The following points have to be observed in connection with Registration of Eligible Entity under Section 12AA of the Income Tax Act, 1961:
(01) The due reasonable opportunity of being heard properly has to be provided to the applicant as per Subsection (1) of Section 12AA of the Income Tax Act, 1961. As per provisions of Section 12AA(1) “no Order under Sub-Clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard”.
(02) If the Registered or Speed Post Mail has been received back by the Official-Sender as “undelivered to the addressee”, the same must either be notified/published or attempted to deliver personally through Notice Server.
(03) Straightaway rejecting the application will be most unfair either under the pretext that the application was getting barred by limitation of completion of six months or merely basing on the reports of the AO (Assessing Officer or Assisting Officer) without knowing the facts and merits of the case on case to case basis. Because, the act of assessing by the AO could be carried out as & when the assessee files its “Return of Income”.
(04) While making ex-parte decisions on any file or taking any decision in the absence of party, the department must atleast examine the information/documents/MoA submitted by the Applicant along with Application in Form No.10A. Because, at the stage/time of Registration under Section 12AA of the Income Tax Act, just the presence of certain essential clauses in “MoA” has to be verified. In the case of Jaipal Singh Sharma Trust Vs CIT in ITA No.6475 of 2014 the Hon’ble ITAT Delhi Bench in its Judgment dated 29-10-2015 has held that the “CIT not authorized to verify charitable activities of trust while granting registration u/s 12AA”.
(05) The Order is deemed to be passed when it was communicated to the assessee within the period of six months. The Order of any authority could not be said to be passed unless it was in some way communicated or published. It was not enough if the order was made, signed and kept in file. To make the Order complete and effective, it should go beyond the control of the authority for any possible effect or modification.
(06) In the case of “CIT vs. Society for the Promotion Of Education, Adventure Sport & Conservation Of Environment” the Supreme Court of India has held that the Allahabad High Court has taken the right view that once an application is made under the said provision and in case the same is not responded to within six months, it would be taken that the application is registered under the provision of Section 12AA of the Act. [Vide the copy of the Judgment of the Supreme Court of India, in Civil Appeal No. 1478 of 2016 [@ Special Leave Petition (C) No. 9705 OF 2009].