Trust registration cancelled retrospectively after survey reveals activities contradicting stated charitable objects with foreign funding

ITAT Delhi rejected the trust's stay application against PCIT(Central)-2 Delhi's order cancelling its registration under section 12A/12AA/12AB with retrospective effect. The tribunal held that while ITAT has power to grant stay under section 254(1), the assessee failed to satisfy the three essential conditions: prima facie case, irreparable loss, and balance of convenience. Evidence from survey operations indicated the trust's activities contradicted its stated objects, showing involvement in stopping coal-based thermal power plants and mining projects with foreign funding. The tribunal found PCIT had jurisdiction to cancel registration retrospectively and that the trust's activities would cause irreparable loss to the nation rather than benefit it.

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Issues Involved:
1. Jurisdiction of PCIT (Central)-2, Delhi to cancel the registration.
2. Retrospective cancellation of registration.
3. Activities of the trust and their alignment with the trust's objects.
4. Maintainability of the stay application.
5. Prima facie case, balance of convenience, and irreparable loss.

Detailed Analysis:

1. Jurisdiction of PCIT (Central)-2, Delhi to Cancel the Registration:
The assessee argued that the PCIT (Central)-2, Delhi did not have the jurisdiction to cancel the registration granted under Section 12A and 12AA of the Act. The assessee relied on various case laws to support this contention. However, the Tribunal noted that the decisions cited by the assessee did not consider the Board Notification No.70/2014 dated 13.11.2014, which empowered the PCIT (Central) to perform/exercise powers and functions stipulated in the Act for cases assigned to Assessing Officers subordinate to them under Section 127 of the Act. Therefore, the Tribunal concluded that the PCIT (Central)-2, Delhi had the jurisdiction to pass the order dated 30.09.2023.

2. Retrospective Cancellation of Registration:
The assessee contended that the cancellation order could not have been passed with retrospective effect. The Tribunal, however, referred to the Delhi Bench decision in the case of Young Indian, which held that the PCIT had the power to cancel the registration with retrospective effect if the activities of the assessee were not in line with its objects or were not genuine. Therefore, the Tribunal held that the PCIT (Central)-2, Delhi had the jurisdiction to cancel the registration with retrospective effect.

3. Activities of the Trust and Their Alignment with the Trust's Objects:
The assessee claimed that it had always acted in accordance with its objects. However, the Tribunal noted that prima facie, the materials and emails gathered during the survey indicated otherwise. The Tribunal highlighted emails and other evidence suggesting that the assessee trust was involved in activities to stop coal-based Indian Thermal Power Plants and coal mine projects, which was not in line with the trust's stated objects. Therefore, the Tribunal found a lack of transparency in the activities of the assessee trust.

4. Maintainability of the Stay Application:
The Tribunal referred to various decisions, including those of the Hon'ble Supreme Court and High Courts, to conclude that the ITAT has the power to grant stay in appropriate cases. The Tribunal held that it has the power under Section 254(1) of the Act to grant stay if the facts and circumstances warrant it.

5. Prima Facie Case, Balance of Convenience, and Irreparable Loss:
The Tribunal noted that for the grant of stay, the assessee has to satisfy all three conditions: prima facie case, balance of convenience, and irreparable loss. The Tribunal found that the assessee failed to make out a prima facie case as the PCIT (Central)-2, Delhi had the jurisdiction to cancel the registration, and the cancellation could be retrospective. The Tribunal also found that the activities of the trust were not in line with its objects, causing irreparable loss to the nation rather than the assessee. Consequently, the balance of convenience was not in favor of the assessee.

Conclusion:
The Tribunal dismissed the stay application of the assessee, holding that the assessee failed to satisfy the conditions for the grant of stay, and the activities of the trust were not being carried out as per its objects. The order dated 30.09.2023 cancelling the registration of the assessee trust with retrospective effect was upheld.

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