SOUTH GUJARAT INFORMATION TECHNOLOGISTS ASSOCIATION,SURAT V. THE INCOME TAX OFFICER, ( EXEMPTION) WARD, SURAT , SURAT

ITA 887/SRT/2024

AI Insights

The case involves the South Gujarat Information Technologists Association appealing against the decision of the Commissioner of Income Tax (Appeals), which upheld the denial of exemption under section 11 of the Income-tax Act for the assessment year 2012-13. The Central Processing Centre had initially denied the exemption due to non-submission of a registration certificate under section 12AA. The Association argued that their registration under section 12A was deemed granted as per the Supreme Court's judgment in Society for Promotion of Education, due to the inaction on their application within the prescribed time. The Tribunal agreed with the Association, citing various precedents that support the rectification of an assessment order based on subsequent judicial decisions.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 473275 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. Society for Promotion of Education, Allahabad, B.V.K. Seshavataram vs. CIT, Backbone Tarmet NG JV vs. ITO, DCIT vs. N.R. Wires (P.) Ltd., Kil Kotagiri Tea & Coffee Estates Co.Ltd. vs. ITO, Sirsa Industries vs. CIT, ACIT vs. Saurashtra Kutch Stock Exchange Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: HIREN R.VEPARI
• Keywords: Set aside; Benefit of exemption
• Section: 250; 154; 11; 12AA; 12A

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.887/SRT/2024 Assessment Year: (2012-13) (Physical Hearing) South Gujarat Information Technologists Associations, 407, Lalbhai Contractor Complex, Near Parsi Library, Nanpura, Surat - 395001 Vs. Income Tax Officer (Exemption) Ward, Surat, Room No.105, 1st Floor, Aayakar Bhavan, Anavil Business Centre, Adajan Hazira Road, Adajan, Surat- 395007 èथायीलेखासं./जीआइआरसं./PAN/GIR No: AABAS 8982 P (Appellant) (Respondent) Appellant by Shri Hiren R. Vepari, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 12/12/2024 Date of Pronouncement 26/12/2024 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 20.06.2024 by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [in short, ‘CIT(A)’] for the assessment year (AY) 2012-13. 2. The grounds of appeal raised by the assessee are as under: “(1) The learned CIT(A) ought to have allowed appeal particularly when the order was rectifiable u/s 154. (2) The learned CIT(A) ought to have allowed benefit exemption u/s 11 particularly when the deduction u/s 12A was deemed to have been granted. 2 ITA No.887/SRT/2024/AY.2012-13 South Gujarat Information Technologists Association (3) The above grounds are prejudiced to one another. (4) The appellant craves leave to add, alter or vary any of the grounds of appeal.” 3. The appeal filed by assessee is barred by one day in terms of provisions of section 253(3) of the Act. The learned Authorized Representative (ld. AR) submitted that the CIT(A) has passed order u/s 250 of the Act on 20.06.2024. The appeal before this Tribunal was required to be filed within 60 days, i.e. on or before 19.08.2024. However, the assessee filed the appeal on 20.08.2024. It is submitted that last day to file appeal was on Raklshabandhan i.e., 19.08.2024 and office of the counsel was closed. Hence, it could be filed only on 20.08.2024. Therefore, there is a delay of one day. The ld. AR requested to condone the delay in the interest of justice. 4. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue submitted that the Bench may decide the issue. 5. We have heard both the parties on this preliminary issue and note that there is a delay of only one day. Since office of AR was closed on 19.08.202, appeal was filed on 20.08.2024. Hence, we find that assessee was neither negligent nor deliberate in filing the present appeal before the Tribunal. Since the delay is only one day and appellant has given proper reasons, we condone the delay and admit the appeal for hearing. 6. Brief facts of the case are that the assessee filed its return of income for AY.2012-13 and claimed the benefit of exemption u/s 11 of the Act. The Central Processing Centre, Bangalore (in short, ‘CPC’) denied the claim on the 3 ITA No.887/SRT/2024/AY.2012-13 South Gujarat Information Technologists Association ground of non-submission of copy of the registration certificate u/s 12AA and raised a demand of Rs.5,20,360/- on 11.01.2014. The assessee filed a rectification application u/s 154 of the Act on the ground that the assessee- trust applied for a registration u/s 12A on 12.05.2007. After a lapse of more than six months, the Department had not taken any action. Therefore, the registration was deemed to have been granted in light of the judgement of Hon’ble Supreme Court in case of CIT vs. Society for Promotion of Education, Allahabad (67 taxmann.com 264). The assessee contested that in AY.2012-13, it should have been treated as deemed registered u/s 12A of the Act and the demand of the same was a mistake apparent from record. The CIT(A) observed that the decision of the Hon’ble Supreme Court in case of Society for Promotion of Education (supra) was delivered on 16.02.2016 and it was not a part of the ‘record’ for AY 2012-13 when the returns of the assessee was processed. Hence, the denial of the claim of the assessee u/s 11 cannot be called a mistake apparent from the record. The application u/s 154 of the assessee was rightly rejected by the CPC. The CIT(A) accordingly dismissed appeal of the assessee. 7. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Ld. AR of the assessee submitted a paper book and relied upon various decisions in favour of assessee. The ld. AR submitted that the appeal is in a narrow sphere whether a subsequent judgment of the Hon’ble Supreme Court which settles the law constitutes a “mistake apparent from law” within the meaning of section 154 of the Act. The issue relates to 4 ITA No.887/SRT/2024/AY.2012-13 South Gujarat Information Technologists Association whether the order u/s 143(1)(a) ought to be rectified and the appellant be deemed to be registered u/s 12A of the Act, if its application for registration is not disposed of within six months, thereby giving the benefit of Section 11 of the Act in the light of decision in case of Society for Promotions of Education (supra). He referred to all details which are in the paper book and submitted that the assessee is an association subsisting for promotion of information technology in the region of South Gujarat. He has relied on the following decisions (i) B.V.K. Seshavataram vs. CIT (1994) 75 Taxman 491 (AP), (ii) Backbone Tarmet NG JV vs. ITO (2024) 161 taxmann.com 704 (Ahmedabad-Trib.), (iii) DCIT vs. N.R. Wires (P.) Ltd. (2023) 154 taxmann.com 434 (Raipur-Trib.), (iv) Kil Kotagiri Tea & Coffee Estates Co.Ltd. vs. ITO (1989) 42 Taxman 33 (Kerala), (v) Sirsa Industries vs. CIT (1983) 15 Taxman 306 (Pnj. & Har.) and (vi) ACIT vs. Saurashtra Kutch Stock Exchange Ltd. (2008) 173 Taxman 322 (SC). 8. On the other hand, the Ld. Sr. DR for the Revenue supported the order of lower authorities. He submitted that the order of Hon’ble Supreme Court could be applied prospectively. 9. We have heard both the parties and perused the materials available on record. We have deliberated on the case laws relied upon by Ld. AR of the assessee. The return of income was filed by the assessee on 31.08.2012 for AY 2012-13. The said return was processed on 11.01.2014 wherein claim of exemption u/s 11 was not allowed and demand of Rs.5,28,360/- was raised. The assessee filed rectification petition u/s 154 before ITO(Exemption) which 5 ITA No.887/SRT/2024/AY.2012-13 South Gujarat Information Technologists Association was rejected on 11.01.2018. The CIT(A) dismissed the appeal filed by assessee against the order of ITO(Exemption). The Ld. AR submitted that it has filed application for registration before the CIT-II, Surat on 12.05.2007 which has not yet been disposed off. Therefore, in the light of the decision of Hon’ble Supreme Court in case of Society for Promotion of Education (supra) registration was deemed to have been granted to assessee. The CIT(A) did not accept the contention of assessee because the decision of the Hon’ble Supreme Court was delivered on 16.02.2016 and was not a part of record when return was processed by CPC. The Ld.AR has relied on various decisions cited supra to contend that the subsequent decision of Hon’ble Supreme Court can validly form basis for rectifying an order of assessment u/s 154 of the Act. Such view has been taken by Hon’ble Andhra Pradesh High Court in case of B.V.K. Seshavataram (supra). We also find that ITAT Raipur in case of N.R.Wires (P.) Ltd. (supra) held that since Tribunal’s order was not in conformity with subsequent decision of Hon’ble Supreme Court in Checkmate Services (P.) Ltd. vs. CIT (2022) 143 taxmann.com 178, said order suffered from mistake apparent from record and was to be rectified. The Hon’ble Kerala High Court in case of Kil Kotagiri Tea & Coffee Estates Co. Ltd. (supra) held that an order of assessment, based upon an interpretation or application of law which is ultimately found to be wrong in light of judicial pronouncements rendered subsequently, discloses a mistake apparent from record. The Hon’ble Supreme Court in case of Saurashtra Kutch Stock Exchange Ltd. (supra) held that it is well settled that a judicial decision acts 6 ITA No.887/SRT/2024/AY.2012-13 South Gujarat Information Technologists Association retrospectively. According to Blackstonian theory, it is not the function of the Court to pronounce a ‘new rule’ but to maintain and expound the ‘old one’. In other words, the Judges do not make law; they only discover or find the correct law. The law has always been the same. If a subsequent decision alters the earlier one, it (the later decision) does not make a new law. It only discovers the correct principle of law which has to be applied retrospectively. To put it differently, even where an earlier decision of the Court operated for quite sometime, the decision rendered later on would have retrospectively effect, clarifying the legal position which was earlier not correctly understood. In view of the above authoritative pronouncements, we are of the view that the CIT(A) was not correct in dismissing the appeal of assessee. We, therefore, set aside the order of CIT(A) and direct the AO to allow benefit of exemption u/s 11 of the Act. This ground of assessee is allowed. 9. In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 26/12/2024 Sd/- Sd/- (PAWAN SINGH) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 26/12/2024 SAMANTA 7 ITA No.887/SRT/2024/AY.2012-13 South Gujarat Information Technologists Association Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat "