Indore Education and Culture Centre, Kanpur V. Dy. Commissioner of Income Tax-1, Kanpur

ITA 519/LKW/2015

AI Insights

The case involves the Indore Education and Cultural Centre, which appealed against the decision of the learned Commissioner of Income Tax (Appeals) that upheld the Assessing Officer's denial of registration under sections 12A/12AA of the Income Tax Act. The Assessing Officer had initially assessed the total income of the assessee and denied the registration citing violations of section 13 of the IT Act, which pertains to the non-charitable activities of the assessee. The ITAT had previously directed the CIT (Exemptions) to grant registration, but this order was not implemented. The Tribunal's recent decision emphasizes the need for adherence to procedural fairness and the statutory requirements of the Income Tax Act.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 113263 (ITAT-LUCKNOW)
• Duration Of Justice: 7 year(s) 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 30-05-2023
• Assessment Year: 2005-2006
• Appeal Filed On: 20-07-2015
• Other Referred Cases: Karnatka Golf Association Vs. Director of Income tax exemption 275 ITR 80 (AT)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARISH GIDWANI
• Section: 143(3); 12AA

Judgement Text

I.T.A. No.519/Lkw/2015 Assessment year:2005-06 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH ‘B’, LUCKNOW BEFORE SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER I.T.A. No.519/Lkw/2015 Assessment Year:2005-06 Indore Education and Cultural Centre, G-14, Shanti Nagar, Kanpur. PAN:AAATM6983E Vs. Dy.C.I.T.-1, Kanpur. (Appellant) (Respondent) O R D E R PER ANADEE NATH MISSHRA:A.M. (A) In this case the assessment order dated 29/11/2007 was passed by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 (“IT Act” for short) wherein the assessee’s total income was determined at Rs.15,76,358/- (rounded off to Rs.15,76,360/-). While passing the assessment order, the Assessing Officer did not give the assessee benefit of registration u/s 12A/12AA of the IT Act. The relevant portion of the assessment order is reproduced as under: “7. The assessee has claimed that it has applied for grant of registration U/S.12A on 21.03.2003 but no order has been passed on its application and therefore, in view of the judgment of Hon'ble Bangalore Bench of ITAT in the case of Karnatka Golf Association Vs. Director of Income tax exemption 275 ITR 80 (AT), the assessee is entitled for registration on the principle of equity. Appellants by Shri P. K. Kapoor, C. A. Respondent by Shri Harish Gidwani, Sr. D.R. Date of hearing 31/05/2023 Date of pronouncement 01/06/2023 I.T.A. No.519/Lkw/2015 Assessment year:2005-06 2 8. In view of facts discussed from para 1 to 6 it is held that the activities of the assessee were in violation of provisions of section 13 of the IT. Act and it was not running for charitable objects but was providing benefit to the members of executive body or their concerns. Therefore, the assessee is not entitled for the benefit of exemption U/S.12A on a/c. of such violation. It is noteworthy that the assessee society has not been granted registered U/S.12A of the Act.” (B) Aggrieved, the assessee filed appeal in the office of Learned Commissioner of Income Tax (Appeals) [learned “CIT(A)” for short]. Vide impugned appellate order dated 13/05/2015, the learned CIT(A) dismissed the assessee’s appeal; and in doing so the learned CIT(A) also did not give the assessee the benefit of registration u/s 12A/12AA of the IT Act. The present appeal has been filed by the assessee against the aforesaid impugned appellate order of the learned CIT(A). (B.1) At the time of hearing before us, learned A.R. for the assessee drew our attention to order dated 28/07/2017 of Lucknow Bench of the Income Tax Appellate Tribunal (“I.T.A.T.” for short) in I.T.A. No.655/Lkw/2016 directing learned CIT (Exemptions) to pass certificate of registration u/s 12AA within 60 days from the date of passing of the order by the ITAT. Relevant portion of the aforesaid order dated 28/07/2017 of the ITAT is reproduced below: “5. From the perusal of the said section, it is apparent that the Principal CIT is bound to send the copy of the order granting or rejecting registration to the applicant, but in case he passes an order refusing registration to the trust or institution, he is bound to give a reasonable opportunity of being heard to the assessee. In this case, we noted that the Principal CIT neither sent copy of the order to the applicant nor has given any opportunity of hearing to the petitioner. This clearly proves that the Principal CIT-1, Kanpur has simply disposed of the application of the assessee without finding anything contrary to the charitable objects and the genuinity of the activities of the applicant. Not giving opportunity to the assessee of being heard, I.T.A. No.519/Lkw/2015 Assessment year:2005-06 3 which has specifically been provided, in our view, is a serious default on the part of the Principal CIT, Kanpur. This not only violated the principles of natural justice but also clear cut violation of the provisions of the Income tax Act under which he has to work and exercise his powers. It appears that the Principal CIT-1, Kanpur just filed application as if he is lawmaker and provisions of section 12AA(1) of the Act does not have any legal sanctity. In our view, the order so passed by the Principal CIT-1, Kanpur violating the provisions of section 12AA(1) of the Act vitiate the order so passed for filing the application. The CIT (Exemption), Lucknow has simply rejected the application of the assessee, as the application of the assessee has already been disposed by the Principal CIT-1, Kanpur. The order passed by the Principal CIT, Kanpur as well as the CIT (Exemptions), Lucknow, in our view, are invalid and void ab-initio. We, therefore, set aside the order of the CIT (Exemptions), Lucknow and grant registration to the assessee under section 12AA of the Act and direct the CIT (Exemptions), Lucknow to issue certificate for registration under section 12AA of the Act within 60 days from the date of passing of this order.” (B.1.1) Learned A.R. for the assessee further drew our attention that the learned CIT (Exemptions) is yet to give effect to the aforesaid order dated 28/07/2017 of the ITAT. He submitted that the CIT (Exemptions) should be directed to give effect to the aforesaid order dated 28/07/2017 of the ITAT expeditiously and further submitted that the Assessing Officer should be directed to pass fresh assessment order in accordance with law, after providing reasonable opportunity to the assessee, and after the learned CIT (Exemptions) gives effect to the aforesaid order dated 28/07/2017 of the ITAT. (B.2) Learned Sr. Departmental Representative for the Revenue expressed no objection to the aforesaid submissions made by the learned A.R. for the assessee. (B..2.1) In view of foregoing and as representatives of both sides are in agreement with this, we set aside the impugned appellate order dated 13/05/2015 of learned CIT(A) and we direct the learned CIT (Exemptions) I.T.A. No.519/Lkw/2015 Assessment year:2005-06 4 to give effect to the aforesaid order dated 28/07/2017 of ITAT expeditiously and we also direct the Assessing Officer to pass de novo assessment order in accordance with law, after providing reasonable opportunity to the assessee after learned CIT(E) gives effect to the aforesaid order dated 28/07/2017 of ITAT. (D) In the result, the appeal of the assessee stands partly allowed for statistical purposes. (E) Registry is directed to forward a copy of this order to learned CIT (Exemptions). (Order pronounced in the open court on 01/06/2023) Sd/. Sd/. (SUDHANSHU SRIVASTAVA) (ANADEE NATH MISSHRA) Judicial Member Accountant Member Dated:01/06/2023 *Singh Copy of order forwarded to: 1. The appellant 2. The Respondent 3. Concerned Pr. CIT 4. CIT (Exemptions), Lucknow 5. DR. ITAT 6. CIT(A) Assistant Registrar