HINDUSTAN CHAMBER OF COMMERCE,CHENNAI vs. DIT, CHENNAI

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ITA 670/CHNY/2017Status: DisposedITAT Chennai23 August 20175 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal condoned the delay, finding sufficient cause for the delay due to the ongoing Writ Petition. On merits, the Tribunal quashed the cancellation of exemption, stating that the revenue had not established that the assessee's activities were not genuine or not in accordance with its objects.

What were the facts?

The assessee filed an appeal before the ITAT with a significant delay of 1857 days. The delay was attributed to the assessee prosecuting a Writ Petition before the Madras High Court challenging the order of the Director of Income-tax (Exemptions).

What were the issues?

Whether the delay in filing the appeal can be condoned and whether the cancellation of exemption under Section 12AA was justified.

Which sections of the Income-tax Act were involved?

Section 12AA

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘ C’ BENCH : CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI S.JAYARAMAN

आदेश / O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

1.

This appeal of the assessee is directed against the order of the Director of Income-tax (Exemptions), Chennai-34 dated 15.12.2011 cancelling the exemption u/s.12AA of the Income-tax Act,1961.

2.

At the outset, it was noticed that there was a delay of 1857 days in filing the appeal before this Tribunal. The assessee filed an ITA No.670/Mds./2017 :- 2 -:

affidavit dated 20th March, 2017 for condonation of delay of 1918 days.

Shri G.Seetharaman, the ld.Authorised Representative of assessee submitted that the assessee filed a Writ Petition before the Madras High Court challenging the correctness of the impugned order of Director of Income-tax (Exemptions). The Writ petition was admitted and still it is pending for adjudication. According to Authorized Representative of assessee, right procedure is to file an appeal before the Tribunal and not to file Writ petition before the Madras High Court.

Therefore, the assessee filed this appeal before the Tribunal. Since the assessee was prosecuting the Writ petition, there was a delay of 1918 days in filing the appeal, therefore, the delay may be condoned.

3.

On the contrary, Shri Sailendra Mamid, ld. Departmental Representative submitted that the assessee admittedly filed a Writ Petition and the same is pending for adjudication. Therefore, the assessee intentionally failed to file the appeal before this Tribunal.

Hence, there was no reasonable cause on the part of the assessee in not filing the appeal in the prescribed time.

4.

We have heard the ld. Representative for the assessee and the ld. Departmental Representative. As rightly submitted by the ld.

ITA No.670/Mds./2017 :- 3 -: representative for the assessee, the order of Director of Income-tax (Exemptions), Chennai vide order dated 15.12.2011 is appealable before this Tribunal. Moreover, the assessee is vigilant in prosecuting the matter. The assessee filed a Writ petition promptly and prosecuting the same continuously. Still, the Writ petition filed before the High Court is pending for adjudication. Therefore, we find that there was sufficient cause for not filing the appeal before this Tribunal within a period of limitation. Therefore, we condone the delay and admit the appeal.

5.

Now coming to the merit of the appeal, the Director of Income-tax (Exemptions) cancelled the registration granted to the assessee u/s.12AA(3) of the Act with effect from 01.04.2009. We have gone through the provisions of the section 12AA(3) of the Act, which reads as follows:-

“(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently the Principal Commissioner or Commissioner is satisfied that the ITA No.670/Mds./2017 :- 4 -: activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution :

Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.”

It is obvious from the above provision that when the Trust or institution was found to be not genuine or not being carried out in accordance with the object of the Trust or Institution, the Principle Commissioner of Income-tax or Commissioner, as the case may be, may cancel the registration.

5.1 In this case, it is nobody’s case that the assessee-trust is not a genuine one or it is not carrying out its activity in accordance with its objects. Therefore, the cancellation of registration by the Director of Income-tax (Exemptions), Chennai is not justified. The ld. representative for the assessee has also placed reliance on the Order of Tribunal in the case of M/s.Madras Chamber of Commerce and Industry Vs. ACIT in & 880/Mds./2016 vide order dated 05.02.2016 and also CBDT Circular No.21 of 2016 dated 27th May,

ITA No.670/Mds./2017 :- 5 -:

2016. Since it is not the case of the Revenue that the activities of the assessee-trust are not carried out in accordance with the objects of the Trust, we are unable to uphold the order of the Director of Income-tax (Exemptions). Accordingly, the same is quashed.

6.

In the result, the appeal of the assessee stands allowed.

Order pronounced on 23rd August, 2017, at Chennai.

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