The main legal point established in the judgment is that the rejection of an application within the stipulated period of six months is valid, and subsequent decisions taken after an appeal are not affected by the expiry of the six-month period. The court also clarified that non-disposal of the application within the time limit does not result in deemed grant of registration.

JUDGMENT :

1. Heard Sri Manish Misra, learned counsel for the appellant. However, no one appears for the opposite party.

2. This is an appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act, 1961') by the Revenue.

3. Notices were issued to the respondent herein vide order dated 07.02.2014. By the same order, the appeal was admitted on the substantial questions of law as framed in the appeal which read as under:-

(1) Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal was justified in applying the time limit of 6 months provided in section 12AA(2) in a case where the order u/s 12AA is to be passed in second round to ITAT'S directions.

(2) Whether non disposal of application for registration by granting or refusing registration before the expiry of six months as provided u/s 12AA(2) of the Income Tax Act, 1961 would result in deemed grant of registration

(3) Whether in the facts and circumstances of the case and the Hon'ble Income Tax Appellate Tribunal was correct in granting deemed registration u/s 12AA without appreciating the facts that the power to grant or refuse registration is statutory power of the commissioner u/s 12AA.

(4) Whether in the facts and circumstances of the case the Income Tax Appellate Tribunal has erred in substituting its own satisfaction in place of the satisfaction of the commissioner of the income tax as provided u/s 12AA of the Income Tax Act, 1961, thereby exceeding its jurisdiction."

4. On 07.02.2014 itself, this Court had stayed the operation of impugned order dated 20.09.2013 passed in I.T.A. No.145 and 146/Lkw/2012 by Income Tax Appellate Tribunal, Lucknow. The order sheet reveals that as per report of the process server, notices had been served personally upon opposite party no.1 on 10.04.2014. However, no one is present on behalf of the respondent to contest the matter nor any objections/ counter affidavit has been filed on its behalf.

5. The facts of the case in brief are that the respondent had applied for being registered under Section 12AA of the Act, 1961 on 05.02.2010 in Form No.10A. Along with the said application, another application was filed by the respondent under Section 80G of the Act, 1961. The said application came to be rejected by the Commissioner of Income Tax, Faizabad on 26.08.2010 on the ground that on an examination of evidence on record, it is not possible to arrive at a satisfaction that the appellant/ applicant is genuinely engaged in charitable activities. By a separate order, the application under Section 80G of the Act, 1961 was also rejected. Being aggrieved, the respondent filed an appeal before the Income Tax Appellate Tribunal bearing I.T.A. No.613 & 593/Luc/10. The said appeal was allowed on 12.01.2011 and the matter was remanded back to the Commissioner for reconsideration. The Commissioner of Income Tax, Faizabad reconsidered the applications of the respondent but again rejected the same vide his order dated 23.01.2012. The ground of rejection were the same but they were more detailed keeping in mind judgment of the Tribunal. Again being aggrieved, the respondent herein preferred an appeal bearing ITA No. 145 and 146/Lkw/2012 challenging the aforesaid order of the Commissioner dated 23.01.2012. The appeals were allowed on 20.09.2013. The appeal against the order passed under Section 12AA of the Act, 1961 was allowed on the ground that the order of rejection dated 23.01.2012 had been passed more than six months since the passing of the order dated 12.01.2011 in the earlier appeal by the Income Tax Appellate Tribunal.

6. We may for convenience quote relevant extract of the judgment of Income Tax Appellate Tribunal dated 20.09.2013 which is impugned before us:-

"7. Now we examine the present case on the touchstone of legal provision. In this case the matter was remitted to the file of CIT by the ITAT vide order dated 12.01.2011. The CIT passed the order rejecting the registration vide order dated 23.01.2