TaxTMI 
TaxTMI 
2008 (9) TMI 438
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.... cancelling the registration under s. 12A granted to the appellant by resorting to the provisions of s. 12AA(3). 2. The learned CIT erred in holding that the cash and the various loose papers found with Shri R.D. Shinde during the search belong to the assessee. He failed to appreciate that under s. 132(4A) the presumption had to be drawn that they belonged to Shri Shinde. 3. The learned CIT erred in holding that the assessee had charged donations for admissions and thereby violated the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. 4. The learned CIT erred in cancelling registration on presumptions and surmises without appreciating the correct facts and the position of law. 5. The appellant craves leave to add, alter, amend or delete any of the above grounds." 3. One of the issues raised before us is that powers conferred on the CIT, under s. 12AA(3), did not extend to cancellation of registration granted under s. 12A. A line of demarcation is drawn between the registrations granted under s. 12A and registrations granted under s. 12AA. It is also claimed that this issue is no longer res integra inasmuch as there are decisions of Co-ordinate Ben....
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....the capitation fees was collected from the students seeking admissions in educational institutions run by the assessee trust, and that the monies so collected were in violation of Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987, the CIT came to the conclusion that the activities of the trust were illegal, and, accordingly, was a fit case for cancellation of registration by invoking his powers under s. 12AA(3) of the IT Act, 1961. 6. Dr. Pathak, however, submits that the CIT fell in error in assuming that the powers vested in him extended to the registrations granted under s. 12A as well. Dr. Pathak submits that s. 12AA(3) was introduced by the Finance (No. 2) Act, 2004 w.e.f. 1st Oct., 2004, which provided that when a trust has been granted registration under cl. (b) of sub-s. (1) of s. 12AA and subsequently the CIT is satisfied that the activities of such trust are genuine or are not being carried in accordance with the object of the trust, the CIT shall pass an order in writing cancelling the registration of such trust. It is emphasized that the CIT has the jurisdiction of cancellation only if registration has been granted under sub-s. (1) of s. 12....
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....that the trust is genuine and also carrying on its objects as prescribed in the trust deed, hence the order of the CIT was bad in law. Nowhere, the Revenue Department has denied the fact that the trust is running several educational institutions and the benefit is given to thousands of students. When those activities are being carried out, then it was wrong to hold a view that the educational activities were not carried out by the institute. The activities carried out by the institution were exactly as per the object for which the institution was created; hence, sub-s. (3) has been wrongly invoked by the CIT. On the strength of these elaborate arguments as also on the basis of arguments on merits, which we do not consider appropriate to refer at this stage, we are urged to set aside the impugned cancellation order passed by the learned CIT. Shri M.K. Dubey has supported the orders of the CIT, cancelling the registration. Apart from a strong reliance on findings of the CIT on merits to the effect that the activities of the trust were not within the framework of law, learned Departmental Representative has taken us through the wordings of s. 12A and argued that the said provision nei....
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....s, the assessee has not committed any illegality and the order passed by the learned CIT proceeds on certain fallacious assumptions such as that the money found with Shinde belonged to the assessee, that the capitation fees was received and that there was any violation of anti-capitation fees legislation. As for J&K Bank's case, it was submitted that this decision also has no bearing on the issues in appeal before us as it does not deal with the provisions of s. 12A. It was submitted that as far as this Tribunal is concerned, the short issue is whether or not registration under s. 12A can be cancelled at this stage. This does not, however, prejudice the action of the assessment authorities in accordance with the law. We were once again urged to vacate the order of the CIT. 7. We have heard the rival contentions, perused the material on record and duly considered factual matrix of the case as also the applicable legal position. 8. The plea of the assessee meets our approval. In our considered view, a registration granted under s. 12A of the Act cannot be withdrawn or cancelled by the CIT by invoking the provisions of s. 12AA(3) of the Act. Sec. 12AA(3) provides that "where a trust....
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....anted under the section. This view was again taken by the Tribunal in various cases relied upon by the learned counsel for the assessee. Hon'ble Uttaranchal High Court, in the case of Welham Boys' School Society has also held that the CIT cannot withdraw or cancel a registration granted under s. 12A, as he cannot be inferred to have any implied or inherent power to cancel the registration. We may also add that provisions of sub-s. (3) of s. 12AA were brought on the statute book w.e.f. 1st Oct., 2004 by Finance (No. 2) Act, 2004. The provisions of this section are substantive in nature since the same affect the valuable right of the assessee and therefore, in our opinion are prospective and cannot be given retrospective effect, in view of the decision of the Supreme Court in the case of Sedco Forex International Drill Inc. & Ors. vs. CIT (2005) 199 CTR (SC) 320 : (2005) 279 ITR 310 (SC) wherein it has been held that even the provisions of an Explanation cannot be given retrospective effect unless specifically provided by the statute. It is not the case of the Revenue that legislature specifically provided the retrospective effect of such provision. Therefore, it is also to be held t....