By TIOL News Service

AHEMDABAD, DEC 26, 2016: THE issue is - Whether withdrawal of registration u/s 12A for subsequent A.Ys, can be a ground to initiate reopening of previous A.Ys wherein the concerned institution was allowed exemption u/s 11 on basis of the said registration. NO IS THE VERDICT.

Facts of the case: The assessee is a development authority. During the years under consideration, there was already a registration granted in favour of the assessee u/s 12A(a). Therefore, while filing return of income for AY 2003-04 and 2004-05, assessee had claimed exemption which was allowed and granted by AO while finalizing the assessment. Thereafter vide an order, the DIT(E), cancelled the registration granted u/s 12A(a) retrospectively with effect from 01.04.2002. That thereafter beyond the period of 4 years from the relevant AY, AO had reopened the assessment for AY 2003-04 and 2004-05 u/s 147 solely on the ground that registration u/s 12A(a) had been withdrawn with effect from 01.04.2002 and therefore, the assessee was not entitled to deduction u/s 11 and therefore, the income of assessee was to be computed in normal commercial manner.

On appeal, the HC held that,

++ During the years under consideration i.e. for AY 2003-04 and 2004-05, the assessee claimed the deduction u/s 11 on the basis of the registration u/s 12A(a) accordingly. It is not in dispute that at the relevant time when the assessee claimed the deduction u/s 11, the registration u/s 12A(a) was in existence and in force. Considering the reasons recorded to reopen the assessment for AY 2003-04 and 2004-05, it appears that the assessment for AY 2003-04 and 2004-05 is sought to be reopened solely on the ground that subsequently in the year 2010, the registration u/s 12A(a) has been withdrawn retrospectively with effect from 01.04.200. Considering the fact that at the relevant time and during the years under consideration the registration u/s 12A(a) in favour of assessee was in force and in existence and accordingly the assessee claimed the deduction u/s 11, which came to be granted / allowed by the AO. Therefore it cannot be said that there was any failure on the part of the assessee in not disclosing the true and correct facts necessary for assessment.

(See 2016-TIOL-3103-HC-AHM-IT)