2016 (2) TMI 1023

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.... the Act was cancelled. In view of the provision u/s. 12AA (3) of the Act, the main point which was being considered by the authority is that the assessee was carrying out all the activities in the nature of trade, commerce and business etc and his gross receipt became in excess of Rs. 10 lacs. Aggrieved of this order the assessee filed the present appeal before us. 3. The assessee has raised the following grounds of appeal:- 1. The learned DIT(E) erred in holding that he had jurisdiction to cancel the registration u/s. 12AA(3), as the aforesaid Sections applies only if, the activities of the Trust are not genuine or are not being carried out in accordance with the objects of the Trust and neither of these conditions applied because for the last over 35 years the Appellant has been held to be entitled to exemption from tax under section. 2 The DIT(E) erred in holding that the Appellant is hit by the proviso to Sec.2(15) and the Appellant will not be for a charitable purpose and the Trust itself becomes non-genuine for the purpose of Section 11 and therefore, the registration allowed to the Appellant was cancelled/withdrawn as non charitable trust. 3 The Director of Income-ta....

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.... (II) (1), Mumbai, the registration given u/s 12A of the Act was cancelled. The contention of the representative of the assessee is that the DIT(E) has no right to cancel the registration on the basis of nature of activities which were if any found as trade, commerce and business and on the basis of that gross receipt was found in excess of Rs. 10,00,000/-. In support of these contentions the learned representative of the assessee placed reliance upon the law settled in SAE India Vs. DIT(E) [2015]67SOT15/[2014]52taxmann.com 209, Income Tax Appellate Tribunal Chennai Bench and DIT(E), Bangalore Vs. Karnataka Industrial Area Development Board [2015] 229 taxman 539/55 taxmann.com34 Hon'ble High Court of Karnataka and an order pass by the Income Tax Appellate Tribunal C Bench Bangalore dated 08.02.2013 titled as M/s. Kodava Samaj Vs. DIT(E) Banglore and the order of Income Tax Appellate Tribunal, Ahmedabad dated 31.01.2012 titled as Gujarat Cricket Association and the order of Income Tax Appellate Tribunal, Mumbai bench dated 10.07.2013 titled as Khar Gymkhana Vs. DIT(E), Mumbai. 4.1 As discussed above DIT(E) has granted the permission for charitable purposes whose definition has been....

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....dated 10.07.2013 speaks about the non providing the sufficient opportunity of being heard and also speaks about the necessary enquiry to be conducted by the Assessing Officer to know about the nature of trade commerce and business activity of the institution. Before, discussing further it also necessary to advert the provision prescribed in section 12AA (3) of the Act on record:- [Principal Commissioner or] Commissioner, on receipt of an application for registration of a trust or institution made under clause (a) [or clause (aa) of subsection (1)] of section 12A, shall- (a) call for such documents or information from the trust or institution as he thinks necessary in order to satisfy himself about the genuineness of activities of the trust or institution and may also make such inquiries as he may deem necessary in this behalf; and (b) after satisfying himself about the objects of the trust or institution and the genuineness of its activities, he- (i) shall pass an order in writing registering the trust or institution; (ii) shall, if he is not so satisfied, pass an order in writing refusing to register the trust or institution, and a copy of such order shall be sent to the....

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....sub-section, if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner.] 4.3 The said provision speaks about the procedure for registration. The Authority under the said provision is the principal commissioner or commissioner which also deals with the cancellation of registration in view of the provision u/s. 12AA(3). There is nothing on record that the DIT(E) has no power to cancel the permission granted u/s 12A of the Act. The only proviso to the section 12AA(3) is that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. Now it is to be seen whether reasonable opportunity of being heard has been given to the assessee or not. On perusal of the order in question it came into notice that the DIT(E) has issued the show cause notice by virtue of letter No. DIT(E)/ITO(HQ)/Withdrawal/70/2011-12 dated 02.02.2012 stating therein that as to why the registration granted to it should not be withdrawn by the invoking provisions of section 12AA(3) of the Act. It was specifically mentioned in the notice that the activities carried out by the as....