Power of the Appellate Tribunal are Co-extensive with Power of the Commissioner u/s 12AA of the IT Act under Certain Circumstances: Allahabad HC [Read Judgment]

The Allahabad High Court in the case of Commissioner of Income Tax Exemption v. Reham Foundation held that the power and jurisdiction of the Appellate Tribunal under Section 254(1) of the Act, 1961 is unfettered thereby enabling the Appellate Tribunal to direct registration of the Trust at its level itself but the same is not open as a matter of course and such power is to be exercised only in certain circumstances

The Appeal was preferred by the revenue against the order of the ITAT directing registration of the Trust under Section 12AA(1)(b) of the Act within a period of 60 days, failing which the Trust shall be deemed to have been registered.

The DR submits that the power for registration of a Trust or an institution under Section 12AA of the Act has been given to the Commissioner and cannot be exercised by the Tribunal. If at all on the scrutiny of the case in Appeal, a case is made out for registration of Trust, the matter is to be remanded to the Commissioner.

The Bench constituting of Justices MN Bhandari, S Chandra and M Mathur held that in the case where the Commissioner has refused to accept the application for registration of Trust after making a record that the activities and objectives of the Trust are not genuine and the Appellate Tribunal and the Appellate Tribunal on the basis of the same material on record comes to the conclusion that the order of the Commissioner is perverse since it has been passed ignoring, misconstruing or misinterpreting such evidence, then it can direct registration of the Trust without remanding the matter to the Commissioner.

While pointing out at another instance, it has been held that “Remand to the Commissioner can also be affected in a case where the Commissioner rejects the application on a technical ground without recording its opinion on facts or genuineness of the activities and object of the Trust but the Tribunal finds ground for rejection on such technical ground thereby reopening the issue of recording satisfaction in terms of Section 12 (AA) of the Income Tax Act, 1961.”