Specified violation for registration cancellation must be pleaded specifically; cancellation cannot rest on assessment-stage diversion alone.

Cancellation of registration under Section 12AB(4) was quashed because the authority invoked Explanation clauses (a) and (e) without showing that the society's predominant educational activity was non-genuine or conducted contrary to registration conditions; alleged benefits to specified persons under Section 13(1)(c) do not by themselves constitute a 'specified violation' warranting cancellation and are to be addressed at assessment; show-cause notices failed to specify the particular Explanation limb relied upon, vitiating proceedings; the 'specified violation' regime introduced effective 01.04.2022 cannot be applied retrospectively; and PCIT (Central), Kanpur lacked delegated jurisdiction to cancel registration. Appeal allowed.

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Issues: (i) Whether cancellation of registration under section 12AB(4) could be sustained by invoking Explanation clauses (a) or (e) when the society's predominant activity of imparting education was not shown to be non-genuine or carried out contrary to registration conditions; (ii) Whether allegations of benefit to specified persons under section 13(1)(c) can, by themselves, constitute a 'specified violation' warranting cancellation of registration under section 12AB(4); (iii) Whether the show-cause notices and communications adequately specified the particular clause of the Explanation to section 12AB(4) relied upon (notice specificity and natural justice); (iv) Whether Section 12AB(4) (and its concept of 'specified violation') could be applied retrospectively to earlier assessment years prior to its effective date of 01.04.2022; (v) Whether PCIT (Central), Kanpur had jurisdiction to cancel the registration instead of the authority that granted registration (CIT (Exemptions)).

Issue (i): Whether Clause (e) or Clause (a) of Explanation to Section 12AB(4) could be validly invoked where the society's predominant activity of imparting education was ongoing and not shown to be sham or in breach of registration conditions.

Analysis: The Tribunal examined the statutory language of Section 12AB(4) and its Explanation, the nature of Clause (e) (activities not genuine or not in accordance with registration conditions), the facts that the society ran recognised schools continuously, and that the PCIT's findings were confined to discrete alleged financial irregularities rather than any finding that core educational activities were a facade or that conditions of registration were breached. Precedents (Karnataka High Court decisions and Tribunals) were applied to distinguish between isolated transactions and the genuineness of predominant activities; the Tribunal also reviewed Form No.10AC conditions and found no pleaded or established violation of those conditions.

Conclusion: Clause (e) and Clause (a) of Explanation to Section 12AB(4) could not be validly invoked on the facts; cancellation on that basis was legally unsustainable. Conclusion favours the assessee.

Issue (ii): Whether alleged benefits to specified persons under Section 13(1)(c) amount to a 'specified violation' under Explanation to Section 12AB(4) warranting cancellation of registration.

Analysis: The Tribunal analysed the statutory scheme of Section 13 and the post-amendment framework (Finance Act changes and introduction of Section 115BBI) showing legislative intent to confine consequences of Section 13 violations to assessment-stage taxation/denial of exemption to the extent of diverted income. The Explanation to Section 12AB(4) does not include clauses corresponding to Section 13(1)(c)/(d) as 'specified violations'. Judicial precedent and CBDT guidance were relied upon to show that stretching Section 13 into grounds for cancellation would defeat the statutory distinction between assessment consequences and registration withdrawal.

Conclusion: Alleged violation of Section 13(1)(c) does not, by itself, constitute a 'specified violation' for cancellation under Section 12AB(4). Conclusion favours the assessee.

Issue (iii): Whether the show-cause notices and the PCIT's communications sufficiently identified the specific clause of the Explanation relied upon, and whether failure to specify vitiates the proceeding.

Analysis: Tribunal reviewed the notices and found only omnibus allegations without identification of the specific Explanation clause relied upon. It held that specifying the particular limb is a mandatory jurisdictional requirement because each 'specified violation' carries different factual and legal connotations; absence of such specification deprives the assessee of meaningful opportunity to meet the charge and vitiates the jurisdictional basis for initiating cancellation proceedings. Tribunal relied on its coordinate decisions on notice specificity.

Conclusion: Notices lacking specification of the particular clause of the Explanation vitiate the cancellation proceedings. Conclusion favours the assessee.

Issue (iv): Whether Section 12AB(4) and the concept of 'specified violation' introduced effective 01.04.2022 could be applied retrospectively to assessment years prior to that date.

Analysis: Tribunal applied principles of strict and prospective construction of fiscal statutes creating disabilities and examined legislative materials (Memorandum to Finance Bill 2022) and authoritative guidance; it concluded there was no clear legislative intent to apply the new 'specified violation' regime retrospectively. The tribunal noted that the PCIT applied Section 12AB(4) to earlier assessment years without authority.

Conclusion: Section 12AB(4) cannot be applied retrospectively to years prior to 01.04.2022; retrospective application in this case was invalid. Conclusion favours the assessee.

Issue (v): Whether PCIT (Central), Kanpur had jurisdiction to cancel registration in place of the authority competent to grant/cancel registration (CIT (Exemptions)).

Analysis: Tribunal examined Section 127 transfer provisions, the Explanation of 'case' in Section 127, Rule 17A, CBDT Notification No.52/2014 (territorial/subject-matter jurisdiction of CIT (Exemptions)), and related precedent. It held that the transfer under Section 127 pertains to assessment machinery and does not transfer original power to grant or cancel registration vested in CIT (Exemptions) absent explicit Board authorisation; the CIT (Exemptions) had not validly delegated registration cancellation powers to PCIT (Central) for the purpose of Section 12AB(4). Tribunal concluded PCIT (Central), Kanpur lacked jurisdiction to cancel registration.

Conclusion: PCIT (Central), Kanpur lacked jurisdiction to pass the cancellation order; conclusion favours the assessee.

Final Conclusion: The impugned order cancelling the society's registration under Section 12AB is quashed on multiple independent grounds (misapplication of Clause (e)/(a), improper reliance on Section 13(1)(c), defective/unspecific notices, impermissible retrospective application, and lack of jurisdiction of PCIT (Central)); accordingly the appeal is allowed and the cancellation is set aside.

Ratio Decidendi: Cancellation of a trust or institution's registration under Section 12AB(4) requires a clear jurisdictional foundation: (a) the specific limb of the Explanation relied upon must be identified in notice; (b) cancellation is confined to cases where predominant activities are non-genuine or registration conditions are breached; (c) alleged diversion under Section 13 is to be addressed at assessment stage and does not, by itself, constitute a 'specified violation' for cancellation absent statutory specification; and (d) powers to cancel registration vested in the authority that grants registration cannot be assumed transferred by ordinary assessment-case centralization under Section 127 without explicit authorisation.

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