Revenue cannot take Benefit of a Pending Appeal before HC until it is Disposed: Bombay HC [Read Order]

In CIT v. Bharati Vidyapeeth, Pune, a division bench of the Bombay High Court dismissed a departmental appeal by observing that it cannot take a plea on the basis of a pending appeal which is not yet disposed.

In the instant case, Assessee-Trust was engaged in propagating education in various fields in modern India, particularly in Maharashtra. Assessee was granted with registration under section 12A of the Income Tax Act, 1961 and had been enjoying the benefits of section 11 and 12 of the Income Tax Act.

In the year 2007, the Commissioner cancelled their registration by invoking section 12A(3) of the Act. Consequently, the Assessing Officer refused to accept the exemption claim made by the assessee. The ITAT, however, reversed the order of cancellation of registration on second appeal. Against the same, the Revenue preferred an appeal before the High Court.

In the meanwhile, both the CIT(A) and the ITAT quashed the assessment order-in question by relying upon the Tribunal order.

Against these orders, the Revenue approached the Court raising a question that “Whether on the facts and in the circumstances of the case and in law, the Hon'ble Income Tax Appellate Tribunal was justified in relying on its decision for restoration of registration u/s. 12A without appreciating that department has filed an appeal before the Hon'ble High Court in respect of the said decision?”

Dismissing the appeal, the bench slammed the Revenues contention that merely because the Revenue has challenged the order passed by the Tribunal restoring assessee's registration under Section 12A of the IT Act and that Appeal is admitted and pending means entertain this Appeal.

“Which principle of law will enable the Revenue to urge that the order of the Tribunal should be interfered with, has not been clarified. The only argument is, namely, if the Revenue succeeds in the Appeal challenging the order of the Tribunal restoring assessee's registration, then it may be open for the Revenue to tax its income and by holding that both Sections 11 and 12 of the IT Act have no application thereto. We do not think that such ifs and buts would permit the Revenue to get over a presently binding order of the Tribunal. That order of restoration of registration binds the Revenue. That order has not been quashed and set aside by this Court.”

“The Appeal is merely admitted. To our mind, the question as proposed in the present matter is not a substantial question of law. So long as the law does not oblige entertaining of an Appeal of the Revenue proposing the above question, we do not think we should entertain it. There is a difference and vast as it is, between an order being subjected to challenge and the challenge having succeeded. In the later case, the order is wiped out because then it is quashed and set aside. Today, a challenge is merely pending. That cannot be equated to the challenge succeeding. That hurdle is yet to be crossed. If that is not crossed, the initial order of restoration of registration continues to bind the Revenue,” the bench said.

Read the full text of the Order below.