Trusts Must Re-register under Section 12AB: Court Directs Processing & Abeyance of Notice

The court held that the provisions under Section 12AA of the Income Tax Act became redundant post the introduction of Section 12AB by the Finance Act, 2021. It mandated trusts previously registered under Section 12A or 12AA to apply for fresh registration under Section 12AB within three months from April 1, 2021. The court directed the processing of the petitioner's application for fresh registration under Section 12AB and ordered the impugned notice to be kept in abeyance until registration is granted. The court provided specific directions for further actions under the new regime.

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Issues Involved:
1. Jurisdiction of the respondent to issue notice under Section 12AA(3) post the introduction of Finance Act, 2021.
2. The impact of the new regime under Section 12AB on the existing registrations under Section 12A and 12AA.
3. The procedural requirements for fresh registration under Section 12AB.
4. The validity of the impugned notice issued under the old regime.

Issue-wise Detailed Analysis:

1. Jurisdiction of the respondent to issue notice under Section 12AA(3) post the introduction of Finance Act, 2021:
The petitioner argued that the respondent had no jurisdiction to issue the notice under Section 12AA(3) of the Income Tax Act, 1961, post the introduction of the Finance Act, 2021. The Finance Act, 2021, introduced Section 12AB, which provides a new procedure for the registration of trusts and charitable institutions, rendering the provisions under Section 12AA inapplicable from April 1, 2021. The court acknowledged that Section 12AA(5) clearly states, "Nothing contained in this Section shall apply on or after the 1st day of April 2021," thus making the provisions under Section 12AA redundant post the specified date.

2. The impact of the new regime under Section 12AB on the existing registrations under Section 12A and 12AA:
The court examined the transition from the old regime (Section 12A and 12AA) to the new regime (Section 12AB). It was noted that trusts or institutions previously registered under Section 12A or 12AA must apply for fresh registration under Section 12AB within three months from April 1, 2021. The Principal Commissioner or Commissioner is mandated to pass an order in writing registering the trust or institution for a period of five years upon receipt of such application. The court emphasized that the new regime intended to streamline the registration process and ensure periodic renewal to avoid indefinite registration periods.

3. The procedural requirements for fresh registration under Section 12AB:
The petitioner had submitted an application for fresh registration under Section 12AB on May 4, 2021. The court reviewed the procedural requirements under Section 12AB(1)(a), which mandates the Principal Commissioner or Commissioner to pass an order in writing registering the trust or institution for five years upon receipt of the application. The court directed that the application submitted by the petitioner must be processed, and an order granting registration must be passed before any punitive action, such as cancellation of registration, can be initiated under the new regime.

4. The validity of the impugned notice issued under the old regime:
The court held that the impugned notice dated August 10, 2021, issued under Section 12AA(3), could not be proceeded with under the old regime, given the introduction of the new regime under Section 12AB. The court directed that the notice be kept in abeyance until the petitioner's application for fresh registration under Section 12AB is processed and an order is passed. The court clarified that once the fresh registration is granted, the respondent may proceed with any action under Sub-Sections (4) or (5) of Section 12AB if any violations are noticed.

Conclusion:
The court disposed of the writ petition with specific directions:
- The impugned notice dated August 10, 2021, shall be kept in abeyance.
- The petitioner's application dated May 4, 2021, for fresh registration under Section 12AB shall be processed, and an order granting registration for five years shall be passed.
- Post-registration, the respondent may proceed with any action under Section 12AB(4) using the contents of the impugned notice.
- The petitioner is permitted to submit a hard copy of the application to the concerned officer to resolve any controversy regarding the receipt of the application.

The writ petition was disposed of with no costs, and the connected miscellaneous petitions were closed.

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