2023 (8) TMI 1521 - AT - Income Tax

Registration cancellation under section 12AA upheld for non-genuine activities and non-compliance with IT Act provisions

Shri Ram Murti Anchal Memorial Educational Society Versus CIT (Exemptions), Lucknow

ITAT Lucknow dismissed the appeal challenging cancellation of registration under section 12AA. The tribunal held that the assessee did not approach with ... Cancellation of assessee’s registration u/s 12AA - AO held that the assessee was neither entitled for exemption u/s 10(23C) nor u/s 11 of IT Act - HELD THAT:- Appellant assessee before us has not approached ITAT with clean hands. Secondly, from the foregoing, it is also inferred that the activities of the appellant assessee are not genuine within the meaning of section 12AA(3) of IT Act. Thirdly, the assessee applicant is in violation of section 13(1)(c) of IT Act and is consequently hit by section 12AA(4)(a) read with section 13(1)(c)(ii) of IT Act. Fourthly, the assessee has not complied with Income Tax Act (not only by entering into collusive arrangements to evade recovery of tax dues, but also by not filing returns of income u/s 139 of IT Act, as is evident from perusal of impugned order dated 21/01/2021 of learned CIT(E). Therefore, the assessee, on strict and literal interpretation of Income Tax Act, is hit by section 12AA(4)(b) of the IT Act. When the appellant does not have clean hands, it does not deserve liberal consideration of the appellate forum. The appellant only gets the relief on the basis of strict and liberal interpretation of law in the light of facts and circumstances. We have already held in foregoing paragraph that the activities of the assessee are not genuine within the meaning of section 12AA(3) of the IT Act. We have further held that the assessee is hit by section 12AA(4)(a) read with section 13(1)(c)(ii) of IT Act, and by section 12AA(4)(b) of IT Act. Issues Involved:1. Invocation of Section 12AA(3) for cancellation of registration.2. Passing of a single order for multiple assessment years.3. Non-consideration of assessment orders for AY 2010-11, 2011-12, and 2012-13.4. Alleged improper handling of adjournment requests.5. Lack of fresh investigation before cancellation of registration.6. Legal sustainability of the assessment order.Detailed Analysis:Issue 1: Invocation of Section 12AA(3) for Cancellation of RegistrationThe learned CIT(E) canceled the registration under Section 12AA of the IT Act, citing the following reasons:- The assessee society was not filing its returns regularly.- A demand of Rs. 19,92,860/- was raised during assessment proceedings.- Bank accounts were opened in the name of a member of the society.- Incomplete returns that did not properly state the section under which exemption was claimed.The Tribunal found that the assessee had not approached with clean hands, as it had not paid tax dues and had employed subterfuge to evade recovery of tax dues. The Tribunal concluded that the activities of the assessee were not genuine, violating Section 13(1)(c) and Section 12AA(4) of the IT Act.Issue 2: Passing of a Single Order for Multiple Assessment YearsThe appellant argued that a single order for three distinct assessment years was erroneous. The Tribunal found no merit in this argument, stating that there is no legal requirement for separate orders for each assessment year, especially when similar issues are involved.Issue 3: Non-Consideration of Assessment Orders for AY 2010-11, 2011-12, and 2012-13The assessee claimed that the CIT(E) did not consider the assessment orders for these years. The Tribunal noted that the assessee did not file returns on its own and only did so in response to notices. The assessment orders revealed that the assessee was neither entitled to exemption under Section 10(23C) nor under Section 11 of the IT Act.Issue 4: Alleged Improper Handling of Adjournment RequestsThe appellant contended that the CIT(E) erred in handling adjournment requests. The Tribunal found that reasonable opportunities were provided to the assessee and that the CIT(E) acted within her rights.Issue 5: Lack of Fresh Investigation Before Cancellation of RegistrationThe appellant argued that no fresh investigation was conducted before canceling the registration. The Tribunal found that there was no legal requirement for fresh investigation when sufficient material was already available.Issue 6: Legal Sustainability of the Assessment OrderThe Tribunal dismissed this ground as general in nature and found no merit in it, based on the decisions on other grounds.Conclusion:The Tribunal dismissed all grounds of appeal on merits and also noted that the appeal was infructuous because the assessee had claimed benefits under Section 10(23C), making the registration under Section 12AA irrelevant. The appeal was dismissed in its entirety.Order Pronounced:The appeal was dismissed, and the order was pronounced in the open court on 31/08/2023.