The CBDT has issued Instruction No. 16 of 2015 dated 06.11.2015 in which it has taken a stern view of the fact that the time limit of six months specified in s. 12AA(2) of the Income-tax Act 1961 for passing an order granting or refusing registration under s. 12AA are not being adhered to by the Commissioners of Income Tax (Exemptions). The CBDT has directed the Chief Commissioners to monitor that the Commissioners are adhering to the time limit and to take suitable administrative action in the case of laxity
Instruction No. 16 /2015
F.No.197/38/2015-ITA.1
Government of India
Ministry of Finance
Department of Revenue
(Central Board of Direct Taxes)
(ITA-1 Division)
North Block, ITA.1 DivisionDated, the 6th November, 2015
To
All the Principal Chief Commissioners of Income-tax
All the Chief Commissioners of Income-tax
Chief Commissioner of Income-tax (Exemptions)
All Directors General of Income-taxSir/Madam,
Sub:- Following the prescribed Time limit in passing order u/s 12AAof the Income-tax Act, 1961.
Sub-section (2) of Section 12AA of the Income-tax Act 1961 prescribes that every order granting or refusing registration under clause (b) of sub-section (I) of that Section shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) or clause (aa) of the sub-section (1) thereof. Thus while processing the application u/s 12AA of the Act, the time limit of six months has to be adhered to by the Commissioner of Income Tax (Exemptions). However, it has been brought to the notice of the Board that the said time limit has not been observed in some cases.
2. The undersigned is directed to convey that the aforesaid time limit of six months is to be strictly followed by the Commissioner of Income Tax (Exemptions) while passing order u/s 12AA. The CCIT (Exemptions) may monitor the adherence of prescribed time limit and initiate suitable administrative action in case any laxity in adhering to the same is noticed.
(Deepshikha Sharma)
Director to the Government of India
As far as I know, there is hardly any case where the CBDT has taken action on its executive for not following their instructions or circulars. On the other hand what is happening day in day out is gross violation of the instructions and circulars. Even otherwise, is it required for a warning that action would be taken if the provisions are not followed. Cannot the Board initiate action on all those officers who has not passed orders and allowed the Tribunals or courts to take a view that they are deemed to have been passed. All IRS come together like birds of same feather. Only if some one is a promotee may be action would be taken. There is another instance where provisions of law is not followed when it comes to levy of penalty. Thought the provision is amended to make it mandatory to pass it within one year from the end of the financial year in which orders of the first appellate authority is received. However officers continue to pass them within six months after receipt of the order of Tribunal following the old provision. What action the Board has taken. There are several instances of violation of the Board’s instructions on grant of stay. Even where the issue is covered in favour of the tax payer stay is not granted on the ground that such order in favour is not in assessee’s case. It is high time the Board opens its eyes else there could be revolution from tax payers.
The Supreme Court also had clarified in its order dated 16-02-2016 that if the application for registration u/s12 AA is not disposed of within 6 months, it would be deemed to have been granted the registration vide its order in CIVIL APPEAL NO. 1478 of 2016 [@ SPECIAL LEAVE PETITION (C) NO. 9705 OF 2009]. Will the CBDT initiate action against that particular CIT who did not oblige the provisions of the IT Act? To my doubts it would not definitely not.
I agree with you, Sir. Repeated circulars, observed more in breach than compliance, give a poor picture.
Rule 12AA(2) of the IT Rules reads as follows:-
” Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) 4[or clause (aa) of sub-section (1)] of section 12A.]”
The issue of non disposal of applications within six months by CIT has been considered by Hon. Allahabad HC in case of CIT vs. Muzafar Nagar Development Authority (Allahabad High Court – Full Bench) and it has observed as under in it’s order
“S. 12AA: Non disposal of an application for registration before the expiry of six months as provided u/s 12AA (2) would not result in deemed grant of registration. Assessee will have to file a Writ to compel CIT to consider application
Providing that an application should be disposed of within a period of six months is distinct from stipulating the consequence of a failure to do so. Laying down a consequence that an application would be deemed to be granted upon the expiry of six months can only be by way of a legislative fiction or a deeming definition which the Court, in its interpretative capacity, cannot create. That would be to rewrite the law and to introduce a provision which advisedly the legislature has not adopted.”
Filing writs in Hon. HC by the assessees, in my view, is not a desirable option as the courts are already overburdened with crores of pending cases and assessee would have to incur substantial cost in terms of expenses and time. It would be better if CBDT amends rule 12AA(2) to provide that if the application is not disposed off within six months from end of month of receipt, the application would be deemed to be granted. This would strengthen repeated professions by MOF/ CBDT that it is having non-adversarial approach towards tax payers.
Is it necessary for the CBDT to issue instructions like this where the time limits had been specified in the Incometax itself. If the CBDT comes across with any such violations why does not the CBDT initiate disciplinary proceedings against the Commissioners of Incometax (Exemption)? Such reiteration of circulars creates an unwanted image among those Commissioners (Exemption).