Hon’ble Dr. Dhananjaya Yeshwant Chandrachud, C.J.—This reference to the Full Bench has been occasioned by a referring order of a Division Bench of this Court dated 5 August 2013 and turns upon the interpretation of the provisions of Section 12AA(2) of the Income Tax Act 1961 (the Act). The questions which have been formulated for decision are as follows:

(i) Whether the non disposal of an application for registration, by granting or refusing registration, before the expiry of six months as provided under Section 12AA(2) of the Income Tax Act, 1961 would result in deemed grant of registration; and

(ii) Whether the Division Bench judgment of this Court in the case of Society for the Promotion of Education, Adventure Sport & Conservation of Environment v. Commissioner of Income Tax, (2008) 216 CTR (All) 167, holding that the effect of non consideration of the application for registration within the time fixed by Section 12AA(2) would be deemed grant of registration, is legally correct.

The Division Bench has prima facie doubted the correctness of an earlier judgment of a Division Bench in Society for the Promotion of Education Adventure Sport & Conservation of Environment v. Commissioner of Income Tax and others (supra).

2. Section 11 of the Act provides that certain categories of income of charitable and religious trusts shall not be included in the total income of the assessee. Section 12A stipulates that Sections 11 and 12 of the Act shall not apply in relation to the income of any trust or institution unless certain conditions are fulfilled. Amongst the other conditions in clause (a) of Section 12A, the conditions are that (i) the person in receipt of the income has made an application for registration of the trust or institution in the prescribed form and manner to the Commissioner within one year of the creation of the trust or the establishment of the institution; and (ii) such trust or institution is registered under Section 12AA. The procedure for registration is enunciated in Section 12AA.

Section 12AA provides as follows:

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

(a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and

(b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he—

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

(ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution,

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

Provided that no order under sub-clause (ii) shall be passed unless the applicant has been given a reasonable opportunity of being heard.

[(1A) All applications, pending before the Chief Commissioner on which no order has been passed under clause (b) of sub-section (1) before the 1st day of June, 1999, shall stand transferred on that day to the Commissioner and the Commissioner may proceed with such applications under that sub-section from the stage at which they were on that day.]

(2) Every order granting or refusing registration under clause (b) of sub-section (1) shall be passed before the expiry of six months from the end of the month in which the application was received under clause (a) [or clause (aa) of sub-section (1)] of Section 12A.]

[(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) [or has obtained registration at any time under Section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are