TaxTMI 
TaxTMI 
2021 (4) TMI 214
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....registration of the Appellant is without jurisdiction and, hence, void ab initio. b) The PCIT failed to appreciate that the power of cancellation of registration vests in the authority who has the jurisdiction to grant registration. Admittedly the Commissioner of Income-tax (Exemption) ['CIT(E)'] is the authority who can grant registration, therefore, he is the only authority who can cancel the registration under section 12AA(3)/(4) of the ITA. c) The PCIT failed to appreciate that when the Trust was registered on 10.12.1990, it was merely communicated that the name of the Trust was entered at TR/27968 in the Register of Trusts. There was no formal order granting registration to start with. Hence there is no requirement in law for passing of an order acknowledging the surrender when the Trust chose to surrender such registration. 2 a) The PCIT erred in holding that the surrender of registration by the Appellant vide its letter dated 26.02.2015 filed on 04.03.2015 is not valid and cannot be given effect to as there is no provision under law for acceptance of such surrender. The PCIT erred in not appreciating that the Appellant is entitled to surren....
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....ITA is on date of conversion which in turn has been defined as the date of the order cancelling the registration. c) The PCIT failed to appreciate that multiple SCNs were issued to the Appellant on various dates by the CIT(E) (10.03.2015 and 07.06.2017 referring to the Appellants' surrender letter filed, for violation of section 13(l)(d) of the ITA) as well as the PCIT (dated 08.03.2018 stating violation under section 13(l)(d) and 13(2)(h) of the ITA and 16.08.2019 stating that the activities of the Appellant are not carried out in accordance with the objects of the trust deed in addition to violation under section 13(l)(d) and 13(2)(h) of the ITA) each without disposal of the earlier ones (SCNs) and expanding the scope of the earlier ones. d) The PCIT failed to dispose the SCN dated 10.03.2015 issued by the CIT(E) and failed to appreciate that a change in incumbent who initiated a proceeding cannot abate the proceedings initiated by the erstwhile incumbent. e) The PCIT ought to have held that the impugned order passed under section 12AA(3)/(4) of the ITA, cancelling the registration of the Appellant is effective from the: i) date of the surr....
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.... October 2020, as follows, as also a petition seeking admission of this additional ground of appeal: That the order under section 12AA(3)/(4) of the Income Tax Act, 1961, of the learned Principal Commissioner of Income Tax -17, dated 31st October 2019, is barred by limitation inasmuch as it passed after an unreasonable time from the date of alleged default as well as surrender application filed by the appellant, and the first show cause notice issued by the (income tax) department in this regard. 4. Learned representatives fairly agree that whatever we decide in ITA No 7238/Mum/2019, in the case of Navajbai Ratan Tata Trust vs PCIT which was heard alongwith this set of appeal, will apply mutatis mutandis in this case as well. 5. Vide our order of even date, we have in the case of Navajbai Ratan Tata Trust vs PCIT, observed as follows:- 5. To adjudicate on this appeal, only some of the relevant facts need to be taken note of. The assessee before us is a trust settled by way of the trust deed dated 23rd December 1974, with its main objects including "the advancement of education, learning and industry in all its branches including in economy, sanitary science ....
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.... Sir, Navajibai Ratan Tata Trust is a public charitable trust created by the trust deed dated 23rd December 1974. The trust, on 1st August 1975, had filed the prescribed form no. 10A for registering itself as required under section 12A(a) of the Income Tax Act. We were informed by the communication dated 15th March 1976 that the said application has been entered at Serial No. TR/10925 in the Register of applications under section 12A(a) of the Act maintained by the Income Tax Department. We now refer to Section 12AA(4) of the Act, inserted with effect from 1st October 2014, by the Finance Act (No. 2) Act, 2014, and submit that some of the activities of the Trust are not in compliance with the provisions of Section 13(1) of the Act. We understand that the said non-compliance would be construed as an activity of the trust which is being carried out in a manner that the provisions of Section 11 and 12 of the Act donot apply to exclude either whole or any part of the income of the Trust resulting in withdrawal of registration obtained by us under section 12A(a) of the Act. Accordingly, the assessee does not desire to continue to avail the benefits of registra....
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....rom 1st October 2014, by the Finance Act (No. 2) Act, 2014, and submit that some of the activities of the Trust are not in compliance with the provisions of Section 13(1) of the Act. We understand that the said non-compliance would be construed as an activity of the trust which is being carried out in a manner that the provisions of Section 11 and 12 of the Act donot apply to exclude either whole or any part of the income of the Trust resulting in withdrawal of registration obtained by us under section 12A(a) of the Act. Accordingly, the assessee does not desire to continue to avail the benefits of registration made by the Trustees in 1975. Hence, you are hereby informed that the Trust would not be claiming exemption under section 11 of the Act, since, upon withdrawal of the registration or in any event cancellation of the registration under section 12A of the Act, it would not comply with the requirements of Section 12A(1)(a) read with 12AA(4) of the Act. 3. In view of the above, it is proposed to withdraw registration under section 12A of the Income Tax Act, granted in your case vide registration No. TR/10925 of the erstwhile CIT, Bombay City IV, Bombay....
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....er the registration obtained by the Trust. Pursuant to our letter, we received a Notice dated March 13, 2015, wherein you had proposed to withdraw registration under section 12A of the Act, granted to the Trust vide registration no. TR/10925 and asked us to appear before you on March 20, 2015. Accordingly, on March 20, 2015, the Authorized Representatives of the Trust appeared before you and confirmed their agreement to the action you had proposed to take and stated that the Trust had no objection to your proposal, as the Trust itself had sought the deregistration. As there was no dispute that our request would not be acceded to we proceeded to file our Return of Income for Assessment Year 2015-16, by not availing the benefits under sections 11 to 13 of the Act. The Return of Income was filed on the basis of the normal provisions of the Act. As over fourteen months have elapsed after our meeting on 20th March, 2015, we presume our request has been noted and accepted. We have however, not received a formal communication from you. We therefore, request you to confirm that our understanding is right Thanking you Yours sincerely, On....
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....ee, alongwith five other similarly placed assessee trusts- namely R D Tata Trust, Tata Social Welfare Trust, Sarvjanik Seva Trust, Jameshdji Tata Trust and Tata Education Trust, challenged this show cause notice before the Hon'ble Bombay High Court but subsequently withdrew the writ petition with the liberty to raise all the contentions in appropriate proceedings. Hon'ble Bombay High Court, accordingly, disposed off these petitions vide judgment dated 29th October 2018 observing, inter alia, "we dispose of each of these writ petitions with the liberty to raise all the contentions at an appropriate stage before the appellate forum/authority" and that "the petitions are disposed of with the liberty, as prayed". 13. Once again, proceedings resumed before the respondent Principal Commissioner of Income Tax. It was, inter alia, explained by the assessee that this exercise is an exercise in futility inasmuch as the registration under section 12A has already been surrendered by the assessee and it stood cancelled/ withdrawn with effect from March 2015, for the reasons as follows: (i) The Trust was constituted by trust deed dated 23.12.1974 and obtained registration as pu....
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....ected in the department's own actions. 14. None of these submissions, however, impressed the respondent Principal Commissioner of Income Tax. He proceeded with cancelling the registration of the assessee trust, as granted under section 12A, and he cancelled the registration with effect from the date of his order, i.e., 31st October 2019. The assessee has no grievance whatsoever with the cancellation of the Trust because that is exactly what he had prayed for many years before the date of this order, and the dispute of the assessee is confined to the date from which such cancellation has to be effective. Rival submissions: 15. Shri P J Pardiwalla, learned Senior Advocate, painstakingly took us through the facts of the case in detail and submitted that this entire exercise of cancellation of registration is a nullity in law inasmuch as by virtue of letter dated 11th March 2015, the registration under section 12 A is no longer in existence. He submits that what is provided by Section 12 A is a registration which is the nature of benefit as it is a foundational requirement for the exemption under section 11. It is thus meant to be a beneficial scheme for ....
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..... Every one has a right to waive, and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual, in his private capacity (b), and which may be dispensed with without infringing on any public right or public policy. Thus, a person may agree to waive the benefit of the Statute of Limitations (c). The trustees of a turnpike road may, in demising the tolls, waive the provision of the Act which requires that the demise shall be signed by the sureties of the lessee (d). A passenger may waive the benefit of an enactment which entitles him to carry so many pounds of luggage with him; and he does so, it may be added, by taking a ticket with the express condition that he shall carry no luggage (a). The only person intended to be benefitted by such an enactment is obviously, the passenger himself; and no consideration of public policy is involed in it (b). A company authorised by the statute to levy tolls within a specified maximum is not bound to exact uniform tolls from all persons alike; but is entitled, in the absence of an express provision requiring equality, to remit any part of the tolls to particular persons, at its discretion (c)."....
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....eral rule, any person can enter into a binding contract to waive the benefits conferred upon him by an Act of Parliament, or, as it is said, can contract himself out of the Act, unless it can be shown that such an agreement is in the circumstances of the particular case contrary to public policy. Statutory conditions may, however, be imposed in such terms that they cannot be waived by agreement, and, in certain circumstances, the legislature has expressly provided that any such agreement shall be void." 19. Learned counsel further relies, in support of the same proposition, upon the judicial precedents in the cases of Shri Poosaji Magnilal Vs The South Indian Humanitarian League [(2009) 2 CTC 25 (Mad)], Commissioner of Customs Vs Virgo Steels [(2002) 4 SCC 316)], Vellayan Chettiar Vs Province of Madras [(1947) 49 BOMLR 794], Jain Ram Vs Union of India [(1954) AIR SC 584 (SC)] as also several precedents on the same lines. For the sake of brevity, however, we may not deal with these precedents. 20. It is then contended that unlike Section 18 of the Bombay Public Trust Act, 1950, which mandates every public trust to make an application for registration under the Inco....
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....not be cancelled under this 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. [Emphasis, by underlining, supplied to highlight the plea of the assessee] 22. Learned counsel submits that while section 12AA(3) requires the Commissioner to be satisfied of a 'violation', under sub section 12AA(4) a violation has to be only 'noticed'. Once the assessee has informed the Commissioner of the violation, that satisfies the requirement of Section 12AA(4) inasmuch as the Commissioner cannot say that he has not noticed the violation, and no further satisfaction by the Commissioner is necessary. It is thus contended that the requirements of Section 12AA(4) were clearly satisfied in the present case. It is then pointed out that while under section passing of an order is mandatory under section 12AA(3) inasmuch as it provides that the Commissioner "shall" pass the order, the word used in section 12AA(4) is "may", and, by implication therefore, passing of the order is not mandatory at all. It is further pointed out that while section 12AA(3) provides for an opportunity of hearing to the assess....
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.... Learned counsel further submits that under the scheme of Section 12A, as it then existed and quite in contrast with the scheme of Section 12AA introduced by the Finance Act 1996, there was no requirement for the Commissioner being satisfied about genuineness of the activities of the trust and the requirement of registration was satisfied as soon as the assessee filed the application for registration in the prescribed manner. Our attention was invited to Hon'ble Madras high Court's judgment in the case of New Life in Christ Evangelistic Association Vs CIT [(2001) 246 ITR 532 (Mad)] wherein it is said to have been held that the only purpose of registration under section 12 A was to establish identity of the Trust. Our attention was then invited to the CBDT circular 762 of 1998 which, inter alia, has, referring to the scheme of section 12 A as it then stood, observed that "One of the conditions is that the person in receipt of income shall make an application for registration of trust or institution in the prescribed form and in the prescribed manner to the Chief Commissioner or the Commissioner in the specified time. However, there was no provision in the income tax law for processi....
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....cause notice and after giving due opportunity to the Assessee to respond to the same, pass a reasoned Order as has been done in the instant case. 29. Learned ASG contends that the registration under section 12A does not amount to a benefit simplicitor to the assessee. His line of reasoning is as follows. It is submitted that as would be evident on a bare perusal of the relevant provisions of the Income Tax Act, 1961 registration of a Trust as a charitable or religious entity permits it, inter alia, to claim exemptions on its total income. These exemptions are permitted and provided for, as a quid pro quo for the fact that these bodies are involved in carrying out philanthropic activities. The legislature in its wisdom has deemed it fit to permit entities which seek to help society by performing charitable acts to be entitled to certain benefits from the taxation schemes of the Government. It is further submitted that these benefits however, are not standalone benefits available to any and all trusts but only to trusts that perform charitable activities and meet the criterions mentioned in the statute for this purpose. He submits that the registration is granted only when t....
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....istinct and different from that of registration as a charitable trust, and, for this reason, what is held in the case of Mahendra Mills (supra) would not be applicable in the present context. 30. It is then contended that while the assessee has an option to claim or not to claim the benefit of Section 11, as it is optional, but then, once a registration is granted, it is not at the option of the assessee to have or not to have the registration. Once the registration is granted, and unless it is lawfully cancelled, the assessee is bound by the same. Learned ASG then takes pain to clarify that claiming of benefit under Section 11 may be option of the trust, however, not claiming benefits under section 11 and surrendering the registration granted under section 12A are, two entirely different concepts. It is legally tenable for a Trust to be registered under section 12A of the Act and still opt for not claiming benefits of section 11 of the Act. Reliance is also placed on the registration certificate of one of the group Trusts wherein it is specifically mentioned that registration in itself does not entitle the Trust for claiming exemption under section 11 of....
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....berate violations cannot be brushed aside by surrendering the registration unilaterally as is attempted to be done. If this is allowed, it would result in Trusts registering themselves on the pretext of charitable purposes, then carrying out commercial activities and upon being told to explain the wrongful use of the registration to claim exemptions (if exemptions were otherwise available), surrendering the registration and walking away scot free having abused and violated the law. It is submitted that this could never be the intent or purpose of the law. Even the plain language of the provisions suggests contrary to the assertions of the Trust on this aspect. 31. Learned ASG thus submits that the question of a unilateral surrender cannot and would not arise. In fact, there is no power or provision under the Act whereby a party can unilaterally effect a surrender of the registration. Section 12AA(3) and (4) expressly provide for an Order in Writing for cancelling the registration. Necessity of passing an order is a statutory requirement without which the registration of a Trust cannot be cancelled, meaning thereby that the registration under section 12A of the Act continue....
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....sion is even buttressed by the clear legislative mandate of an Order in Writing being passed to cancel the registration. Hence, the legislature has consciously provided for an order of cancellation to be passed and not permitted a unilateral act of surrender. 34. It is contended that the appellant on its own considered it necessary to have the formal cancellation order as necessary as would be evident on a bare perusal of the letter dated 11th March, 2015. The letter dated 11/03/2015 sent by the Trust to Commissioner of Income-tax (Exemptions), Mumbai also bears out that even the Trust contrary to its present assertion, understood the statute in the same sense. The letter admits that there has been a violation and hence, states that they would no longer seek exemption. The letter expressly records that, "Accordingly, the Trustees do not desire to continue to avail the benefits of the registration made by the Trustees in 1975. Hence, you are hereby informed that the Trust would not be claiming exemption under Section 11 of the Act, since upon withdrawal of the registration or in any event cancellation of the registration under Section 12A of the Act, it would not comply wit....
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....r of Income tax (Exemptions), Mumbai admits that there has been a violation and hence, states that they would no longer seek exemption. The letter expressly records that, "Accordingly, the Trustees do not desire to continue to avail the benefits of the registration made by the Trustees in 1975. Hence, you are hereby informed that the Trust would not be claiming exemption under Section 11 of the Act, since upon withdrawal of the registration or in any event cancellation of the registration under Section 12A of the Act, it would not comply with the requirements of Section 12A(1)(a) read with 12AA(4) of the Act". The clear language of the letter suggests that the Trust was not seeking to surrender the registration. In fact, no words to the effect "surrender" or "relinquish" even found in the said letter. A bare perusal of the portion quoted above, would evince that what was urged by the Trust is that they would not claim the benefits of registration i.e. the exemption and not that they were surrendering the same. As explained above, there is a difference and distinction between registration and claiming the exemption. It is contended that the letter only suggested that no exemption wo....
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....prohibited modes of investment, shows their disregard to the objects of the Trust Deed as well as to the provisions of Income Tax Act. The aforesaid wilful / conscious activities carried out by the trustees are against the basic objects of the trust within the meaning of the provision of section 12AA(3) of the Act. It is also contended that in the present case, the purported surrender on 11th March, 2020 was not genuine but merely an attempt to escape liability for past wrongdoings and as such a letter addressed for collateral and/or oblique purposes. It is claimed that the trustees knew that they had violated the provisions of section 13(1)(d) of the Act, and they would not be able to avail of the benefits of exemption under sections 11 and 12 of the Act. This fact had been affirmed by the Hon'ble ITAT, Mumbai in 2014 in the case of Jamshetji Tata Trust. Therefore, once the final fact-finding authority, had confirmed the Trust's violation of the aforesaid provisions, this Trust (being a group concern of Jamsetji Tata Trust) was left with no other alternative but to give up the benefits of registration. Therefore, it is submitted that this act on the part of the Tr....
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....garding the so called unilateral surrender of registration granted to the assessee under section 12A. We are thus urged to uphold the impugned order and decline to interfere in the matter. Learned ASG vehemently opposes admission of the additional ground of appeal as it would require reference to many facts of the case which are not already on record. He submits that what is an inordinate delay, and what is not an inordinate delay, is essentially a factual question which cannot be agitated at this stage. In any case, such an investigation would require a reference to a large number of factual aspects which is not possible at this stage. He finally submits that if this aspect is to be adjudicated, the matter is required to be adjourned as hearing on that aspect, given the present limited facts, is not possible. 39. Learned counsel for the assessee, in his rejoinder, points out that the short question before us is the date from which the cancellation has to be effective- the date on which the assessee wrote to the Commissioner that the assessee is no longer eligible for the benefit of exemption under section 11 and, therefore, there is no point in his conti....
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....ressed and submit that we must hold the cancellation to be effective from 11th March 2015. 40. We have given our careful consideration to submissions made by Shri P J Pardiwala, learned senior counsel for the assessee, as also by Shri Anil C Singh, learned Additional Solicitor General of India. We have also carefully perused the material on record and duly considered facts of the case in the light of the applicable legal position. Our analysis: 41. It is only elementary that the registration under section 12A of the Income Tax Act, 1961 is a foundational requirement for tax-exemption of charitable institutions under section 11, and the usual litigation before us, therefore, is the litigation wherein a trust seeks the aforesaid registration, when it is not granted, or seeks it with effect from a date prior to the date on which it is granted, when it is granted, so that a trust can avail more of the tax-exemption, if admissible, under section 11. In this case, however, while the assessee claims that the registration was surrendered on 10th February 2015, and, therefore, the trust should not be treated as registered charitable trust, for the application of S....
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....son in receipt thereof for that previous year. [Emphasis, by underlining, supplied by us] 45. The manner in which the above provision has been construed is this. As long as the assessee trust is registered as a charitable institution, by obtaining registration under section 12A or by being granted registration under section 12AA(1)(b), the assessee will not be entitled to any of the exemptions, barring under section 10(23C)(1), under section 10 of the Act. That is how this provision has been construed by the income tax authorities. Without going into the validity of that approach, which is not the subject matter of adjudication by us anyway, let us see the corollaries of this approach. Going by this logic, so far as dividend from Indian companies is concerned, the assessee, for the reason of registration as a charitable institution under section 12A, is deprived of exemption under section 10(34). To this extent, the registration under section 12A acts as a disability for the assessee, and, by thus ensuring that the registration under section 12A continues to remain in existence, the assessee is denied exemption under section 10(34). Effectively thus, the continuan....
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....al provisions and general provisions. Once an assessee, to borrow the words used in the circular, "voluntarily opts for the special dispensation, it should be governed by these specific provisions and should not be allowed the flexibility of being governed by other general provisions or specific provisions at will". The intention of the legislature was thus unambiguous; all that the legislature intended was to eliminate the unfettered choice between the general exemption and the specific exemption. However, the way this provision is being interpreted by the income tax authorities is that once an assessee is a registered charitable institution, irrespective of admissibility or even claim for exemption under section 11, the exemption under section 10(34) is inadmissible. That is how admittedly this provision has been construed by the revenue authorities, and that approach, coupled with the facts set out earlier, puts the assessee to a clear tax disadvantage. Effectively thus, as a result of the trust being held to be a charitable trust registered under section 12A, the trust is declined the exemption of dividends received by the trust from the domestic companies- an exemption which i....
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....o as tax on accreted income) at the maximum marginal rate on the accreted income. (2) ............................ 50. This additional tax burden would not come into play in case the deregistration is with effect from the date on which the registration is claimed to have been surrendered i.e. 19th February 2015, the date on which the hearing in this respect is concluded by the Principal Commissioner of Income Tax, i.e. 20th March 2015, or even when it is taken as within a reasonable period from the date of conclusion of this hearing, say within 365 days from the date of closing the hearing i.e. 20th March 2016. Therefore, the date of cancellation of registration has an important bearing on this tax liability as well. 51. It would thus indeed seem that the actual trigger, and proximate reason for this unwelcome generosity of extending the benefit of registration under section 12 A, is the possible denial of exemption of dividends from domestic companies, under section 10(34) as also the fact that there may be certain adverse tax implications under section 115 TD on account of the effect of cancellation being after 1st April 2016, which result in more tax r....
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....e "circulars of the CBDT are, as we shall presently point out, binding on the tax department in administering or executing the provisions enacted in subsection (2), but quite apart from their binding character, they are clearly in the nature of contemporanea expositio furnishing legitimate aid in the construction of sub-section (2). The rule of construction by reference to contemporanea expositio is a well-established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous". Quite clearly, therefore, the CBDT circulars, as an aid for interpretation of the law as also as a binding authority on the field authorities employed in the execution of the Income Tax Act, provide a legitimate basis for understanding the provisions of the Income Tax Act. 54. In this light, let us once again take a look at the CBDT circular no 1/ 2015 (supra). This circular, relevant extracts from which we have reproduced earlier as well, specifically notes that "Sections 11, 12 and 13 of the Income-tax Act are special provisions governing institutions which are being ....
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....ion below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return Of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.". 56. Clearly, therefore, registration under section 12A was a condition precedent for availing section 11 exemption. An exemption is clearly in the nature of a benefit, and, therefore, meeting a precondition for exemption is also a benefit. The registration under section 12A did not put the assessee under any obligation to do, or refrain from doing, anything. It was so for the reason that even if someone has registration under section 12A, and yet it does not perform any charitable activities or meet the requirements under the scheme of, as CBDT terms it, "special dispensation" of "Sections 11, 12 and 13 of the Income-tax Act...... special provisions governing institutions which are being given the benefit of tax exemption", all that happens to the assessee is that the assessee does not get the said exemption. It was exemption under section 11, which was given as quid pro ....
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....mulated monies are required to be used for charitable purposes and be invested as per the provisions of the Act (See Section 11 to 13)". These obligations, however, are vis-à-vis the exemption under section 11 and not vis-à-vis registration under section 12A. An assessee may be registered under section 12A and yet it may not claim an exemption under section 11, and, in such a situation, all these provisions relied upon by the learned ASG do not come into play. The registration under section 12A does not, therefore, put any such obligations on the assessee. It is an exemption under section 11, which puts these obligations on the assessee, but that is not the issue before us. Right now, we are only concerned about the implications of Section 12A. 58. Learned ASG has repeatedly stated that "registration is not granted for the asking but is dependent upon the applicant being otherwise in conformity of the provisions of the statute and in a sense, undertaking to comply with the statute and the purpose of rendering charitable services" and that "registration is not a benefit available to all but a benefit which can be claimed by the Trusts which meet the criterions....
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....n an unwilling assessee. 60. We have also noted that, on 11th March 2015, the assessee on his own had informed the assessee that on account of its investment pattern becoming incompatible with the amended provisions Section 13(1) and in view of the provisions of Section 12AA(4), the assessee is no longer eligible for the continuance of registration under Section 12A. Once the learned Commissioner "noticed" this position admitted by the assessee, it was his duty to pass an order in writing withdrawing the registration. For ready reference, the relevant legal provision, i.e. section 12AA(4), is being reproduced once again as below: (4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A, as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996), and subsequently it is noticed that (a) the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such tru....
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....cise power which is invested in aid of enforcement of a right-public or private-of a citizen". While it was well within the notice of the Commissioner that it was a fit case for cancellation of registration obtained under section 12A and the assessee had informed, as also accepted, that position, learned Commissioner did not exercise his powers of cancellation. The Commissioner does not have a choice about taking or not taking a call in these proceedings. He had to take a call one way or the other in this matter. Such inaction on the part of the Commissioner simply cannot meet any judicial approval. What is done next is to ignore these proceedings without bringing them to a logical conclusion and start fresh proceedings, after a long gap, on a standalone basis, dehors the pending proceedings. That is equally impermissible. When the proceedings for cancellation of registration are pending for disposal, there cannot be another initiation of proceedings for the same purpose. What makes these proceedings even more unsustainable in law is the fact the delay in cancellation of registration has tax implications to the disadvantage of the assessee, and, to that extent, one will ha....
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....was thus required to be effective, at the most, from 20th March 2015. 62. We have also held that registration under section 12A, on the facts of this case and having been granted prior to 1st April 1997, was in the nature of a benefit to the assessee, and, therefore, it could not have been thrust upon an unwilling assessee. Be that as it may, this aspect of the matter is not really decisive, even if quite relevant, because as we have in the preceding discussion, once the Commissioner notices the admitted violation of Section 13(1), it was his duty, not only power, to cancel the registration granted under section 12A, and this has to relate back, at the minimum, to the date on which hearing in this matter was concluded. The inordinate delay in cancellation of registration, which is wholly attributed to the revenue authorities, cannot be placed to the disadvantage of the assessee. 63. As learned ASG rightly puts it, an order in writing for cancellation is a statutory requirement to bring an end to the registration. There can be no dispute with this proposition. The question, however, is the date from which such an order has to be effective, and on that aspect, we ha....
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....is not eligible for exemption under section 11, and the assessee is content with that position. Any academic discussions about the nuances of this position at this stage is unwarranted. Of course, at the time of the related assessments or related proceedings, the Assessing Officer can deal with that those aspects of the matter. The trouble, however, is that given the complex web of legal developments, the cancellation is made effective from a later date the assessee is being put to a disadvantageous legal position and tax implications. If the assessee does not comply with the permissible mode of investment, for trusts what follows is the denial of exemption under section 11, but such a non-compliance cannot justify or legitimize the cancellation of registration being effected from a later date, than the date on which cancellation ought to have been effected, so as to put the assessee in a disadvantageous legal position with tax implications other than the legal, including penal, consequences for the non-compliance in question by the assessee. We cannot approve the approach adopted by the revenue authorities. 66. The question of whether the assessee had the powers, under th....
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....i.e., 20th March 2015, since, without disposing of the said matter, the Commissioner, or his successors, could not have started other parallel proceedings for cancellation of registration obtained under section 12A. The registration having been "obtained" under section 12A was in the nature of a benefit to the assessee, and it was, therefore, entirely at the option of the assessee. In our considered view, an assessee unwilling to avail the "benefit" of registration "obtained" under section 12A cannot be, directly or indirectly and by actions or by inactions, compelled by the revenue authorities, to continue with the said registration "obtained' by the assessee, particularly when it pertained to the registration obtained in a period prior to the insertion of section 12AA. The present cancellation of registration under section 12A must, therefore, be held to be effective from 20th March 2015. To this limited extent, we uphold the plea of the assessee. 69. We have noted that many other peripheral issues, with regard to the conduct of the assessee trust and compliance with the statutory provisions under section 11 to 13, are raised in the course of the impugned proceedings. In....