2019 (11) TMI 309 - HC - Income Tax

Registration u/s 12AA - ITAT allowed the registration - no relevant document was produced before the Commissioner (Exemption) to prove that the assessee is involved in charitable activities in consonance to the object for which it was established - HELD THAT - Perusal of the order passed by the Commissioner (Exemption) shows that the assessee did not appear before it when the matter was fixed for hearing. The Commissioner (Exemption) considered the matter in reference to the material produced before it. Since no documents to prove charitable activities was produced by the assessee, finding was drawn against it for denial of registration under Section 12AA. It has not recorded its finding in reference to the material produced before it and that too after holding finding of the Commissioner (Exemption) to be perverse. In fact the order impugned herein shows that in reply, the assessee has stated that all the relevant documents are available for perusal thus, it can be verified. It shows that no relevant document was produced before the Commissioner (Exemption) to prove that the assessee is involved in charitable activities in consonance to the object for which it was established. Tribunal has failed to exercise its jurisdiction, as is vested even as per the judgment of the larger Bench in the case of Income Tax Exemption U.P. State Cons. Infra. Vs. M/s Reham Foundation Kandhari Lane Lal Bagh Lucknow 2019 (10) TMI 151 - ALLAHABAD HIGH COURT Any judgment in conflict with the aforesaid would not be relevant now for any purpose. Thus, the judgments referred by the Tribunal in its order impugned herein are not more relevant after the judgment of the larger Bench of this Court, where both the questions have been answered after detailed discussion of the issue.

Summary

Issues:
1. Whether the Income Tax Appellate Tribunal can pass an order directing the Commissioner to grant registration under Section 12AA?
2. Whether the Tribunal has co-extensive jurisdiction with the Commissioner in matters of registration under Section 12AA?

Analysis:

Issue 1:
The High Court addressed the issue of whether the Income Tax Appellate Tribunal, after rejection of registration under Section 12AA by the Commissioner, can itself direct registration. The Larger Bench held that the Tribunal can remand the case to the Commissioner or issue direction for registration only after recording satisfaction as required by Section 12AA of the Income Tax Act, 1961. The Tribunal's jurisdiction is co-extensive with that of the Commissioner, allowing it to direct registration if the necessary satisfaction is recorded.

Issue 2:
The Court examined whether the Tribunal properly exercised its jurisdiction in a case where the Commissioner denied registration due to lack of evidence of charitable activities. The Tribunal had directed registration without considering relevant material or finding the assessee's involvement in charitable activities. The Court found that the Tribunal failed to exercise its jurisdiction properly and set aside its order, remanding the case for fresh consideration. The Tribunal was instructed to consider all observations made by the Court and ensure compliance with Section 12AA requirements.

In conclusion, the Court allowed the appeal, setting aside the Tribunal's order and remanding the case for reconsideration. The registration of the Trust was deemed unsustainable without the required satisfaction from the Commissioner. The Tribunal was directed to consider the case afresh, taking into account the judgment of the Larger Bench and disregarding any conflicting judgments. The substantial questions of law were answered in favor of remanding the case for proper consideration.