2019 (10) TMI 151 - HC - Income Tax

ITAT can direct Commissioner to grant Section 12AA registration if refusal is based on existing material.

Commissioner Of Income Tax Exemption U.P State Cons. & Infra. Versus M/s Reham Foundation Kandhari Lane Lal Bagh Lucknow

Commissioner Of Income Tax Exemption U.P State Cons. & Infra. Versus M/s Reham Foundation Kandhari Lane Lal Bagh Lucknow - [2019] 418 ITR 205 (All [FB]) Issues Involved:1. Whether the Income Tax Appellate Tribunal (ITAT) can direct the Commissioner to grant registration under Section 12AA or should remand the matter for fresh consideration.2. Whether the ITAT has co-extensive appellate jurisdiction similar to that of the authorities below.Issue-wise Detailed Analysis:Issue 1: ITAT's Authority to Direct RegistrationThe Full Bench was constituted to address whether the ITAT can itself pass an order directing the Commissioner to grant registration under Section 12AA or should remand the matter. The Revenue contended that the power to register a trust under Section 12AA lies solely with the Commissioner, who must be satisfied with the genuineness of the trust's activities. They argued that the ITAT should remand the case if it finds merit in the appeal, rather than directing registration itself, citing the Division Bench's decision in Commissioner of Income Tax, Meerut vs. M/S. A.R. Trust Meerut.The assessee's counsel argued that if the ITAT, upon reviewing the material, is satisfied with the genuineness of the trust's activities, it can direct registration to avoid unnecessary remand and litigation. They emphasized that the ITAT has the power under Section 254 of the Act to pass such orders as it thinks fit, including directing registration if the Commissioner's refusal was based on perverse findings.The court examined Section 12AA, which mandates the Commissioner's satisfaction regarding the genuineness of the trust's activities before granting registration. It was noted that the ITAT, as the last court of facts, has wide jurisdiction under Section 254(1) to pass orders it deems fit. The court concluded that if the ITAT finds the Commissioner's order perverse based on the same material, it can direct registration without remand. However, if new material is presented at the ITAT level or if the Commissioner's refusal was on technical grounds, remand would be necessary.Issue 2: Co-extensive Appellate JurisdictionThe court considered whether the ITAT's appellate jurisdiction is co-extensive with that of the Commissioner under Section 12AA. The court referred to various judgments, including Shiv Shakti Cooperative Housing Society vs. Swaraj Developers, which emphasized that an appeal is a continuation of the original proceedings and the appellate authority can take a different view on the same set of facts.The court also referred to the judgment in Clariant International Limited vs. SEBI, which stated that the appellate authority's jurisdiction is not fettered unless explicitly limited by statute. The court concluded that the ITAT's powers are co-extensive with those of the Commissioner under Section 12AA, meaning it can pass orders regarding the registration of a trust after recording satisfaction about the genuineness of its activities.Conclusion:1. The ITAT can direct the Commissioner to grant registration under Section 12AA if it disagrees with the Commissioner's satisfaction based on the material already on record. This power should not be exercised as a matter of course, and remand is necessary if new material is presented or if the Commissioner's refusal was on technical grounds.2. The ITAT's powers are co-extensive with those of the Commissioner under Section 12AA, subject to recording satisfaction regarding the genuineness of the trust's activities.The reference was answered accordingly, and the registry was directed to place the appeals before the appropriate court.