2020 (10) TMI 1153 - HC - Income Tax

Maintainability of appeal on low tax effect - Exemption u/s 11 - granting the registration u/s 12AA over looking the provision to Section 12A 1 a i - HELD THAT - Since the matter pertains to a registration under Section 12AA of the Act, the question of withdrawing the appeal on the ground of low tax effect would not arise. This submission cannot be considered at this juncture because the substantive appeal is no longer on the file of this Court and has been dismissed. The reasons may be many for such dismissal. If at all, the Revenue is of the view that the appeal should not be withdrawn and accordingly, dismissed, then appropriate steps should have been taken immediately in the year 2016 to restore the appeal. There is nothing on record before us today to indicate that such steps have been taken. Therefore, in our view, the Revenue cannot pursue the present appeal, when the appeal filed by the Revenue against the main order passed by the Tribunal was dismissed.

Summary

Issues:
1. Challenge to the order granting registration under Section 12AA of the Income Tax Act, 1961.
2. Eligibility of the assessee for registration under Section 12AA from the date of inception.
3. Dismissal of the department's Miscellaneous Petition without considering Section 12A[1][a] of the Act.

Analysis:

Issue 1:
The appellant, the Revenue, filed an appeal challenging the order granting registration under Section 12AA of the Income Tax Act, 1961. The appeal raised the question of whether the Appellate Tribunal was correct in granting registration under Section 12AA while allegedly overlooking the provision of Section 12A[1][a][i] of the Act. The High Court considered this issue in detail.

Issue 2:
Another substantial issue was the eligibility of the assessee for registration under Section 12AA from the inception date of 19-06-1986. The Appellate Tribunal had to determine if the assessee had valid reasons for the delay in filing the registration application. The High Court analyzed whether the Tribunal's decision was legally sound in holding the assessee eligible for registration from the inception date.

Issue 3:
The third issue involved the dismissal of the department's Miscellaneous Petition without considering Section 12A[1][a] of the Act. The High Court examined the circumstances surrounding the dismissal of the department's petition and whether the Revenue could pursue the present appeal after the dismissal of the appeal against the main order passed by the Tribunal.

In the judgment, the Court noted that the Revenue's appeal was against an order passed in a Miscellaneous Petition, and the main appeal had been dismissed earlier due to low tax effect. The Court emphasized that since the substantive appeal was no longer on record and had been dismissed, the Revenue could not pursue the present appeal. The Court highlighted the necessity for the Revenue to take appropriate steps to restore the appeal if they believed it should not have been dismissed. Consequently, the Tax Case Appeal was dismissed, leaving the Substantial Questions of Law open, with no costs imposed.

This detailed analysis of the issues involved in the judgment provides a comprehensive overview of the High Court's decision in the case.