2022 (4) TMI 1522 - AT - Income Tax

Exemption u/s 11 - registration u/s 12A cancelled - CIT-A held petitioner has not rendered its services directly to the farmers but is rendering its services directly to its clients / agents who are engaged in the trading of the certified seeds with profit motive and therefore its activities are not for the advancement of any other object or general public utility and hence not for the charitable purpose u/s 2(15) - HELD THAT - We find that the assessee inspite of several opportunities provided has failed to appear and pursue the case. We therefore note that the assessee is not interested in pursuing the case before the Tribunal. In view of the above we find no infirmity in the order of the Ld.CIT(A) and no interference is required. Appeal of the assessee is dismissed.

Summary

Issues:
1. Appeal against CIT(A) order for A.Y. 2016-17 regarding exemption u/s 11 of the Income Tax Act.
2. Rejection of claim u/s 11 due to cancellation of registration u/s 12A by DIT(E), Hyderabad.
3. Failure of the assessee to appear and pursue the case before the Tribunal.

Analysis:
1. The appeal was filed against the order of the CIT(A) for the A.Y. 2016-17, where the assessee, a seed certifying agency, claimed exemption u/s 11 of the Income Tax Act but admitted 'Nil' income in the return. The case underwent scrutiny under CASS, and the AO rejected the claim due to the cancellation of registration u/s 12A by DIT(E), Hyderabad.

2. The CIT(A) upheld the AO's decision, citing that the society lost its charitable organization status and failed to carry out activities as per its objectives. The ITAT Visakhapatnam and the High Court also confirmed the cancellation of registration, emphasizing that the society did not serve the public directly but engaged with clients for profit, rendering its activities non-charitable.

3. Despite multiple opportunities, the assessee did not appear before the Tribunal, indicating a lack of interest in pursuing the case. The Tribunal, considering the submissions of the DR, concluded that no interference was required in the CIT(A)'s order due to the assessee's non-appearance, leading to the dismissal of the appeal.

This judgment highlights the importance of complying with charitable organization regulations to claim exemptions under the Income Tax Act and the consequences of non-compliance, as demonstrated by the cancellation of registration and subsequent rejection of the claim. The failure of the assessee to actively participate in the appeal process ultimately led to the dismissal of the appeal.