ROTARY EDUCATION SOCIETY,RAIGAD vs. COMMISSIONER OF INCOME TAX (EXEMPTION), PUNE

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ITA 116/PUN/2021Status: DisposedITAT Pune22 June 2022AY 2021-224 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the assessee had indeed submitted an explanation which the CIT(Exemption) overlooked. Therefore, the impugned order denying registration was set aside.

What were the facts?

The assessee, an educational society, applied for registration under Section 12AA. The CIT(Exemption) denied registration, observing a large surplus and lack of activity in the technical college section, and concluded the assessee offered no explanation.

What were the issues?

Whether the CIT(Exemption) properly considered the explanation submitted by the assessee before denying registration under Section 12AA.

Which sections of the Income-tax Act were involved?

Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH, ‘B’ PUNE

Before: SHRI R.S. SYAL & SHRI S.S. VISWANETHRA RAVI

For Appellant: Shri Rohan Dedhia
For Respondent: Shri Sardar Singh Meena

आदेश / ORDER

PER R.S. SYAL, VP :

1.

This appeal by the assessee is directed against the order dated 29-03-2021 passed by the CIT(Exemption), Pune denying registration u/s.12AA(1)(b)(ii) of the Income-tax Act, 1961 (hereinafter also called ‘the Act’).

2.

Briefly stated, the facts of the case are that the assessee is an educational society, which was granted registration under the Bombay Public Trust Act, 1950 on 16.8.1991. It filed application for registration u/s.12AA of the Act. Certain information was called for by the ld. CIT(Exemption), which was duly submitted.

The ld. CIT(E) perused the financial statements of the last four years and noticed that there were no transaction in the Technical College section. He further observed that there was huge surplus in the education society activity. The assessee was called upon vide notice dated 09-02-2021 to explain as to how such huge surplus was generated and why the activity should not be considered as ‘business activity’. The ld. CIT(E) proceeded with the matter as if the assessee had no explanation to offer, after recording that the assessee did not submit any explanation, and rejected the application for grant of registration. Aggrieved thereby, the assessee has approached the Tribunal.

3.

After considering the rival submissions and going through the relevant material on record, it is observed that the assessee was called upon by the ld. CIT(E) to show as to how there was huge surplus generated and why the activity should not be considered to be ‘business activity. In response to this, the assessee submitted an explanation, whose copy has been placed on record. The ld. CIT(E) did not go through such submission and simply decided the matter by holding that “The applicant has not submitted any explanation in this regard. In absence of any explanation from the applicant in this regard, there is no alternative but to presume that the applicant has no explanation to offer”. In view of the fact that the assessee filed the explanation, which skipped the attention of the ld. CIT(E), we are satisfied that the impugned order cannot be upheld. We, therefore, set aside the impugned order and send the matter back to the ld. CIT(E) with a direction to decide the question of registration afresh as per law after allowing reasonable opportunity of hearing to the assessee.

It is expected that the ld. CIT(E) will expeditiously dispose of the application for the registration.

4.

In the result, the appeal is allowed for statistical purposes. Order pronounced in the Open Court on 22nd June, 2022.

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