Petition Dismissed: Society's Object Alteration Invalidates Tax Registration Without Commissioner Notification.

Allahabad Agricultural Institute And Another Versus Union Of India And Others.

Allahabad Agricultural Institute And Another Versus Union Of India And Others. - [2007] 291 ITR 116, 211 CTR 26, 163 TAXMANN 67 Issues:
1. Change in objects of the society and impact on registration under section 12A of the Income-tax Act, 1961.
2. Authority of the Income-tax Officer to determine the survival of registration.
3. Power of the Commissioner to cancel registration under section 12AA(3).
4. Prima facie case for grant of an interim order in appeal.
5. Guidelines for granting or denying interim stay of recovery during appeal.
6. Requirement of reasons for rejecting stay application under section 220(6) of the Act.

Analysis:

1. The petitioners altered the objects in the memorandum of association after obtaining registration under section 12A of the Income-tax Act. The Income-tax Officer held that the altered objects were not intimated to the Commissioner, leading to the conclusion that the registration granted to the petitioners would not survive after the change in objects. The petitioners argued that only the Commissioner could cancel registration under section 12AA(3), but the court held that a wholesale change in objects without intimation would render the registration invalid.

2. The court clarified that the power to cancel registration lies with the Commissioner under section 12AA(3) when the actual activities of the trust or institution deviate from the registered objects. In this case, the alteration in objects by the petitioners without immediate intimation to the Commissioner invalidated the registration, as the very foundation for registration was removed voluntarily by the petitioners.

3. The court emphasized that the immediate intimation required by the assessee to the Commissioner is crucial to keep records updated. Failure to provide such intimation after altering objects prevents the petitioners from continuing to utilize the registration. The court declined to interfere in the assessing authority's decision regarding the survival of registration due to the significant change in objects without intimation.

4. Regarding the grant of an interim order in appeal, the court noted that the appellate authority had not yet granted an interim order. The petitioners needed to demonstrate the similarity between the original and altered objects to establish a prima facie case for the grant of an interim order. The court highlighted that alterations in objects are presumed to be necessary, and the burden lies on the petitioners to prove the similarity between the old and new objects.

5. The court discussed the guidelines for granting or denying interim stay of recovery during an appeal. It stated that recovery should remain in abeyance if there is a prima facie case and the assessed income substantially exceeds the returned income. The court clarified that recovery should not be stayed solely based on a higher assessed income without a prima facie case.

6. Lastly, the court addressed the requirement of reasons for rejecting a stay application under section 220(6) of the Act. It emphasized that the lack of detailed reasons in the order rejecting the stay application was a technicality and not sufficient to grant an interim stay. The petitioners were required to demonstrate a substantial prima facie case in their favor to justify stalling the demand during the appeal, which they failed to do.

In conclusion, the court dismissed the writ petition as the petitioners did not establish a prima facie case for relief, and the alterations in objects without intimation invalidated the registration under section 12A of the Income-tax Act.