Petitioner allowed to withdraw Section 12A registration application as existing five-year registration remains valid through 2026-27

Bombay HC allowed petitioner to withdraw application dated 30 September 2022 for registration under Section 12A(1)(ac)(i), rendering the rejection order dated 31 March 2023 inconsequential. Court found the fresh application was unnecessary as petitioner already held valid registration under Section 12A(1)(ac)(ii) read with Section 12AB(1)(a) dated 04 April 2022 for five years (assessment years 2022-23 to 2026-27). HC confirmed the existing registration remains legal and valid through the specified period.

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Issues Involved:
1. Validity of the impugned order dated 31 March 2023.
2. The petitioner's entitlement to the benefit of registration granted on 04 April 2022.
3. The legal implications of "deemed registration" under Section 12AA of the Income Tax Act.

Detailed Analysis:

1. Validity of the Impugned Order Dated 31 March 2023:
The petitioner, a Public Charitable Trust, challenged the order dated 31 March 2023, which rejected their application for registration under Section 12AB of the Income Tax Act. The petitioner argued that the impugned order was passed on a mistaken application made on 30 September 2022, despite the petitioner already having a valid registration granted on 04 April 2022, which was valid for five years. The court found substance in the petitioner's contention that the fresh application was unnecessary and illogical, given the existing valid registration. The primary reason for rejecting the application was deemed invalid and unjustifiable. Consequently, the petitioner was allowed to withdraw the application dated 30 September 2022, rendering the impugned order inconsequential.

2. The Petitioner's Entitlement to the Benefit of Registration Granted on 04 April 2022:
The court acknowledged that the petitioner had been granted registration on 04 April 2022 under Section 12A (1) (ac) (ii) read with Section 12AB (1) (a) of the Act, valid for five years from the assessment year 2022-23 to 2026-27. This registration continued to operate to the petitioner's benefit, and there was no record indicating its invalidity. The court emphasized that the order dated 04 April 2022 remained legal and valid, thereby protecting the petitioner’s interests.

3. The Legal Implications of "Deemed Registration" Under Section 12AA of the Income Tax Act:
The petitioner cited the Supreme Court's decision in Commissioner of Income-tax, Kanpur v. Society for Promn. of Edn., Allahabad, which held that non-response to an application for registration within six months would result in "deemed registration." However, another Supreme Court decision in Harshit Foundation Sehmalpur Jalalpur Jaunpur v. Commissioner of Income-tax took an opposite view, stating that non-response would not lead to deemed registration. The court noted that the former decision, being a judgment on an appeal, declared the law under Article 141 of the Constitution and thus held precedence. The court also referenced the principles from Kunhayammed and Ors. Vs. State of Kerala & Anr., which clarified that an order refusing special leave to appeal does not attract the doctrine of merger and does not substitute the order under challenge.

Conclusion:
The court allowed the petitioner to withdraw the application dated 30 September 2022, rendering the impugned order dated 31 March 2023 inconsequential. The registration granted on 04 April 2022 remained valid and continued to benefit the petitioner. The court kept all contentions open for any future actions by the Department and disposed of the petition accordingly.

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