Case Law Details

Case Name : Memorial Medical Association Vs CIT (ITAT Mumbai)
Appeal Number : ITA No. 2957/Mum/2006
Date of Judgement/Order : 18/03/2009
Related Assessment Year :
Courts : All ITAT (4213) ITAT Mumbai (1410)

RELEVANT PARAGRAPH

7. Under section 12AA1(a) of the Act, the CIT is empowered to call for information to satisfy himself about the genuineness of activities of trust /institution. The Commissioner may make such inquiries as he thinks fit for the purpose. Under section 12AA1(b) of the Act, after having satisfied about the objects of Trust/institution and genuineness of its activities, CIT shall pass an order registering the Trust/Institution or refusing to register the Trust/Institution. Under section 122AA(2) of the Act, the order is to be passed by the CIT within 6 months from the end of month in which application was received. Under section 12AA(3) of the Act, where registration has been granted and if the CIT is satisfied that Trust/Institution is not genuine or that activities are not in conformity with objects of Trust, he shall pass order canceling the registration of such Trust.

10. The requirement of section 12AA of the Act is that the order granting or refusing the registration is to be passed by the CIT within six months from the date of the application moved by the assessee. In the decision of the Special Bench of the Tribunal in bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust vs. CIT (supra), it has been held that `Unless the statute provides for exceptions, orders must be passed by statutory authorities in accordance with the time limit set by the law. Sub-section (2) of 12AA of I.T. Act does not admit of any exception to the Rule ………. Therefore, it is mandatory for the CIT to dispose off the application for registration of trust within six months from the end of the month in which the application was filed.

11. In the facts of the case before the Special Bench in Bhagwad Swarup Shrir Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust vs. CIT (supra), it was noted that no action was taken on the application moved by the assessee till the time limit for passing the order was about to come to an end. The Tribunal further noted that when the inquiry was started at a late stage many things had to be inquired into and the time limit prescribed was given a go bye. The Tribunal thus held that `it will be incongruous to hold that conducting an inquiry into the claim for registration is an important exercise of the power whereas passing of the order within the time limit is not and it can be done at any time’. In the facts of the case before us, the CIT vide his letter dated 17-5-2005 in reply to the application filed by the assessee on 22-11-2004 i.e., towards end of the period of six months for the first time raised certain inquiries. Admittedly the said inquiries were not complied with in-time by the assessee but that does not justify the time taken by the CIT in initiating the inquiry. The statute provides sufficient time to conduct enquirers into the claim for registration and the said procedure for registration including the inquiry is to be completed within the time limit provided under the Act.

14. Following the ratio laid down by the Special Bench in Bhagwad Swarup Shri Shri Devraha Baba Memorial Shri Hari Parmarth Dham Trust vs. CIT (supra), as the CIT in the present case has failed to initiated the inquiry in-time to complete the process of grant of registration within the stipulated period of six months and as the order has not been passed within the time limit prescribed, the application is deemed to have been granted. We accordingly hold that the order of CIT refusing the registration is a nullity and is quashed. The registration is deemed to have been granted to the assessee. The grounds of appeal raised by the assessee are thus allowed.

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Category : Income Tax (24919)
Type : Judiciary (9830)
Tags : ITAT Judgments (4392) Trust (80)

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