2023 (11) TMI 696 - AT - Income Tax

Bar Association registration denied under sections 12AA/12AB for failing mandatory Gujarat Public Trust Act registration under Rule 17A(2)(c)

The ITAT Surat dismissed the assessee's appeal challenging denial of registration under sections 12AA/12AB. The Bar Association failed to obtain mandatory ... Registration under section 12AA/12AB - requirement of certified copy of registration under Rule 17A(2)(c) - condonation of delay - prematurity of application for registration - discretion and procedure of the Commissioner in granting/refusing registrationCondonation of delay - Delay of 26 days in filing the appeal was condoned and the appeal admitted for hearing on merits. - HELD THAT: - The Tribunal found that the delay in filing the appeal before it was not mala fide or deliberate but arose because the Managing Committee members whose unanimous decision was necessary were unavailable due to professional engagements. On the facts and circumstances, and having regard to the bona fide pursuit of the appeal by the assessee-association, the Tribunal held that sufficient cause was shown and condoned the delay, thereby permitting adjudication on merits. [Paras 2, 4]Delay of 26 days condoned and appeal admitted for hearing on merits.Registration under section 12AA/12AB - requirement of certified copy of registration under Rule 17A(2)(c) - prematurity of application for registration - discretion and procedure of the Commissioner in granting/refusing registration - Application for registration could be refused because the assessee had not furnished the certified copy of registration as required by clause (c) of sub rule (2) of Rule 17A, and in absence of such registration the application was premature and not amenable to merits examination. - HELD THAT: - The Tribunal observed that Rule 17A was substituted with effect from 01.04.2021 and that clause (c) of sub rule (2) requires the applicant to furnish certified copy of registration with the appropriate authority (registrar of companies, registrar of firms/societies, or registrar of public trusts) as the case may be. Since the assessee/Bar Association was not registered with any such statutory authority and no certified registration document was furnished, the application was held to be premature. The Tribunal treated the pending application under the regime of section 12AB and held that the primary condition of being registered with the competent authority was not fulfilled; consequently, the Commissioner was justified in rejecting the application without proceeding to examine the objects and activities on merits. [Paras 6, 10, 11]Application for registration under section 12AA/12AB rejected as premature for non furnishing of certified registration under Rule 17A(2)(c).Discretion and procedure of the Commissioner in granting/refusing registration - The Commissioner did not exceed jurisdiction in reconsidering the matter and passing a fresh speaking order; reliance on earlier Tribunal directions did not preclude the Commissioner from requiring compliance with statutory conditions. - HELD THAT: - The Tribunal considered the assessee's contention that the Commissioner exceeded his jurisdiction in the fresh order notwithstanding the earlier direction of the Tribunal. It found that the Commissioner had followed the Tribunal's direction by giving opportunity and by examining the matter afresh. The Commissioner was entitled to insist on compliance with the statutory conditions of Rule 17A(2)(c). The precedents cited by the assessee concerning excess of jurisdiction were not found apposite on the facts. [Paras 11]Findings of the Commissioner upheld; no excess of jurisdiction in passing the fresh order refusing registration.Final Conclusion: The Tribunal condoned the delay in filing the appeal but found no merit in the challenge to the Commissioner's refusal of registration: the application was premature for want of certified registration as required by Rule 17A(2)(c), the Commissioner acted within jurisdiction in passing a fresh order, the assessee's grounds are rejected, and the appeal is dismissed while granting liberty to apply afresh upon compliance with statutory registration requirements. Issues Involved:1. Delay in filing the appeal.2. Rejection of application for registration under section 12AA of the Income Tax Act, 1961.3. Compliance with Rule 17A and Section 12AA requirements.Summary:1. Delay in Filing the Appeal:The appeal was filed with a delay of 26 days. The assessee attributed this delay to the unavailability of some office bearers due to professional engagements, which delayed the decision-making process. The Tribunal found no mala fide or deliberate delay and condoned the delay, allowing the appeal to be heard on merit.2. Rejection of Application for Registration under Section 12AA:The assessee, a Bar Association, applied for registration under section 12AA on 09.02.2018. The Commissioner of Income Tax (Exemptions) [CIT(E)] rejected the application on 28.12.2018, citing the failure to submit a copy of the registration certificate evidencing the creation of the trust/institution. The Tribunal had previously set aside this order and directed the CIT(E) to examine the objects and activities of the assessee and pass a speaking order.3. Compliance with Rule 17A and Section 12AA Requirements:Upon reconsideration, the CIT(E) again rejected the application, stating that the assessee failed to provide a certified copy of registration with any competent authority, such as the Charity Commissioner or Registrar of Societies. The CIT(E) emphasized that Rule 17A and Section 12AA require such documentation to establish the creation of a trust or institution. The Tribunal upheld this decision, noting that the assessee did not fulfill the primary condition of registration under any statutory authority, making the application premature.Conclusion:The Tribunal dismissed the appeal, agreeing with the CIT(E) that the assessee did not meet the necessary conditions for registration under section 12AA. The Tribunal granted the assessee the liberty to apply for fresh registration upon complying with the statutory registration requirements. The appeal was dismissed, and the order was pronounced in open court on 12/10/2023.