TaxTMI 
TaxTMI 
2019 (8) TMI 854
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....g to the impugned orders briefly stated is that the appellant is an educational institution registered under the Societies Registration Act 1860 running in the name and style of St. Michael's High School. The educational activities of the appellant are regulated under the memorandum of association as well as the rules and regulations framed there under and it is bearing consideration of the avowed object for which the institution was set up that the appellant was granted registration under Section 12AA of 'the Act' bearing registration no. 7/84-85 on 26.04.1985 by the respondent Commissioner. The copies of the memorandum of association as well as the rules and regulations framed by the institution together with the registration so granted under Section 12AA of 'the Act' are enclosed at Annexures 1 and 2 respectively to the appeal. It is after a lapse of more than 26 years that the appellant institution was served with a show cause notice issued from the office of the Commissioner of Income Tax I, Patna which is dated 09.08.2011 putting the appellant on show cause as to why his registration under section 12AA be not cancelled. The notice dated 09.08.2011 is issued by the Commissi....
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....of the trust or institution that such an order can be passed and not in any other circumstance. In reference to the orders put to challenge it is submitted by Mr. Pathy that no such instance has been laid down in the orders impugned of the appellant either of the activities of the institution being not genuine or not being carried out in accordance with the objects for which it had been set up rather it is bearing note of certain decisions taken in the board meeting and forming an opinion as to the eligibility of the appellant to the exceptions present in Section 13 (1) (b) that the registration itself has been canceled. According, to Mr. Pathy, the foundation for the exercise under Section 12AA (3) of 'the Act' is entirely distinct with the scope and extent of exercise under Section 13(1) (b) of 'the act' inasmuch as even if any part of the income of the institution enjoying the registration under Section 12AA of 'the act' is not found eligible from exemption, such instance ipso facto is not sufficient to warrant a cancellation of the registration itself until there is a satisfaction recorded by the Commissioner or the Principal Commissioner of Income Tax that the activities of....
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....he resolutions so present, has canceled the registration which order suffers no infirmity. Learned counsel has made reference to the provision of Section 2(15) of 'the Act' to submit that it explains the term 'charitable purpose' and it is every activity which is to the benefit of the public in general which comes within its fold. In reference to the show cause notice at Annexure 3 it is submitted by learned counsel for the department that since it was noted that the appellant was espousing the cause of a religion in particular and was using its income for benefit of a particular religious community that in view of the provisions so present in Section 13(1) (b) of 'the Act' the appellant was put on notice and since the reply present at Annexure 4 failed to satisfy the Commissioner of Income Tax, the impugned order was passed which has been confirmed by the Tribunal. According to Ms. Sinha even if the appellant institution was set up with a benevolent object, in case it deviates from its object, there is sufficient power vested in the Commissioner of Income Tax under Section 12AA (3) to cancel such registration and it is bearing note of the deviation in the activities of the appe....
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....f Income Tax was taken was for the benefit of a particular religious community, and which in turn made the appellant institution ineligible for exclusion of his total income under sections 11 and 12 of 'the Act' in view of the provisions present in Section 13(1) (b) of 'the Act'. It is drawing such premise that the notice was served on the appellant on the proposed action for cancellation of registration granted under Section 12AA of 'the Act'. Although exhaustive arguments have been advanced by Mr. Pathy, for the petitioner as well as Ms. Sinha, learned counsel appearing for the Income Tax Department but in our opinion the entire issue revolves around the question, whether or not, the power has been exercised by the Commissioner, Income Tax in accordance with the provisions of Section 12AA(3) of the Act or he has overstepped his jurisdiction in the process and which illegality, if any, has been perpetuated in the confirmation order passed by the tribunal. The show cause notice issued under Section 12AA(3) of 'the Act' as noted above, takes notice of the resolutions passed by the governing body in its meeting held from time to time and there is nothing left for speculating th....
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....x on being satisfied that the petitioner was entitled to a registration for exemption under Sections 11 and 12 of 'the Act' was granted registration under the existing provisions of Section 12A(a) of 'the Act' on 26.04.1985 as a charitable institution thus, eligible for exemptions so provided under 'the Act'. Section 12AA was incorporated in the Act by the Finance (2) Act, 1996 laying down the procedure for registration and Section 12AA (3) interalia laid down the procedure for cancellation of such registration granted to any charitable institution under Section 12A of 'the Act' as it stood before the amendment, under certain conditions which are eloquent from the provisions itself and is reproduced herein below for ready reference : "(3) Where a trust or an institution has been granted registration under Clause (b) of Sub- Section 1 or has obtained a registration at any time under Section 12A as it stood before its amendment by the Finance (No. 2) Act, (33 of 1996) and subsequently the Principal Commissioner or Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust....
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....llation i.e. whether or not the resolution so passed demonstrated that the activities of the institution was not genuine ; or whether the institution had violated its object. The show cause notice as well as the order is absolutely silent on this score for there is no finding of any such violation by the petitioner institution. Law in this regard is too well settled and where a statute provides an act to be done in a particular manner it has to be done in that manner alone and every other mode of discharge is clearly forbidden. It is unfortunate that the statutory authorities, performing quasi judicial functions have kept themselves oblivious of such settled legal position. Applying the doctrine to the case in hand, it is seen that it is on being swayed by the resolution of the governing body that the order of cancellation has been passed by the Commissioner without recording any satisfaction, either on the issue that, the activities of the school are not genuine and /or that it is not being carried out in accordance with the objects for which the institution had been set up. In such eloquent circumstances we are in no confusion to hold that it is only on fulfillment of such ....