2023 (2) TMI 594 - AT - Income Tax

Successful Appeal Against Registration Rejection Under Income Tax Act

The appeal was filed against the order of the CIT(E) under Section 12AA of the Income Tax Act for the assessment year 2021-22, challenging the rejection ... Exemption u/s 11 - registration u/s. 12AA was rejected in terms of the new provision of the Act, 12AB - HELD THAT:- It is not in dispute that the assessee is holding the valid registration and the approval under Section 12A and 12AA of the Act was in effect but it was only for the intervening period as the registration is already available to the assessee effective from A. Y. 2022-23. The bench is of the considered view that in absence of any adverse remark on the activity of the trust merely on technical ground for this intervening period the registration cannot be canceled for this period and a benefit of having registered trust cannot be denied to the assessee when there is specific time extension limit given by the Hon’ble Apex Court and TOLA for this period. The assessee is having sufficient cause for not replying to the notices issued by the Revenue. As regards the contention of the DR we are not considering his prayer to restore to this issue to the file by the ld. CIT(E) as the subsequently the ld. CIT(E) has already granted the registration to the assessee trust and there is no adverse observation by the ld. CIT(E). In light of these facts and circumstances of the case, we see no reason to sustain the order under appeal and in the absence of any controverting finding on record we vacate the order passed by the ld. CIT(E) - Appeal of the assessee is allowed. Issues:- Appeal against order of CIT(E) under Section 12AA of the Income Tax Act for the assessment year 2021-22.- Rejection of application seeking registration under Section 12AA.- Grounds raised by the assessee challenging the legality of the order.- Dispute regarding the application filed by the assessee under Form 10A.- Validity of existing registration under Section 12AA and 80G.- Interpretation of provisions under Finance Act, 2020 and Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.- Impact of Covid-19 related extensions on the limitation period.- Arguments presented by the assessee and the Revenue.- Consideration of the bonafide belief of the assessee and the subsequent registration granted.- Decision on the appeal and the outcome.Detailed Analysis:1. The appeal was filed against the order of the CIT(E) for the assessment year 2021-22 under Section 12AA of the Income Tax Act. The assessee challenged the rejection of their application seeking registration under Section 12AA, citing that the order was bad in law and deserved to be quashed.2. The dispute arose from the confusion regarding the application filed by the assessee under Form 10A. The assessee argued that despite existing valid registrations under Section 12AA and 80G, the application was rejected, leading to the appeal.3. The assessee contended that the existing registrations were still in force and had not been canceled or withdrawn. They highlighted the provisions of the Finance Act, 2020, and the subsequent extension granted by the Taxation and Other Laws Act, 2020, impacting the requirement for fresh registration.4. The assessee's arguments emphasized the bonafide belief held regarding the application process, especially in light of the Covid-19 related extensions of limitation periods. They presented detailed submissions and affidavits supporting their case.5. The Revenue objected to the assessee's plea, arguing for a remand back to the CIT(E) for compliance with the details called for in the application. However, the bench noted the valid registration held by the assessee and the subsequent approval granted, leading to the decision to allow the appeal.6. The bench concluded that, considering the absence of adverse remarks and the specific time extensions granted, the registration could not be canceled for the intervening period. The decision favored the assessee, vacating the order passed by the CIT(E) dated 04.03.2021.7. The judgment highlighted the importance of the bonafide belief of the assessee, the impact of legal provisions, and the specific circumstances of the case in reaching the decision to allow the appeal.