2019 (1) TMI 1634 - HC - Income Tax

Registration u/s 12AA - whether direction for registration can be issued by Tribunal or not while exercising appellate jurisdiction? - HELD THAT - Refer the following questions to the Larger Bench (i) whether Income Tax Appellate Tribunal while hearing appeal in a matter where registration under Section 12 AA has been denied by Commissioner Income Tax can itself pass an order directing Commissioner to grant registration or should leave the matter to be considered by Commissioner Income Tax to consider matter afresh giving rise to further litigation in the matter; (ii) whether co-extensive appellate jurisdiction conferred upon Income Tax Appellate Tribunal being a last court of fact can be read to confer upon it similar powers as been exercised by authorities below whose orders are considered in appeals by Tribunal

Summary

Issues:
1. Applicability of Tribunal's power to direct registration under Section 12 AA of the Income Tax Act.
2. Interpretation of co-extensive appellate jurisdiction of the Income Tax Appellate Tribunal.

Analysis:

Issue 1: Applicability of Tribunal's power to direct registration under Section 12 AA of the Income Tax Act
The appeal arose from a judgment where the Tribunal directed the Commissioner to allow registration to the Assessee Trust under Section 12 AA (1) (b) of the Income Tax Act, 1961. The appellant's counsel argued that the Tribunal exceeded its jurisdiction by issuing such a direction, citing a Division Bench decision that emphasized the need for satisfaction recorded by the Registering Authority as per Section 12AA of the Act. In contrast, the respondent's counsel relied on another Division Bench judgment, asserting that the Tribunal's power is coextensive with the authorities below and that there is no restriction on the Tribunal's power to pass orders under Section 254 of the Act. The conflicting viewpoints led to the conclusion that the matter required resolution by a Larger Bench due to contradictory judgments.

Issue 2: Interpretation of co-extensive appellate jurisdiction of the Income Tax Appellate Tribunal
The conflicting judgments highlighted the need to clarify whether the Tribunal, as the last court of fact, can direct the Commissioner to grant registration under Section 12 AA or if it should leave the matter for the Commissioner to reconsider, potentially leading to further litigation. The reference to a Larger Bench aimed to address the questions regarding the Tribunal's authority in matters where registration has been denied by the Commissioner and the scope of the Tribunal's appellate jurisdiction in comparison to the authorities below. The resolution of these questions required a comprehensive examination by a Larger Bench to provide clarity on the Tribunal's powers and limitations in such cases.

In conclusion, the conflicting judgments and differing interpretations of the Tribunal's powers necessitated a reference to a Larger Bench to resolve the controversy surrounding the Tribunal's authority to direct registration under Section 12 AA of the Income Tax Act and the extent of its co-extensive appellate jurisdiction.