ITAT Kolkata Allows Appeal, Reinstates Exemption Under Income-tax Act

The Appellate Tribunal ITAT Kolkata allowed the assessee's appeal, overturning the denial of exemption under section 11 of the Income-tax Act. The Tribunal held that the cancellation of registration under section 12AA(3) by the CIT was not valid as registration under section 12A cannot be withdrawn using section 12AA(3). Relying on a Delhi High Court decision and previous Tribunal rulings, the Tribunal reinstated the registration under section 12A, leading to the quashing of the denial of benefits by the AO and CIT(A). The assessee's appeal was granted, and the lower authorities' decisions were reversed.

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Issues:
- Denial of exemption u/s. 11 of the Income-tax Act due to cancellation of registration under section 12AA(3) by CIT, Central-III, Kolkata.
- Appeal challenging the order of CIT(A) confirming the addition made by AO.

Analysis:
The judgment by the Appellate Tribunal ITAT Kolkata involved an appeal by the assessee against the order of CIT(A) denying exemption u/s. 11 of the Income-tax Act. The denial was based on the cancellation of registration under section 12AA(3) by CIT, Central-III, Kolkata. The assessee raised three grounds in the appeal, emphasizing that the CIT(A) should have considered the legality of the assessment and the facts specific to the relevant assessment year. The Tribunal referred to its previous orders in the assessee's case for other assessment years, where similar issues were allowed in favor of the assessee. The Tribunal highlighted that the power to cancel registration under section 12AA(3) does not extend to registrations granted under section 12A of the Act. It emphasized that the registration granted under section 12A cannot be withdrawn or cancelled using the provisions of section 12AA(3).

The Tribunal further cited a decision by the Hon'ble Delhi High Court, which clarified that the power to cancel registration granted under section 12A was limited to registrations granted under specific clauses until an amendment in 2010. Following the Delhi High Court decision and previous Tribunal rulings, the Tribunal held that the cancellation of registration by CIT invoking section 12AA(3) was not in accordance with the law. Consequently, the Tribunal vacated the CIT's order and restored the registration granted to the assessee-trust under section 12A of the Act. As a result, the denial of benefit u/s. 11 of the Income-tax Act by the AO and confirmed by CIT(A) was quashed.

Given the restoration of registration under section 12A, the Tribunal allowed the assessee's appeal, as there were no valid grounds for denying exemption u/s. 11 of the Act. The judgment concluded with the allowance of the assessee's appeal, overturning the orders of the lower authorities.

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