ITAT Can Pass Orders Directing CIT To Register A Trust Under S. 12AA Of IT Act : Allahabad HC (FB)[Read Order]

The decision was passed in an appeal, referred to the bench by a division bench of the high court, seeking whether ITAT could itself pass an order directing Commissioner to grant registration or should it leave the matter to be considered by Commissioner afresh.

Section 12AA prescribes the procedure for registration of a trust or institution and empowers the Commissioner to do so. Whereas, Section 254(1) elucidates the powers of an Appellate Tribunal and states that an Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit.

Advocate Manish Mishra, for the Appellant-Commissioner had contended that the power for registration of a Trust under Section 12AA had been given to the Commissioner only, and it could not be exercised by the Tribunal.

"If at all on the scrutiny of the case in Appeal, a case is made out for registration of a Trust, it needs to be remanded back to the Commissioner," he submitted.

Disapproving this submission, the bench of Justices Munishwar Nath Bhandari, Sangeeta Chandra and Manish Mathur held that the powers of the Tribunal are co-extensive to that of the Commissioner under Section 12AA of the Act of 1961. Thus, it can direct for registration of a Trust.

The bench concurred with the Respondent- M/S Reham Foundation's submission that the Tribunal was empowered to issue directions for registration of the Trust under Section 254 of the Act, after considering the issue and recording its satisfaction as to the genuineness of the activities of the Trust.

The bench held that,

"the words 'as it thinks fit' used in relation to the powers of the Appellate Tribunal exercisable under Section 254(1) of the Act, were is of the widest amplitude…enabling the Appellate authority to take an entirely different view on the same set of facts". Reference was made to Babu Lal Nagar v. Shree Synthetics Limited & Ors., 1984 (supp) SCC 128.

The bench continued "where the words of statute are clear without any ambiguity and the intention of the legislature is clearly conveyed, there is no scope for the court to innovate or take upon itself the task of altering the statutory provisions by breathing into the provisions, words which have not been expressly incorporated by the legislature."

Reliance in this behalf was placed on Commissioner of Customs (Import) Mumbai v. Dilip Kumar & Company & Ors., (2018) 9 SCC 1, wherein the Apex Court had, particularly with respect to taxing statutes, stated that statutory interpretation had to be done only in accordance with the unambiguous words used in the statute and the intention of the legislature in incorporating or leaving out certain words was necessarily required to be seen.

Reference was further made to the Supreme Court's verdict in Clariant International Limited & Anr. v. SEBI, (2004) 8 SCC 524, wherein the court had held that if the jurisdiction of an Appellate authority is not fettered by a statute, it may exercise absolute jurisdiction. It was also held therein that the limits to jurisdiction of the Appellate authority would have been stated explicitly in the statute had that been the intention of legislature.

In view thereof, the bench held that "in case where the Commissioner has refused to accept the application for registration of Trust after recording its finding on the basis of material on record before him holding that the activities and object of the Trust are not genuine 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." It added that remand in case of Tribunal's personal satisfaction world be "an empty formality".

The bench however clarified that if the Appellate Tribunal had recorded its satisfaction on the basis of material which was not available before the Commissioner, the matter would require remand. Further, remand to the Commissioner could also be directed in case where the application had been rejected on a technical ground, without recording opinion on facts.