No Deemed Registration Even If Registration Application U/Sec 12AA Income Tax Act Is Not Decided Within Six Months: Supreme Court

The Supreme Court has observed that there shall not be any deemed registration even if in a case where the registration application under Section 12AA of the Income Tax Act, 1961, is not decided within six months.

The bench comprising Justices MR Shah and BV Nagarathna was considering a Special Leave Petition challenging a judgment of Allahabad High Court in which the issue raised was whether on non-deciding the application for registration under Section 12AA (2) of the Income Tax Act within a period of six months, there shall be deemed registration or not?

Section 12AA lays down the following procedure for registration of a trust or institution.

-The Commissioner, upon receipt of an application for registration of a trust or institution, shall call for documents or information in order to satisfy himself about the genuineness of the activities of the trust or institution. The Commissioner is also empowered to make such inquiry as he deems necessary.

-After satisfying himself of the objects of the trust or institution and the genuineness of its activities, the Commissioner shall pass an order in writing registering the trust or institution or, if he is not so satisfied, pass an order in writing refusing to register it. S

-Every order granting or refusing registration "shall be passed before the expiry of six months" from the end of the month in which the application was received. 

In this case, the High Court answered the issue against the assessee holding that on expiry of six months, there will not be any deemed registration.

While considering the Special Leave Petition filed by the assessee, the Apex Court bench noted that the Full Bench of the Allahabad High Court in Commissioner of Income Tax vs. Muzafar Nagar Development Authority [ITA 348 of 2008] has considered this issue in detail.

"After considering in detail the provisions of Section 12AA (2) of the Act and having found that there is no specific provision in the Act by which it provides that on non-deciding the registration application under Section 12AA (2) within a period of six months there shall be deemed registration, the Full Bench of the High Court has rightly held that even if in a case where the registration application under Section 12AA is not decided within six months, there shall not be any deemed registration. We are in complete agreement with the view taken by the Full Bench of the High Court. ", the bench said while dismissing the Special leave petition.

In the Muzafar Nagar, the High Court had rejected the plea of the assessee to read into sub-section (2) a fiction by which an application for registration should be regarded as deemed to be granted, if it is not disposed of within six months. "Providing that an application should be disposed of within a period of six months is distinct from stipulating the consequence of a failure to do so. Laying down a consequence that an application would be deemed to be granted upon the expiry of six months can only be by way of a legislative fiction or a deeming definition which the Court, in its interpretative capacity, cannot create. That would be to rewrite the law and to introduce a provision which advisedly the legislature has not adopted.", the High Court had held.

Case details

Harshit Foundation Sehmalpur Jalalpur Jaunpur vs Commissioner Of Income Tax Faizabad | 2022 LiveLaw (SC) 431 | SLP(C) 26978/2017 | 22 April 2022

Coram: Justices M R Shah and B V Nagarathna

Counsel: Adv Abhinav Mehrotra for the petitioner, ASG N. Venkataraman for respondent

Headnotes

Income Tax Act, 1961 ; Section 12AA - Registration of a trust or institution - Even if in a case where the registration application under Section 12AA is not decided within six months, there shall not be any deemed registration. 

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