2022 (1) TMI 1379 - HC - Income Tax

High Court dismisses revenue's appeal on Income Tax Act interpretation, upholding Tribunal decision.

Commissioner of Income Tax (Exemption), Kolkata Versus Sarlaben Bhansali Charities Trust

The Calcutta High Court dismissed the revenue's appeal under Section 260A of the Income Tax Act, 1961, concerning the interpretation of Section 263 and ... Revision u/s 263 - cancellation of registration for the year when the cancellation order was not available to the AO while passing the order u/s 147/143(3) - HELD THAT:- Tribunal had allowed the assessee’s case following the decision in the case of Commissioner of Income Tax(exemption) Vs. Mukesh Bhansali Charities Trust [2019 (3) TMI 2027 - CALCUTTA HIGH COURT] allowed the assessee’s appeal wherein the Tribunal upheld circular No. 1 of 2011, dated 6th April, 2011 issued by the CBDT and held that Section 12AA(3) is applicable only from the assessment year 2011-12. We find that the substantial questions of law raised in this appeal are covered against the revenue. Issues:1. Interpretation of Section 263 of the Income Tax Act, 1961 regarding the timing of action following cancellation of registration.2. Consideration of the effect of cancellation of registration granted under Section 12AA of the Income Tax Act, 1961.Analysis:1. The appeal before the Calcutta High Court under Section 260A of the Income Tax Act, 1961 raised the issue of whether the Income Tax Appellate Tribunal erred in law by holding that action under Section 263 cannot be taken after the cancellation of registration, especially when the cancellation order was not available to the Assessing Officer during the assessment proceedings under Section 147/143(3) of the Act. The Court noted that the Tribunal had based its decision on a previous case involving Mukesh Bhansali Charities Trust, where the Tribunal upheld a circular issued by the CBDT and interpreted Section 12AA(3) to be applicable only from the assessment year 2011-12. The Court further highlighted that a similar appeal by the revenue in the Mukesh Bhansali Charities Trust case was dismissed earlier, indicating that the substantial questions of law in the present appeal were decided against the revenue.2. The second issue involved the Tribunal's decision on the cancellation of registration granted under Section 12AA of the Income Tax Act, 1961. The Court examined whether the cancellation could be retroactively effective from April 01, 2009, considering that the registration in question was under Section 12AA and not Section 12A of the Act. The Court did not find merit in the revenue's arguments and upheld the Tribunal's decision, ultimately dismissing the appeal and answering the substantial questions of law against the revenue. Consequently, the stay application related to the appeal was also dismissed with the main appeal.In conclusion, the Calcutta High Court, comprising Hon'ble Justice T.S. Sivagnanam and Hon'ble Justice Ananda Kumar Mukherjee, dismissed the revenue's appeal under Section 260A of the Income Tax Act, 1961, based on the interpretation of Section 263 and the effect of cancellation of registration under Section 12AA. The Court's decision was influenced by previous rulings and interpretations, leading to the dismissal of the appeal and the related stay application.