Commissioner Of Income Tax (Exemption), Kolkata v. Topsel Trust

OD-26 IN THE HIGH COURT AT CALCUTTASpecial Jurisdiction (Income tax)ORIGINAL SIDE IA No.GA 1 of 2017 (Old No.GA 3735 of 2017) In ITAT 397 of 2017 COMMISSIONER OF INCOME TAX (EXEMPTION), KOLKATAVs.TOPSEL TRUST BEFORE: The Hon'ble JUSTICE T. S. SIVAGNANAM AND The Hon’ble JUSTICE HIRANMAY BHATTACHARYYADate : 13[th] December, 2021. Appearance:Mr. P.K. Bhowmik, Adv.…for the appellant.Mr. Abhratosh Majumdar, Adv. Mr. Avra Majumdar, Adv.…for the respondent. The Court : This appeal by the revenue filed under Section 260A ofthe Income Tax Act (the ‘Act’ in brevity) is directed against the order dated23[rd] June, 2017 passed by the Income Tax Appellate Tribunal, C-Bench,Kolkata (the ‘Tribunal’) in ITA No.2221/Kol/2016 and ITANo.2222/Kol/2016. The revenue has raised the following substantial questions of law forconsideration: i)Whether on the facts and in the circumstances of the case and aswell as in law the Tribunal is right in observing that verificationof genuineness of activity is not the pre-condition for grantingregistration u/s. 12AA of the Income Tact Act, 1961 ? ii)Whether on the facts and in the circumstances of the case and aswell as in law the Tribunal is right in observing that cancellationof registration u/s. 12AA(3) of the Income Tax Act, 1961 in case ofan institution found to be not carrying out activity according to itsobjectives is more correct application of the Income Tax Act, 1961than verification of genuineness of activities before grantingregistration u/s. 12AA of the Income Tax Act, 1961 ? ?well as in law the Tribunal is right in observing that cancellationof registration u/s. 12AA(3) of the Income Tax Act, 1961 in case ofan institution found to be not carrying out activity according to itsobjectives is more correct application of the Income Tax Act, 1961than verification of genuineness of activities before grantingregistration u/s. 12AA of the Income Tax Act, 1961 ? ? We have heard Mr. P. K. Bhowmik, learned Standing Counselappearing for the appellant/revenue and Mr. Abhratosh Majumdar, learnedCounsel appearing for the respondent/assessee. The short issue which falls for consideration is whether the Tribunalwas right in holding that the cancellation of registration granted to theappellant trust under Section 12AA(3) of the Act on the ground that asseseetrust is not carrying out activities according to its object. The revenue cannotdispute the fact that this issue has been answered in several decisions of thisCourt as well as the other High Courts and the Hon’ble Supreme Court. Inthis regard it will be beneficial to refer to the decision of the Division Bench inthe case of Principal Commissioner of Income Tax (Exemption) Vs. Shri NathjiGoverdhan Nathji Charitable Trust reported in [2020] 120 Taxmann.com 256(Calcutta). The Division Bench after taking note of several decisions held thatverification of genuineness of activity is not condition precedent for grantingregistration under Section 12AA of the Act. Further, we note that theTribunal had taken note of several decisions on the point to hold thatrejection of the application for grant of registration at the threshold was not sustainable. We find there is no ground to interfere with the order passed bythe Tribunal, impugned in this appeal. Accordingly, the appeal fails and the same is dismissed. Substantialquestions of law are answered against the revenue. The connected application also stands dismissed. (T. S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) S.Das/pa