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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R PER MAHAVIR SINGH, VP: These appeals by the assessee are arising out of the common order of the Commissioner of Income Tax (Appeals) - 2, Madurai vide to 0056/2015-16 dated 27.12.2019. The
- 2 - to 452/Chny/2020 assessments were framed by the ITO (Exemptions), Tirunelveli for the assessment years 2009-10 to 2012-13 u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter ‘the Act’), vide orders dated 19.03.2015 & 20.03.2015.
The only common issue in these four appeals of assessee is as regards to the order of CIT(A) confirming the action of AO in denying the benefit of exemption u/s.11 of the Act during pendency of appeal before Hon’ble High Court of Madras against cancellation of registration u/s.12AA of the Act in appeal proceedings in T.C.A No.149 of 2012.
The ld.counsel for the assessee filed paper-book before us giving the following documents:- Sl.No. Date Particulars 1 24.11.1992 Bye Laws of the Appellant Association 2 12.10.2007 Registration u/s 12AA of the Act w.e.f. A.Y.2007-08 3 16.01.2011 Show Cause Notice by CIT(E) in proposing to cancel registration u/s.12AA 4 20.01.2011 Response to the Show Cause Notice to the CIT(E) against the cancellation order 5 16.05.2011 Order of the CIT(E) u/s 12AA(3) of the Act vide C.No.464/24/CIT-I/07-08 cancelling the registration u/s.12AA 6 16.12.2020 Case Status before the Madras High Court
- 3 - to 452/Chny/2020 7 23.01.2019 Madras High Court in Auro Lab. v. Income-tax Officer, Ward II(4), Range-II, Madurai [2019] 102 taxmann.com 225(Madras)
The ld.counsel for the assessee stated that the assessee was a registered charitable trust u/s.12AA of the Act w.e.f. assessment year 2007-08 and due to order of CIT(Exemptions) u/s.12AA(3) of the Act vide C.No.464/24/CIT-I/07-08 cancelling the registration of trust u/s.12AA of the Act, the AO denied the claim of exemption u/s.11 of the Act. The assessee has moved before Hon’ble High Court of Madras against the cancellation order in TCA No.149 of 2012, which is likely to come up before the Hon’ble Madras High Court. The ld.counsel also relied on one judgment of Hon’ble High Court of Madras in the case of Auro Lab vs. ITO, [2019] 411 ITR 308, wherein it is decided whether the Commissioner has power to cancel registration granted to a trust is applicable retrospectively or not. The Hon’ble High Court of Madras held that there was no inherent power to Commissioner to cancel registration and held in favour of assessee and whether the reopening can be done on the basis of cancellation of certificate of registration at a later date, the Hon’ble High Court in para 22 held as under:- “22.On the fourth and last question as to whether the completed assessment can be reopened on the ground of cancellation of certificate of registration
- 4 - to 452/Chny/2020 at a later/future date, what follows as a sequel to the decisions in the other three questions is an emphatic ‘No’. Courts have categorically held that unless the assessee obtained registration by fraud, collusion or concealment of any material fact, the registration granted can never be alleged to be a nullity. In the case on hand, it is evident that fact of the cancellation of the registration triggered the proceedings and evidently forms the preamble of each of the impugned orders. And clearly, there is no allegation of fraud or misdeclaration on the part of the petitioners and the respondents were candid in confessing that the certificate was granted erroneously. Therefore, reopening the assessment for the past years on account of the cancellation order dated 30.12.2010 in the case of the petitioner by the assessing officer is not permissible under the law and the proceedings issued in AAATA1142P dated 12.08.2011 relating to the assessment year 2004-2005, 2005-2006, 2006-2007, 2007-2008 are liable to be quashed and accordingly quashed. Also, the the assessment order in AAATA1142P dated 29.12.2011 relating to the assessment year 2010-11 disallowing exemptions on the basis of the cancellation order dated 30.10.2010 is liable to be quashed and accordingly quashed.”
On a query from the Bench, the ld.counsel took us through the grounds raised on reopening also and stated that in all the 4 years, reopening is beyond 4 years and original assessment was completed u/s.143(3) of the Act. According to him, the proviso 147 of the Act is directly applicable in the present case. The ld.counsel for the assessee only requested that neither the AO nor CIT(A) has gone into the issue of reopening viz-a-viz the case law of Hon’ble Madras High Court in the case of Auro Lab, supra and the AO can also await for the decision of Hon’ble High Court of Madras in the case of - 5 - to 452/Chny/2020 pendency of appeal against cancellation of registration u/s.12AA of the Act in TCA No.149/2012 filed by assessee and which is likely to be decided soon.
On the other hand, the ld. Senior DR relied on the order of CIT(A) and that of the AO.
After hearing rival contentions and going through the facts of the case, we noted that none of the parties below have examined the aspect of reopening in term of decision of Hon’ble High Court of Madras in the case of Auro Lab, supra and even the assessee’s appeal in regard to cancellation of registration u/s.12AA of the Act in TCA No.149/2012 is pending before Hon’ble High Court of Madras and is likely to be taken up as confessed by ld.counsel for the assessee, the matter can be restored back to the file of the AO to decide (i) on the issue of merits after awaiting for the decision of Hon’ble High Court of Madras in regard to cancellation of registration u/s.12AA of the Act in TCA No.149/2012 and (ii) to re-decide the issue of reopening in the light of decision of Hon’ble High Court of Madras in the case of Auro Lab, supra. In term of the above, the orders of lower authorities in all these four assessment years are set
- 6 - to 452/Chny/2020 aside and matter remanded back to the file of the AO for fresh adjudication as directed above.
In the result, the appeals filed by the assessee in 450, 451 & 452/CHNY/2020 are allowed for statistical purposes.
Order pronounced in the open court on 8th December, 2022 at Chennai.