2019 (5) TMI 634 - HC - Income Tax

Grant registration u/s 12AA and grant approval u/s 80G - objectives of the assessee society are not charitable in nature or not? - independent reasons by ITAT in order - HELD THAT - Tribunal was required either to accept the reasons and dismiss the appeal or not to accept it. If it did not accept the reasons, it was obliged to give its own reasons and dispose of the appeal. In the alternative, it had the option of remanding the matter back to the commissioner. It had followed neither of the two courses. This impugned order of the tribunalis absolutely erroneous in law. It is set aside. We remand the matter back to the tribunal to decide the issues involved in accordance with law within a period of six months from the date of communication of this order with reasons and upon hearing the parties. The tribunal will have the option to remand the matter back to the commissioner with proper reasons, if the occasion so arises.

Summary

Issues: Condonation of delay in filing the appeal, rejection of registration under section 12AA of the Income Tax Act, 1961 by the Commissioner of Income Tax (Exemption), Kolkata, tribunal's decision in allowing the appeals, tribunal's failure to provide reasons for its decision, remand of the matter back to the tribunal for reconsideration.

Condonation of Delay: The High Court allowed the appeal and condoned the delay of 30 days in filing the appeal. The application for condonation of delay was approved, and the appeal was directed to be registered immediately by the department.

Rejection of Registration under Section 12AA: The Commissioner of Income Tax (Exemption), Kolkata had rejected the registration under section 12AA citing that the trust had not carried out any charitable activity since its inception. The Commissioner emphasized the necessity for charitable activities to be conducted before registration could be granted, as per the provisions of section 12AA(1) of the Act.

Tribunal's Decision: The tribunal allowed the appeals filed by the assessee, directing the Commissioner to grant registration to the assessee under section 12AA and approval under section 80G of the Act. The tribunal's decision was based on the lack of findings by the Commissioner regarding the charitable nature of the assessee's objectives.

Tribunal's Failure to Provide Reasons: The High Court criticized the tribunal for not providing reasons for its decision to allow the appeals. The Court highlighted that the tribunal should have either accepted the Commissioner's reasons and dismissed the appeal, provided its own reasons, or remanded the matter back to the Commissioner. As the tribunal did not follow any of these courses, the High Court deemed the tribunal's order as erroneous in law.

Remand of the Matter: The High Court set aside the tribunal's order and remanded the matter back to the tribunal for reconsideration. The tribunal was instructed to decide the issues involved in accordance with the law within six months from the date of communication of the order. The tribunal was given the option to remand the matter back to the Commissioner with proper reasons if necessary.

In conclusion, the High Court's judgment focused on the procedural errors in the tribunal's decision-making process, emphasizing the need for proper reasoning and adherence to legal requirements in matters of granting registration under the Income Tax Act.