Facts of the Case

The assessee, High Court Bar Association, Allahabad, filed an application seeking registration under Section 12AA. The Association, established in 1958, claimed to function as a mutual body of practicing advocates, providing welfare benefits, promoting legal education, and maintaining a law library.

The CIT(Exemptions) issued detailed queries regarding the genuineness of activities and compliance with statutory requirements. Meanwhile, the assessee had filed a revision petition under Section 264 against an earlier assessment order for AY 2017-18.

Issues Involved

  1. Whether the assessee had withdrawn its application for registration under Section 12AA.
  2. Whether the CIT(E) was justified in rejecting the application without examining it on merits.
  3. Whether the application should be reconsidered after proper inquiry into objects and activities.

Petitioner’s (Assessee’s) Arguments

  • The Association did not withdraw its application but only requested that proceedings be kept in abeyance pending the revision petition.
  • The reply was misinterpreted by the CIT(E).
  • As a mutual organization of advocates, it claimed eligibility for exemption and registration.
  • Rejection without examining merits was unjustified.

Respondent’s (Revenue’s) Position

The CIT(E) treated the assessee’s communication as a request to withdraw the application and rejected the registration accordingly.

Court Order / Findings (ITAT)

  • The assessee’s reply was ambiguously worded but did not expressly withdraw the application.
  • The request was merely to defer consideration until disposal of the revision petition.
  • The CIT(E) rejected the application in limine without examining the merits or conducting inquiry into objects and activities as required under Section 12AA.
  • Such rejection was not sustainable in law.

Important Clarification

  • Registration under Section 12AA requires examination of the genuineness of activities and objects of the institution.
  • Ambiguous communication cannot be treated as withdrawal of an application unless expressly stated.
  • Authorities must follow principles of natural justice and statutory procedure.
  • Tribunal did not adjudicate on merits of eligibility, leaving all issues open for fresh decision.

Link to download the order - https://itat.gov.in/public/files/upload/1643094789-ITA%2024%20PDF.pdf

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