Allahabad High Court
Commissioner Of Income Tax [Exemption] ... vs M/S Fateh Chand Charitable Trust & ... on 16 October, 2019
Bench: Munishwar Nath Bhandari, Alok Mathur
HIGH COURT OF JUDICATURE AT ALLAHABAD, LUCKNOW BENCH ?Court No. - 4 Case :- INCOME TAX APPEAL No. - 16 of 2019 Appellant :- Commissioner Of Income Tax [Exemption] Lucknow Respondent :- M/S Fateh Chand Charitable Trust & College Mall Road Agra Counsel for Appellant :- Manish Misra Counsel for Respondent :- Anand Prakash Sinha Hon'ble Munishwar Nath Bhandari,J.
Hon'ble Alok Mathur,J.
Heard Sri Manish Misra, learned counsel for the appellant as well as Sri Anand Prakash Sinha, learned counsel for the respondent.
The present appeal was admitted on 07.08.2019, on following substantial questions of law :
(1) Whether Income Tax Appellate Tribunal while hearing appeal in a matter where registration under Section 12AA 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?
(2) 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?
The questions of law framed by this Court have been answered by the Larger Bench in the case of Commissioner of Income Tax Exemption U.P. State Cons. & Infra. Vs. M/s Reham Foundation Kandhari Lane Lal Bagh Lucknow - Income Tax Appeal No. 37 of 2017, by its judgment dated 26.09.2019.
The larger Bench held that the Income Tax Appellate Tribunal (hereinafter referred to as "the Tribunal"), while hearing the appeal after rejection of application for registration of the Trust/Institution under Section 12AA of the Income Tax Act, 1961 (hereinafter referred to as "the Act, 1961"), can remand the case to the Commissioner (Exemption) or issue direction for registration of the Trust/Institution but would be after recording satisfaction, as is required under Section 12AA of the Act, 1961.
It is held that the jurisdiction of the Tribunal is co-extensive to that of the Commissioner (Exemption) and accordingly if satisfaction, as is required under Section 12AA of the Act, 1961 is recorded by the Tribunal, direction for registration of the Trust/Institution can be given.
Learned counsel appearing for the Revenue however, submits that the impugned order has been passed by the Tribunal without recording its satisfaction, as required under Section 12AA of the Act, 1961. The Tribunal has not given finding that the Commissioner (Exemption) has ignored the material produced before it and accordingly recorded perverse finding. Referring to paragraph 9 of the impugned order of the Tribunal, it is demonstrated that no finding has been recorded to hold order of the Commissioner (Exemption) to be perverse. Even satisfaction, as required under Section 12AA of the Act, 1961 has not been recorded. The Tribunal has issued a direction for registration of the Trust/Institution after referring several judgments on the issue without marshalling evidence with a finding to show satisfaction for registration of the Trust, as required under Section 12AA of the Act, 1961. In absence of the satisfaction, as required, the judgment of the larger Bench in the case of Income Tax Exemption U.P. State Cons. & Infra. (supra) would apply. The order of the Tribunal is thus not sustainable. The Tribunal could have remanded the matter to the Commissioner (Exemption) for consideration of the case afresh. The assessee failed to produce relevant documents before the Commissioner to record satisfaction for registration under Section 12AA of Act, 1961. The denial of registration by the Commissioner (Exemption) was in absence of material to satisfy that the Trust is involved in charitable activities.
Prayer is accordingly to set aside the order passed by the Tribunal.
Learned counsel for the assessee has contested that appeal. He submits that after the order passed by the Tribunal, registration under Section 12AA of the Act, 1961 has been given to the assessee. It is after calling for the record and recording satisfaction by the Commissioner (Exemption).
In view of the aforesaid circumstances, interference in the order passed by the Tribunal should not be made. It is more so when Tribunal has considered arguments of the parties before recording its satisfaction for registration under Section 12AA of the Act, 1961.
The prayer is accordingly to dismiss the appeal preferred by the Revenue.
We have considered the rival submissions of the parties and perused the record.
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 of the Act, 1961. The assessee preferred an appeal to challenge the order passed by the Commissioner (Exemption). The appeal was allowed by the Tribunal. A direction for registration of the Trust has been given, but perusal of the impugned order, we do not find that the Tribunal has considered the relevant material to come to the conclusion that the assessee is involved in charitable activities. 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.
In view of the above, the 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 (supra).
The Tribunal could have exercised its jurisdiction to direct registration of the Trust/Institution, because before the Commissioner (Exemption), relevant material was not produced and otherwise assessee did not appear on the date of hearing. In such circumstances, even the Tribunal could not have recorded its finding that Commissioner (Exemption) either failed to look into the material or recorded perverse finding. The course available to the Tribunal in the present matter was to remand the matter to the Commissioner (Exemption) if the material was such which may show that the assessee is involved in charitable activities.
A direction for registration could not have been given by the Tribunal after referring the judgment of the Court without first recording its finding to show satisfaction, as is required under Section 12AA of the Act, 1961 for registration of the Trust/Institution. The Tribunal, no doubt has made reference of certain facts while dealing with the rival contentions of the parties but fail to record its finding thereupon to the effect that the material produced by the assessee is sufficient to draw conclusion about its charitable activities or that finding of the Commissioner (Exemption) is perverse.
Accordingly, we find reason to cause interference in the order passed by the Tribunal.
The impugned order dated 27.09.2018, passed by the Income Tax Appellate Tribunal is accordingly set aside with remand of the case, to decide the appeal afresh. The Tribunal would take into consideration all the observations made by this Court for remand of the case to the Commissioner (Exemption) in the facts and circumstances of the case. The direction for remand of the case to the Commissioner (Exemption) has not been given by this Court for the reason that the order aforesaid is not under challenge.
The registration of Trust, after the order of Tribunal, is not sustainable as no satisfaction was recorded by the Commissioner, as required under Section 12AA of the Act, 1961. The Commissioner has complied the order of the Tribunal and otherwise there was no occasion for the Commissioner to record its satisfaction in absence of remand of case.
While the matter would be considered by the Tribunal afresh, it will take into account 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 (supra). 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.
The substantial questions of law mentioned herein above are answered accordingly.
With aforesaid the appeal is allowed.
Order Date :- 16.10.2019 A. Verma