2024 (6) TMI 1053 - AT - Income Tax

ITAT condones 97-day delay, quashes registration cancellation under Section 12AA for attempting to unsettle decided matters

ITAT Cuttack condoned 97-day delay in filing appeal against cancellation of registration u/s 12AA, as delay occurred while pursuing writ petition before ... Condonation of delay - appeal filed by the assessee is delayed by 97 days - Cancellation of Registration u/s 12AA - It was the submission that the delay was on account of the period during which the writ petition was pending before the Hon’ble High Court - HELD THAT:- Considering the fact that the delay was on account of the assessee seeking alternate remedy before the Hon’ble High Court through writ petition, which was subsequently withdrawn and the permission had been granted by the Hon’ble High Court to file an appeal before the Tribunal, the delay in filing of the appeal is condoned and the appeal disposed off on merits. Order passed u/s.12AB(4) did not contain the Document Identification Number (DIN No.) - Admittedly, the circular issued by CBDT is binding on the authorities below and the lCIT(Exemptions) is an authority under the CBDT. As the order passed by ld CIT(E) in the case of the assessee, has admittedly been passed without issuing a DIN, in view of the circular issued by CBDT, the order admittedly is non-est and is liable to quashed. However, the issue having been stayed by the Hon’ble Supreme Court in the case of Brandix Maritius Holdings Ltd. [2024 (1) TMI 276 - SC ORDER] this finding of the Tribunal quashing the order of CIT(Exemptions) dated 20.6.2023 on account of non-availability of DIN in the said order would stand suspended till the issue is decided by the Hon’ble Supreme Court. Cancellation of Registration u/s 12AA - Previous Show Cause Notices and Proceedings - Scope of New Show Cause Notice issued - the activity of the assessee is a business activity or charitable activity? - The provisions of section 12AB(4) provide for the time limit in regard to passing of an order in respect of cancellation of the registration but the said provision refers to the first notice to be issued on or after 1st April, 2022. There is no saving provision in regard to the proceedings initiated prior to 1st April, 2022 and which admittedly being not calumniated into an order being served on the assessee. A perusal of the show cause notice issued by the ld CIT(E) on 6.10.2022 admittedly also does not refer to a show cause notice having been issued on 18.10.2016 and, therefore, it cannot be treated as a continuation of the proceedings either. The main crux of the cancellation of the registration is (i) whether the activity of the assessee is a business activity or charitable activity. Admittedly, this has reached finality for the assessment year 2009-10 to 2011-12, wherein, the Co-ordinate Bench of this Tribunal have held the issue in favour of the assessee. The second issue is in regard to donation to Aids Awareness Trust of Orissa and the questioned the existence of the trust. The assessee has produced the assessment order in the case of said trust and the assessment order passed also refers to its registration by the ld CIT(A). Therefore, the second issue could fall to the ground on account of the act of the department itself in regard to the assessment and in regard to registration by the ld CIT(E). It is also admitted by ld CIT(E) that there are no common trustees nor any related trustee between the assessee trust and Aids Awareness Trust of Orissa. In any case, both the issue had been raised by the ld CIT(E) in its original show cause notice which had been culminated in the orders served on the assessee. A new issue which has been raised by the ld CIT(E) in the show cause notice dated 6.10.2022 is the details of the corpus donation. Admittedly, this was the subject matter of 263 proceedings and that the issue had been considered by the Hon’ble Jurisdictional High Court and the Hon’ble High Court had found the orders of ld CIT to be un-sustainable and also quashed the same. Thus, all the issues on which the ld CIT(E) has raised the show cause notice for the purpose of cancellation of registration u/s. 12A have already been decided by the Appellate Authority and same has also reached finality. The ld CIT(E) by his order dated 20.6.2023 being the impugned order has tried to unsettle issues which are already settled in the case of the assessee. This is not permissible. This being so, as it is noticed that all the issues on the basis of which, ld CIT(E) has cancelled the registration u/s. 12A granted to the assessee has already been settled by various appellate authorities on earlier occasion and the issue had reached finality, same cannot be used for cancelling the registration of the assessee. This being so, on merits also, the order passed u/s. 12AB(4) by the ld CIT(E) on 20.6.2023 cancelling the registration granted to the assessee stands quashed. As worthwhile to mention here that the ld CIT(E) mentions that the ITAT had sustained the order of the ld CIT(E) in respect of 263 order but this order of the Tribunal sustaining the order u/s. 263 by the ld CIT(E) has already been quashed by the Hon’ble Jurisdictional High Court [2023 (8) TMI 337 - ORISSA HIGH COURT], which is also extracted earlier. In these circumstances, the order cancelling the registration stands annulled on merits also. Appeal filed by the assessee stands allowed Issues Involved:1. Withdrawal of stay petition.2. Delay in filing the appeal.3. Non-availability of Document Identification Number (DIN) in the order.4. Merits of the cancellation of registration under Section 12AA.5. Retrospective cancellation of registration.Issue-wise Detailed Analysis:1. Withdrawal of Stay Petition:The assessee's representative submitted a request to withdraw the stay petition No.12/CTK/2023. Consequently, the stay petition was dismissed as withdrawn.2. Delay in Filing the Appeal:The appeal was delayed by 97 days due to the assessee initially filing a writ petition before the Hon'ble Jurisdictional High Court of Orissa. With the permission of the High Court, the writ petition was withdrawn, allowing the assessee to file an appeal to the Tribunal. Considering the delay was due to seeking alternate remedy, the delay in filing the appeal was condoned.3. Non-availability of Document Identification Number (DIN) in the Order:The assessee argued that the order passed under Section 12AB(4) on 20.6.2023 did not contain a Document Identification Number (DIN), rendering the order non-est as per CBDT Circular No.19/2019. The Tribunal acknowledged that the circular is binding on the authorities and noted that the order without a DIN is non-est and liable to be quashed. However, this finding is suspended pending the Supreme Court's decision in a related case (CIT vs. Brandix Mauritius Holdings Ltd.).4. Merits of the Cancellation of Registration under Section 12AA:- Original Registration and Re-registration: The assessee was initially granted registration under Section 12A and 80G, and subsequently re-registered under the new regime under Section 12AA.- Show Cause Notices and Replies: The CIT(Exemptions) issued a show cause notice on 6.10.2022, raising seven grounds for cancellation, including issues of corpus donations and the nature of activities being commercial rather than charitable.- Assessment and Appellate Decisions: The Tribunal noted that the issues raised had already been settled in favor of the assessee by various appellate authorities, including the ITAT and the Hon'ble High Court. Specifically, the microfinance activities were deemed charitable, and the donation to Aids Awareness Trust of Orissa was validated by assessment orders.- Finality of Issues: The Tribunal emphasized that the CIT(E) cannot unsettle issues already decided by appellate authorities. As such, the order canceling the registration under Section 12AA was quashed on merits.5. Retrospective Cancellation of Registration:The Tribunal did not delve deeply into the issue of retrospective cancellation but noted that canceling the registration retrospectively from 1.4.2014 was erroneous. Given that the cancellation itself was quashed, the issue of retrospective application was rendered moot.Conclusion:The appeal filed by the assessee was allowed, and the order canceling the registration under Section 12AA was quashed on merits. The stay petition was dismissed as withdrawn. The Tribunal's decision was dictated and pronounced in the open court on 22/04/2024.