C I T vs. GARMENT EXPORTERS ASSOCIATION

ITA/711/2008HC RajasthanRJHC02020170200818 May 20165 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the requirement to submit audited accounts along with the application for registration under Section 12AA of the Income Tax Act is directory, not mandatory. The Court noted that the Tribunal found the defect regarding audited accounts to be unnecessarily pointed out, as their submission was not a mandatory condition precedent. The High Court relied on the judgments of the Madhya Pradesh High Court in CIT Vs. Devradhan Madhavlal Genda Trust, Punjab and Haryana High Court in CIT Vs. Shahzedanand Charity Trust, and Calcutta High Court in CIT Vs. Hardeodas Agarwalla Trust, which held that the requirement of audited accounts is directory. Since the non-submission of audited accounts was not a mandatory defect, the application could not be considered defective on that ground. Therefore, the registration should be effective from the date the application was initially submitted. The High Court found no error in the Tribunal's order and dismissed the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax, Jaipur-II, Jaipur, appealed against an order dated 29.02.2008 passed by the Income Tax Appellate Tribunal, Jaipur Bench. The appeal concerned the effective date of registration granted to the assessee, Garment Exporters Association of Rajasthan, under Section 12AA(a)(ii) of the Income Tax Act, 1961. The Revenue contended that registration should be effective from the date defects in the application were cured, not from the initial submission date. The primary defect cited was the non-submission of audited accounts with the initial application. The assessee argued that the application was complete and the audited accounts were not a mandatory prerequisite for the initial submission.

What were the issues?

1. Whether the registration granted under Section 12AA(a)(ii) of the Income Tax Act, 1961, should be effective from the date of submission of the application or from the date when alleged defects, specifically the non-submission of audited accounts, were cured? Assessee's Contention: The application for registration was complete in all respects when submitted. The absence of audited accounts was not a condition precedent for submission, and the defect was unnecessarily pointed out. The Tribunal's finding that the audited accounts were not mandatory was supported by judgments from the Madhya Pradesh High Court (CIT Vs. Devradhan Madhavlal Genda Trust), Punjab and Haryana High Court (CIT Vs. Shahzedanand Charity Trust), and Allahabad High Court (CIT Vs. Sri Baldeoji Maharaj Trust). Revenue's Contention: As per Section 12AA(a)(ii) of the Income Tax Act, registration can be taken from the date of a complete application. If an application has defects that are cured later, the registration should be effective from the date the defects are removed, not relate back to the defective submission date. The Tribunal committed an illegality by allowing registration from the submission date despite the defect of not submitting audited accounts, citing Gujarat High Court in HeeraLal Bhagwati Vs. Commissioner of Income Tax.

Which sections of the Income-tax Act were involved?

Section 12AA(a)(ii)

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH JAIPUR Judgment D.B. Income Tax Appeal No.711/2008 Commissioner of Income Tax, Jaipur-II, Jaipur Vs. Garment Exporters Association of Rajasthan Date of Judgment ::: 18.05.2016

HON'BLE MR. JUSTICE

M.N. BHANDARI

HON'BLE MR. JUSTICE J.K. RANKA Mr. Nikhil Simlote on behalf of Mr. RB Mathur, for the appellant-revenue. Mr. Sandeep Taneja, for the non-appellant. By this appeal, a challenge is made to the order of Income Tax Appellate Tribunal, Jaipur Bench, Jaipur (in short “the Tribunal”) dated 29.02.2008. Learned counsel for the appellant-revenue Learned counsel appearing for the assessee- appellant-revenue, effective date of application the application submitted by the non-appellant cannot be said to be defective. The registration should have been allowed from the date the application was submitted and not from the date when alleged defects in the application were cured. The Tribunal and the revenue have not pointed out any other defect in the application than for filing of the audited accounts. The issue raised herein is covered by the judgments supra.

5 In the light of the aforesaid, we do not find it to be a case of relating back of the date of registration from the date of its filing. The application was filed without any defect and the audited accounts were submitted later on because submission of audited accounts along with the application was not mandatory. In the light of aforesaid discussion, we find no error in the order passed by the Tribunal. Accordingly, appeal is dismissed. (J.K. RANKA),J (M.N.BHANDARI),J sunita/32 All corrections made in the judgment/order have been incorporated in the judgment/order being e-mailed. Sunita Kanwar Jr.P.A.

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