ITAT Cannot Overstep Its Authority By Deciding On Merits When It Had Already Concluded Appeal Was Not Maintainable: Bombay High Court

The Division Bench of Justices M.S. Sonak and Jitendra Jain observed that “Once the ITAT concluded that the Appeal before it against the impugned communication/order was not “maintainable”, there was no question of the ITAT evaluating the impugned communication/order on its merits or making any observations or recording any findings regarding its validity or otherwise. Therefore, such observations and findings are without jurisdiction and should not have been made.”

In this case, the Appellant/Petitioner, (BCCI), is a society established under the Tamil Nadu Societies Registration Act. The Memorandum of Association of the BCCI was amended on 01 June 2006 and 21 August 2007. However, such changes were not intimated to the Tax Authorities who had granted registration under Section 12A of the IT Act, 1961.

By order, the Director of Income-tax (Exemptions) (DIT) wrote to the BCCI that since the BCCI had modified its objects and no intimation of such modification was sent to the Director of Income-tax (Exemptions) Mumbai (second Respondent) it is quite clear that the registration granted to BCCI u/s.12A of the Income-tax Act, 1961 does not survive from the date on which the objects were changed i.e. 01.06.2006.

Aggrieved by the aforementioned communication/order, the BCCI filed an appeal before the Income Tax Appellate Tribunal,

Before the ITAT, the Revenue submitted that the DIT, by the impugned communication/order had neither cancelled nor withdrawn the registration dated granted to the BCCI under Section 12A of the IT Act, 1961. He contended that by the impugned communication/order, the DIT had merely intimated the BCCI of the consequences of changes in the objects of the BCCI.

The ITAT accepted the Revenue's contention that the impugned communication/order did not amount to either cancellation or withdrawal of registration under Section 12A of the IT Act, 1961. On this basis, the ITAT held that the BCCI's Appeal was not maintainable under Section 253 of the IT Act, 1961.

After recording the above conclusion in the impugned order, the ITAT addressed the merits of the communication/order and virtually held that the DIT's view in that communication/order was correct. The Assessee filed an Income Tax Appeal which was dismissed.

The bench observed that the ITAT, after having upheld the Revenue's contention [whether rightly or wrongly] exceeded its jurisdiction in examining the impugned communication/order on its merits and recording observations tending to uphold the impugned communication/order on its merits.

The bench stated that the ITAT, after concluding that the BCCI's Appeal before it “was not maintainable”, exceeded its jurisdiction in recording the above observations virtually upholding the impugned communication/order dated 28 December 2009. The authority or the jurisdiction to uphold the impugned communication/ order dated 28 December 2009 would be derived by the ITAT upon concluding that the Appeal before it was maintainable.

“If, according to the ITAT, the Appeal before it was not maintainable, then we fail to comprehend how the ITAT derived jurisdiction to make the above observations, which virtually approved the impugned communication/order dated 28 December 2009. Therefore, the above observations/findings are without jurisdiction and cannot be relied upon by the Respondents in the proceedings connected with the assessment of the BCCI or proceedings connected with the cancellation of BCCI's registration under Section 12A of the IT Act, 1961” stated the bench.

In view of the above, the bench allowed the petition.

Case Title: The Board of Control for Cricket in India v. The Assistant Commissioner of Income Tax (INCOME TAX APPEAL NO.1041 OF 2012)

Citation: 2025 LiveLaw (Bom) 70

Counsel for Appellant/ Assessee: P J Pardiwalla

Counsel for Respondent/ Department: P C Chhotaray

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