Charitable registration restored where limitation, jurisdiction, and alleged violations did not justify cancellation of educational status.

Cancellation of charitable registration was held unsustainable where the statutory limitation ran from the first notice under section 12AB(4)(i), not the survey date, and the cancellation order was issued within time. The Principal Commissioner (Central) was held to have jurisdiction in a centralized case. Alleged section 13-type violations, cash stipend payments, hotel and restaurant operations linked to skill training, and other disputed transactions were not treated as specified violations justifying withdrawal of registration; they were at most assessment or exemption issues. On the material before the ITAT, the institution's dominant activity was skill development and education, so its charitable character remained intact and registration was restored.

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Issues: (i) whether the order cancelling registration was barred by limitation; (ii) whether the Principal Commissioner (Central) had jurisdiction to cancel registration; (iii) whether the alleged violations, including benefit to specified persons, hotel and restaurant operations, cash stipend payments, and other non-charitable activities, justified cancellation of registration under section 12AA and section 12AB; and (iv) whether the assessee's activities were charitable and educational in nature.

Issue (i): whether the order cancelling registration was barred by limitation.

Analysis: The limitation under section 12AB(5) runs from the end of the quarter in which the first notice under section 12AB(4)(i) is issued. The first show-cause notice was issued on 10.02.2025 and the cancellation order was passed on 29.09.2025, i.e., within the prescribed period. The date of survey under section 133A could not be substituted for the statutory notice contemplated by section 12AB(5).

Conclusion: The order was not barred by limitation.

Issue (ii): whether the Principal Commissioner (Central) had jurisdiction to cancel registration.

Analysis: A conjoint reading of Notifications No. 52/2014, 50/2014 and 70/2014, along with section 127 of the Income-tax Act, 1961, shows that once the case stood centralized to an Assessing Officer subordinate to the Principal Commissioner (Central), the latter could exercise the powers and perform the functions under the Act in relation to the case, including cancellation of registration. The notification governing exemption jurisdiction did not exclude such power in centralized cases.

Conclusion: The Principal Commissioner (Central) had jurisdiction.

Issue (iii): whether the alleged violations, including benefit to specified persons, hotel and restaurant operations, cash stipend payments, and other non-charitable activities, justified cancellation of registration under section 12AA and section 12AB.

Analysis: Allegations founded merely on section 13(1)(c) and section 13(1)(d) violations do not, by themselves, constitute specified violations under section 12AB(4). The evidence showed that payments for office upkeep, skill-development-related operations, and stipend disbursements did not establish a statutory basis for cancellation; the cash stipend issue was at most a procedural lapse. The hotel and restaurant activity was undertaken under government-linked arrangements for skill training, with surplus-sharing terms and no material showing a purely commercial venture. Alleged bogus transactions, loans, salaries, and reimbursements were treated as matters affecting exemption or assessment, not as a legally sustainable basis for withdrawing registration on the facts proved.

Conclusion: The alleged violations did not justify cancellation of registration.

Issue (iv): whether the assessee's activities were charitable and educational in nature.

Analysis: The assessee's objects, agreements with skill-development bodies and industry partners, deployment of faculty, structured training, apprenticeship implementation, and evidence of training activity established that the dominant activity was skill development and education within section 2(15). Incidental business receipts, if any, and operational arrangements did not alter the charitable character on the material before the Tribunal.

Conclusion: The assessee was engaged in charitable and educational activities.

Final Conclusion: The cancellation of registration could not be sustained on the grounds examined, and the earlier registration was directed to be restored.

Ratio Decidendi: Cancellation of charitable registration can be sustained only on a statutory ground specifically made out under the governing provision; alleged violations relatable to assessment consequences or procedural lapses, including section 13-type issues not covered by the definition of specified violation, do not by themselves justify withdrawal of registration where the dominant educational and charitable character of the institution is established.

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