IMPORTANT POINT
The Commissioner of Income Tax cannot assess the genuineness of a trust's activities against its books of accounts at the registration stage under Section 12AA of the Income Tax Act.

ORDER :

Sanjay K. Agrawal, J.

1. This tax appeal preferred under Section 260A of the Income Tax, 1961 (for short, ‘the IT Act’) was admitted for hearing on 15-3-2023 by formulating the following substantial question of law:

“Whether on facts & circumstances of the case, the order of the Ld. Tribunal is correct in law and on facts in directing the Ld. CIT to grant the registration u/s 12 AA of the IT Act irrespective of non-genuineness of the activities of the institution evidenced in the impugned order of the Commissioner of Income Tax dated 28-09-2015, thereby rendering the decision which is perverse?”

2. The Association of Physicians, Branch: Durg-Bhilai i.e. the respondent herein has filed an application for registration under Section 12AA(1)(b)(i) of the IT Act in appropriate form before the competent authority and the said application was rejected by the Commissioner of Income Tax (Exemption) by order dated 28-9-2015 holding that the case of the Association of Physicians is not covered by the provisions contained in Section 12AA(1)(b)(i) of the IT Act. Feeling dissatisfied with the order of the Commissioner of Income Tax (Exemption) dated 28-9-2015, the respondent herein preferred an appeal before the Income Tax Appellate Tribunal (ITAT) and the ITAT by its impugned order, allowed the appeal filed by the respondent Association holding that the issue raised in the appeal is covered by the decision of this Court in the matter of Commissioner of Income Tax v. Chhattisgarh Urology Society TAXC No.159/2017, decided on 17-1-2018 and directed the CIT(E) to grant registration in favour of the respondent Association / assessee under Section 12AA of the Act against which this appeal has been preferred.

3. Mr. Amit Chaudhari, learned counsel appearing for the appellant, would submit that the learned ITAT has committed legal error in directing for registration holding that it is covered by the decision of this Court in Chhattisgarh Urology Society’s case (supra), therefore, the impugned order is liable to be set aside.

4. Mr. Mool Chand Jain, learned counsel appearing for the respondent through video conferencing, would submit that the case of the respondent herein is squarely covered by the decision of this Court in Chhattisgarh Urology Society’s case (supra) which was also taken up in review on review petition being filed by the Revenue and by order dated 11-3-2019, the coordinate Bench of this Court has dismissed the review petition, thereafter, SLP was filed by the Revenue being SLP (Civil) Diary No. 33995/2019 which was also dismissed by the Supreme Court on 18-10-2019, as such, the instant tax appeal deserves to be dismissed.

5. We have heard learned counsel for the parties and considered their rival submissions made herein-above and also went through the material available on record minutely and thoroughly as well.

6. Section 12AA(1)(b)(i) of the IT Act states as under: -

“12AA. Procedure for registration.—(1) The Principal Commissioner or Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) or clause (aa) or clause (ab) of sub-section (1) of section 12A, shall—

(a) xxx xxx xxx

(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, he—

(i) shall pass an order in writing registering the trust or institution;

(ii) xxx xxx xxx

and a copy of such order shall be sent to the applicant:”

7. A careful perusal of the aforesaid provision would show that the Principal Commissioner or the Commissioner has to satisfy himself about the objects of the trust or institution and the genuineness of its activities as required under sub-clause (i) of clause (a) and compliance of the requirements under sub-clause (ii) of the said clause, and has to pass an order in writing registering the trust or institution and a copy of the o