The Income Tax Appellate Tribunal (ITAT) in Devraha Baba Trust case held that department cannot reject the registration of application after the expiry of six months, even if it has raised some queries before the expiry of the six-month period.
" ...it is mandatory for the CIT (Commissioner of Income Tax) to dispose of the application for registration within six months from end of the month in which the application was filed," the order said.
In the Devaraha Baba Trust case, the CIT refused registration to the trust after the expiry of six months, though it had initiated some enquiries within the stipulated period.
On an appeal by the Trust against the decision of the CIT, the tribunal said, "the orders (for acceptance or rejection by the CIT) have to be passed within the time limit prescribed and if not, the application should be deemed to have been granted."
The ITAT further said that once the registration is granted, "there is nothing in law to prevent the CIT from making his own enquiries even after the expiry of time limit and making use of the results thereof to cancel the registration..."
Under the Income Tax Act, it is mandatory for a trust, set up for charitable or religious purposes, to get itself registered with the Department to claim income tax exemptions.