Non-disposal of Section 12AA application within six months not results in deemed grant of registration

CIT  Vs Awadh Bihari Ram Lok Vikas Sansthan (Allahabad High Court- Lucknow Bench)

(i) non-disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under section 12AA(2) of the Income Tax Act, 1961 would not result in deemed grant of registration ; and

(ii) the judgment of the Division Bench of this court in Society for the Promotion of Education, Adventure Sport and Conservation of Environment (supra) does not lay down the correct position of law.

FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT

Heard Sri Alok Mathur and Sri Manish Mishra for the appellant; None has appeared on behalf of the respondent, though notice was already issued by registered post acknowledgment due and we have perused the office report dated 25-4-2017. Service upon the respondent is deemed sufficient, therefore, we proceed to hear and decide this appeal after hear­ing learned counsel for the appellant.

2. This appeal under section 260A of the Income Tax Act, 1961 (hereinafter referred to as “Act, 1961”) has arisen from the judgment and order dated 12-11-2013 passed by the Income Tax Appellate Tribunal, Luc-know Bench, Lucknow (hereinafter referred to as ‘Tribunal”) in Income Tax Appeal No. 628/LKW/2011 relating to the assessment year (herein after referred to as “AY”) 2008-09.

3. This appeal was admitted on the following substantial questions of law :–

“(1) Whether on the facts and circumstances of the case the Income Tax Appellate Tribunal was justified in applying the time limit of six months provided in section 12AA(2) in a case where the order under section 12AA is to be passed in second round in pursuant to Income Tax Appellate Tribunal’s directions ?

(2) Whether non-disposal of application for registration by grant­ing or refusing registration before the expiry of six months as pro­vided under section 12AA(2) of the Income Tax Act, 1961 would result in deemed grant of registration ?

(3) Whether in the facts and circumstances of the case and the Hon’ble Income Tax Appellate Tribunal was correct in granting deemed registration under section 12AA without appreciating the facts that power to grant or refuse registration is statutory power of Commissioner under section 12AA ?

(4) Whether in the facts and circumstances of the case the Income Tax Appellate Tribimal has erred in substituting its own satisfaction in place of the satisfaction of the Commissioner of income-tax as pro­vided under section 12AA of the Income Tax Act, 1961, thereby exceeding its jurisdiction ?”

4. We find that the aforesaid questions are squarely covered by a Full Bench judgment of this court in the case of CIT v. Muzafar Nagar Deve­lopment Authority (2015) 372 ITR 209 (AU) ; MANU/UP/0207/2015, wherein the following questions were referred to for consideration by the Full Bench (page 211 of 372 ITR)  :–

“(i) Whether the non-disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under section 12AA(2) of the Income Tax Act, 1961 would result in deemed grant of registration ? and

(ii) Whether the Division Bench judgment of this court in the case of Society for the Promotion of Education, Adventure Sport and Conservation of Environment v. CIT MANU/UP/0144/2008 ; (2008) 216 CTR (All) 167; (2008) 5 DTR (All) 329 ; (2015) 372 ITR 222 (All) (Appex.) holding that the effect of non-consideration of the applica­tion for registration within the time fixed by section 12AA(2) would be deemed grant of registration, is legally correct.”

5. The court has answered the aforesaid questions as under (page 221 of 372 ITR)  :–

“(i) non-disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under section 12AA(2) of the Income Tax Act, 1961 would not result in deemed grant of registration ; and

(ii) the judgment of the Division Bench of this court in Society for the Promotion of Education, Adventure Sport and Conservation of Environment (supra) does not lay down the correct position of law.”

6. In view of aforesaid judgment rendered by the Full Bench, the view taken by the Tribunal otherwise cannot be sustained. The aforesaid ques­tions are answered in favour of the appellant and against the assessee. The appeal is accordingly allowed. The judgment of the Tribunal dated 12-11-2013 is hereby set aside. We direct the Commissioner to pass appropriate order on the application for registration filed under section 12AA of the Act, 1961, if not already passed, within one month and if it has already been passed, communicate to the assessee and the Revenue.