there can be no deemed registration, if the income tax department is not deciding registration application u/s 12AA, within a period of six months.
The aforesaid observation was made by the Surat ITAT, when an appeal was preferred before it by the assessee Domadia Raiyaben Muljibhai Charitable Trust, as directed against the order of the Commissioner of Income Tax (Exemptions), Ahmedabad ( CIT(E)), dated 19/06/2019.
The principal ground of the assessee’s appeal being the question as to whether, in the absence of any order granting or refusing registration in view of the provision of Section 12A(2), the order for registration u/s 12AA is deemed to have been passed on expiry of the six months from the end of the month in which the application is received by CIT , the brief facts of the case pertaining to the issue in question were that, the assessee was claiming itself to be registered as a public charitable trust, which was set up on 13/01/2010.
The applicant Trust filed an application for registration under Section 12AA of the Income Tax Act, 1961 on 13/12/2018, and was granted registration under Section 12AA ,vide order dated 19/06/2019 w.e.f. 13/12/2018 i.e. from the date of application. Still, aggrieved by the action of CIT(E) in granting the registration from the date of application, the assessee trust has filed the present appeal before the Surat ITAT Tribunal with the underlying question of the appeal as has been mentioned above.
With Shri Rushi Parekh, the AR for the assessee submiting that initially the assessee trust had filed an application for its registration on 29/12/2011 before the CIT(E), Surat, and that along with the said registration application, the assessee had also furnished a certificate of the Assistant Charity Commissioner granted on 22/03/2011, the AR contented that no intimation of any kind was received nor any detail was sought from the assessee, and further that the assessee on safer side had moved afresh application on 13/12/2018 before the CIT(E), Ahmedabad for granting registration under Section 12AA of the Income Tax Act.
It was also submitted by the AR that the registration was granted from the date of application which is 13.12.2018 i.e. from A.Y. 2019-20, and that it was during the intervening period i.e. from A.Y. 2011-12 to 2018-19, that the Assessing Officer had scrutinized and passed the assessment orders. He added that in the A.Y. 2016-17, the Assessing Officer also disallowed the expenditure claimed to be exempt ,on the ground of non-registration under Section 12AA of the Income Tax Act. The ld.
With the AR for the assessee further submitting that since the assessee had filed an application in December, 2011, the assessee was under bonafide belief that they will be granted registration from A.Y. 2012-13, and further that the newly amended Section 12A(2) allows granting of registration only from the financial year in which registration sought to apply and not the back date since inception of trust by condoning the delay, he added that however, the case of assessee is in difference and hence that the case of assessee never falls under the clutches of delay , the assessee having applied for the registration since inception.
On the other hand, Shri Ashok B. Koli , the CIT-DR for the revenue, submitted that there was no infirmity or illegality in granting the registration under Section 12AA of the Income Tax Act, vide order dated 19/06/2019. He added that the Assessee trust had filed an application under Form 10A on 23/12/2018 and that the CIT(E) had granted registration from the date of application, and therefore that the assessee is eligible for registration only from the date of application and not for retrospective date i.e. the date of inception of the assessee trust.
He submitted that the Supreme Court in a recent decision in Harshit Foundation Vs CIT , had held that there is no provision of deemed registration in the Income Tax Act, and hence that the assessee cannot claim, on the basis of an application allegedly filed on 29.12.2011, for deemed registration or registration from retrospective date, thus praying for the dismissal of the assessee’s appeal.
Hearing the contentions of either sides and perusing the materials available on record, the ITAT Bench comprising of Dr. Arjun Lal Saini, the Accountant Member, and Pawan Singh, the Judicial Member observed :
“The case law relied by ld. CIT-DR for the revenue in Harshit Foundation Vs CIT ,wherein the Hon’ble Supreme Court has held that there is no specific provision in the Income Tax Act that by non-deciding the registration application under Section 12AA within a period of six months there shall be a deemed registration. Thus, the ratio of this decision is directly applicable on the facts of the present case.”
“Even otherwise, the law declared by the Hon’ble Apex Court is a binding precedent by virtue of Article 141 of the Constitution of India”, the ITAT panel added.
Thus, dismissing the assessee’s appeal, the Surat ITAT concluded :
“We do not find any merit in the grounds of the appeal raised by assessee, and in the result, this appeal of assessee is dismissed”.
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