TaxTMI 
TaxTMI 
2025 (6) TMI 1756
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.... "1. That on facts and in law, the Ld. Principal Commissioner of Income Tax (Central)-3, Delhi ("Ld. PCIT") erred in passing the impugned order dated 30.12.2024 under Section 12A read with Sections 12AA and 12AB(4) of the Income-tax Act, 1961 ("the Act") sans lawful jurisdiction and in a pre-determined, arbitrary and mechanical manner by exclusively relying on 3rd party statements which have not been subjected to crossexamination, rendering the impugned order non est and void ab initio. 2. That on facts and in law, the Ld. PCIT failed to appreciate that the power to cancel registration under Section 12AB(4) of the Act is vested exclusively with the Principal Commissioner/Commissioner of Income Tax (Exemption) vide CBDT Notification No. 52/2014 dated 22.10.2014, and the exercise of such powers by the Ld. PCIT/Respondent is without jurisdiction and also contrary to the provisions of Section 119 of the Act. 3. That on facts and in law, the Ld. PCIT erred in relying on per incuriam decisions to assume jurisdiction by ignoring the binding precedents of the Co-ordinate bench of this Ld. Tribunal vide Lakhmi Chand Charitable Society v. PCIT (Central)-3 (ITA No. 18....
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....Central Circle 29 Delhi was satisfied that the assessee had committed certain specified violations as per explanation to Section 12AB(4) of the Act. Hence, the case of the assessee was referred to the learned PCIT (Central) proposing cancellation of registration of the assessee as per second proviso to Section 143(3) of the Act substituted by Finance Act, 2022 and applicable from 1.4.2022 onwards. 4. Based on the said reference, the Learned PCIT (Central) on 30.6.2024 issued the show-cause notice proposing the cancellation of registration of the assessee society under section 12AB(4) r.w.s. 12A and 12AA of the Act. The assessee filed its replies objecting to the jurisdiction of the Learned PCIT (Central) in issuing the show-cause notice and also filed its objections on merits. It was submitted that the Learned CIT (Exemptions), Delhi would be the prescribed authority who is vested with the power to cancel such registration as per the binding CBDT Notification No. 52/2014 dated 22.10.2014. It was submitted that the jurisdiction of the Learned PCIT (Central) was limited only to the matters of assessment and does not encompass the authority to grant or cancel registration under sec....
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.... the effect of such order passed by the PCIT can be considered while passing final order of assessment by the Assessing Officer. In the case in hand as the assessment proceedings has already been concluded on 29.03.2022 the effect of such alleged violation cannot be made in the assessment order itself as was the main argument advanced by the Ld. Counsel appearing for the assessee before us. 11.1 Moreso, this particular 2nd proviso to Section 143(3) of the Act was substituted and made effective from 01.04.2022 whereby and whereunder the Assessing Officer has been vested with the power to make reference to the PCIT for institutions granted registration under Section 12AA/12AB of the Act. In that view of the mater as there was no provision existing in the statute prior to 01.04.2022 vesting jurisdiction upon the Assessing officer to make reference for alleged violation under Section 12AB(4) of the Act as amendment to Section 12AB(4) and 2nd proviso to Section 143(3) were made w.e.f 01.04.2022. The reference has, thus, no basis and is liable to be quashed. 12. In addition to that, it was submitted by the Ld. A.R. that the reference in terms of 2nd proviso to Section 1....
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....f the matter it cannot be assumed that with the transfer of case of the appellant under Section 127 of the Act for coordinated assessment by the CIT(Exemption) Delhi by and under the order dated 04.01.2021 also transfers the proceedings for cancellation of registration. The order under Section 127 dated 04.01.2021 does not speak that Section 12A registration has also been transferred to the jurisdiction of Ld. PCIT, Central Delhi and thus exercising such powers by the said PCIT-3 for cancellation of registration is not in terms of the statutory provision rather bad in law and therefore, liable to be quashed. 17. The jurisdiction to withdrew exemption vests with the "prescribed authority". The PCIT has no jurisdiction to withdraw or cancel the exemption. In this regard the Notification No. 52/2014 and 53/2014 both dated 22.10.2014 vesting powers to the Ld. CIT(Exemption) Delhi in the territorial area specified in Column No. 4 of the said notification who are claiming exemption inter/alia under Section 12A of the Act has been relied upon. It is the case made out by the appellant that by and under the said notification the Ld. CIT(E) has been constituted separately for the pu....
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....iction) to any other Assessing Officer of Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner of Principal Commissioner or Commissioner, (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners of Principal Commissioners of Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order, (b) where the Principal Directors General or Directors General o....
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....s as he thinks necessary in order to satisfy himself about (A) the genuineness of activities of the trust or institution, and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects, and (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under Item (A), and compliance of the requirements under item (B), of sub-clause (1), (A) pass an order in writing registering the trust or institution for a period of five years; (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard, (c) where the application is made under sub-clause (vi) of the said clause, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the trust or institution. (2) All applications, pending before the Principal Commissione....
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....se (c), of sub-section (1) of section 12AB read with subsection (3) of the said section in Form No. 10AC and issue a sixteen digit alphanumeric Unique Registration Number (URN) to the applicants making application as per clause (1) of the sub-rule (1). (6) If, at any point of time, it is noticed that Form No. 10A has not been duly filled in by not providing, fully or partly, or by providing false or incorrect information or documents required to be provided under sub rule (1) or (2) ог by not complying with the requirements of sub-rule (3) or (4), the Principal Commissioner or Commissioner, as referred to in sub-rule (5), after giving an opportunity of being heard, may cancel the registration in Form No. 10AC and Unique Registration Number (URN), issued under sub-rule (5), and such registration or such Unique Registration Number (URN) shall be deemed to have never been granted or issued. (7) In case of an application made under sub-clause (vi) of clause (ac) of sub-section (1) of 4 section 12A as it stood immediately before its amendment vide the Finance Act, 2023,] during previous year beginning on 1st day of April, 2021, the provisional registration ....
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.... (2) (3) (4) (5) 1. M/s. Aggarwal Vidhya Pracharni Sabha (Aggarwal College, Ballabhgarh) AABTA3490Q Circle - 2(E), Chandigarh DCIT, Central Circle - 2, Faridabad. DLC-CC-136-4 This order shall take effect from 26.10.2020." 12. We also consider it appropriate to reproduce the relevant part of the Notification dated 22.10 2014 providing for the territorial jurisdiction of CIT(E) in furtherance of powers given to the Board u/s 120 (1) and (2) of the Act, made available at pages 2 to 5 of the paper book:- "NOTIFICATION New Delhi, the 22nd October, 2014 (Income Tax) S.O. 2754 (E).--In exercise of the powers conferred by subsection (1) and (2) of section 120 of the Income-Tax Act, 1961 (43 of 1961) and in supersession of the notification of the Government of India, Central Board of Direct Taxes number S.0.880(F), dated the 14th September, 2001, published in the Gazette of India, Extraordinary, Part 11, Section3, Sub section (ii), dated the 14th September, 2001, except as respects things done or omitted to be done before such supersession, the Central Board of Direct Taxes hereby - Sr. No. Designation Headquarters Ter....
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....ified violation" by the trust or institution registered or provisionally registered under the relevant clauses of sub-section (1) of section 12AB or subsection (1) of section 12AA. Subsequent to examination by the Principal Commissioner or Commissioner of Income-tax, an order is required to be passed for either cancellation of the registration or refusal to cancel the registration. Similar provisions have also been introduced in clause (230) of section 10 of the Art by substituting the fifteenth proviso of the said clause with respect to fund or institution trust or institution or any university or other educational institution or any hospital or other medical institution referred under sub clauses (iv), (v), (vi), (via) of this clause and which have been approved or provisionally approved under the second proviso to the said clause These amendments are effective from 1st April, 2022. In addition to the specified violations referred above, the power of cancellation has also been granted under sub-rule (5) of rule 17A and sub rule (5) of rule 20 of the Income-tax Rules, 1962 (the Rules) to the Principal Commissioner authorised by the Board. This Circular only relates to cancellation....
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....tification dated 22.10.2014 the Board, exercising powers under sub-section (1) and subsection (2) of section 120 vested powers to perform all the functions in respect of class of cases referred in the column No.5 of the Schedule of this Notification and had created a specific jurisdiction on territorial basis in regard to the provisions generally dealing with claim of exemptions u/s 10,11,12, 13A and section 138 of the Act. 14.2 Thus as we refer to the Notification dated 22.10.2014, the clause (a) vested powers with Commissioners of Income-tax (Exemptions), for class or class of cases pertaining to section 10, section 11, section 12, section 13A and section 138 of the Art and clause (b), to issue orders in writing for the exercise of 'their powers and perform all 'their functions by Additional Commissioners of Income tax or Joint Commissioners of Income tax and Tax Recovery Officers who are subordinate to them and that signifies that again this delegation of powers by CIT(E), Chandigarh could have been qua officers subordinate to CIT(E), Chandigarh only and not, in any way, gave powers to CIT(E), Chandigarh to pass an order u/s 127(2)(b) of the Art to transfer powe....
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....no circumstance while passing order u/s 127 of the Act on 26.10.2020, CIT(E), Chandigarh could have transferred his powers u/s 12AB of the Act to any other authority. 15.1 On the other hand, Id. PCIT, Gurgaon by virtue of the Explanation defining the scope of 'case' for the purpose of section 127, did not have power vested in him to cancel registration u/s 12AB(4) The 'case' refers to assessment initiated as a consequence of search or consequential proceedings to such assessments only and cannot be extended to special powers of Id. CIT(E), Chandigarh, Thus, the assumption of jurisdiction on the basis of the order dated 26.10.2020 of CIT(E), Chandigarh is completely illegal and that makes the whole exercise of Id. PCIT passing the impugned order liable to be quashed. 16. Furthermore, if examine the legality of the procedure followed by Id. PCIT, Gurgaon to pass order u/s 12AB(4), by recourse to exercise of powers by virtue of clause (a) of sub-section (4) of section 12AB, it comes up that Id.PCIT, Gurgaon admits that a 'proposal for cancellation of the registration of the assessee trust granted u/s 12AA of the Act was forwarded vide letter dated....
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....ed and the impugned order is quashed." 18. Having regard to the judgment as relied upon by the Ld. A.R we are of the considered opinion that the reference made in terms of 2nd proviso of Section 143(3) of the Act to the PCIT to whom the AO was subordinate is not permissible rather it is the CIT(E) Delhi, having territorial jurisdiction specified in Column 4 of the Notification Nos. 52/2014 and 53/2014 both dated 22.10.2014 from whom exemption inter/alia under Section 12A of the Act is being claimed is the appropriate authority. In fact by and under the said notification the CIT(Exemption) has been constituted separately for the purposes mentioned therein. In that view of the matter the order passed by the PCIT cancelling registration of the appellant society on the reference made by the Assessing Officer is found to be flawed and without jurisdiction. 19. Apart from that after considering the 2nd proviso of Section 143(3) of the Act, we find that the reference granted under Section 12AA of the Act is permissible to be made only during the pendency of the assessment proceeding. However, in the case in hand the assessment proceeding has already been concluded on 29.....
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....12A of the Act dated 4.6.1992, which was effective till the date of 23.9.2021 and this registration granted u/s 12A cannot be cancelled u/s 12AB(4)(ii) of the Act for the previous year 2020-21 covering the assessment year 2021-22. On the other hand, he could cancel the registration from assessment year 2022-23 onwards u/s 12AB(4)(ii) of the Act. In our opinion, if there is any violation in the previous assessment year 2020-21 relating to the assessment year 2021-22, this cannot be reason to cancel the registration granted for the assessment year 2022-23 to 2026-27 as the assumption of jurisdiction u/s 12AB(4)(ii) of the Act is itself wrong on the reasons discussed herein above. The specific violation committed by the assessee in any of these assessment years is to be considered independently and not the violation committed in assessment year 2021-22 for cancelling the registration granted u/s 12AB of the Act for the assessment year 2022-23 to 2026-27. As such, we make it clear that the ld. PCIT at liberty to pass the fresh order of cancellation independently u/s 12AB(4)(ii) of the Act for these assessment years i.e. 2022-23 to 2026-27, if so advised. Accordingly, we allow this grou....
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....CIT. 24. The appeal is, therefore, allowed." 7. Respectfully following the above decision, we are inclined to allow various grounds raised by the assessee in this case and accordingly, we quash the impugned order passed by the ld. PCIT cancelling 12A registration granted to the assessee." 6. Further we find that the co-ordinate bench decision of this Tribunal in the case of Human Welfare Foundation vs DCIT (Exemptions) reported in 174 taxmann.com 650 dated 29.4.2025 had held that PCIT cannot cancel the registration retrospectively. The relevant operative portion of the said order is reproduced hereunder:- "19. In view of the above discussions and considering the amendment in section 12AB(4) made by Finance Act, 2022, CBDT circular No. 11 of 2022 and the judicial pronouncements of various Hon'ble high courts and coordinate benches of tribunal, we are of the view that the registration granted u/s 12A cannot be cancelled with retrospective effect from AY 2018-19 when the CIT was granted power to cancel w.e.f. 1.4.2022, thus the same can be done from AY 2022-23. It is also observed that the PCIT has invoked the explanation to section 12AB(4) to hold th....