TaxTMI 
TaxTMI 
2023 (1) TMI 1502
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....issue. Having regard to the submissions made by the assessee, we are of the view that there was reasonable cause for the assessee in filing this appeal belatedly. Accordingly, we condone the delay and admit the appeal for hearing. 3. The facts relating to the case are set out in brief. The assessee herein is a charitable trust providing educational services. It runs a medical college under the name "M/s Pacific Institute of Medical Science" in Udaipur. The assessee was granted registration u/s 12A of the Act on 05.3.2001, subject to certain conditions. One of the conditions is that the assessee trust should adhere to the provisions of sec. 13 of the Act. 4. The revenue carried out search and seizure operations in the hands of the assessee and other connected persons on 26.8.2015. Consequent thereto, the search assessments were completed u/s 153A of the Act. It is the case of the revenue that during the course of search proceedings and post search assessment proceedings, certain incriminating documents were unearthed. They revealed that the assessee is wholly controlled by Sri B R Agarwal and family and the trust is being managed with the sole purpose of providing personal ben....
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....is notice dated 21.06.2019, seeking explanation from the assessee as to why the registration granted u/s 12A should not be cancelled as per the provisions of sec.12AA(3) and 12AA(4) of the Act. In response thereto, the assessee furnished a detailed reply, vide its letter dated 29.7.2019, wherein it was contended that there is no violation of the provisions of sec. 13 of the Act. It was also contended that the assessee is carrying on its activities in accordance with the objects of the trust only. Accordingly, it was contended that the registration given to the assessee should not be cancelled u/s 12AA(3) or sec. 12AA(4) of the Act. 7. The Ld PCIT (Central) did not agree with the contentions of the assessee. He observed that the services of the employees of the assessee trust are being used for the personal purposes of Shri B R Agarwal and his family members. Thus, the property of the assessee trust has been used for the personal benefit of the trustees and his family members, which is in violations of provisions of sec. 13 of the Act. With regard to the collection of fees, the assessee has stated that it has provided free treatment only to members of BPL family. The Ld PCIT (Cen....
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....he has no jurisdiction with regard to the registration granted or cancellation of the registration u/s 12AA of the Act. In support of this contention, the ld A.R placed his reliance on the decision dated 06-01-2021 passed by the Jaipur bench of Tribunal in the case of Wholesale Cloth Merchant Association vs. PCIT (Central) in ITA No. 688/JP/2019. 11. We heard the parties on this legal issue and perused the record. We notice that an identical legal issue has been considered by this bench in a group case, viz., Pacific Academy of Higher Education and Research Society (ITA No. 04/Jodh/2020) and this issue has been decided in favour of the assessee in line with the decision taken in the case of Wholesale Cloth Merchant Association (supra). For the sake of convenience, we extract below the relevant discussions made and the decision taken on this legal issue:- "4. It is further submitted that the jurisdiction to grant/ withdraw exemption u/s 12AA lies with the CIT(E), Jaipur. The Pr. CIT (Central) Rajasthan, Jaipur has no jurisdiction to withdraw the exemption. This is because CBDT in pursuance to Sec. 120(3) vide Notification No. 52/2014 and 53/2014 both dated 22.10.2014 has....
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....der of cancellation. In view of above the order of Ld. PCIT withdrawing the registration u/s 12AA of the Act is bad in law and the same be quashed." .................... 6.2 First of all, we would like to deal with legal objection raised by the assessee with regard to the jurisdiction of Pr. CIT(Central) in issuance of show cause notice and in passing of consequent order. In this respect, our attention was drawn towards Section 120(3) and CBDT Circular No. 52/2014 and 53/2014 both dated 22/10/2014. As per provisions of Section 120(3) of the Act, the criteria of Jurisdictions of Income Tax Authorities has been provided by the CBDT and as per provisions of Sec. 120(3) of the Act, there are four criteria for deciding the jurisdiction and the same are reproduced below: (3) In issuing the directions or orders referred to in sub-sections (1) and (2), the Board or other income-tax authority authorized by it may have regard to any one or more of the following criteria, namely: - (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases. T....
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.... The said notification of CBDT has authorized the CIT(E) to issue order in writing for the exercise of the powers and functions by the Addl. CIT or JCT or TRO who are "subordinate" to them and has authorised the Addl. CIT to issue order in writing for the exercise of the powers by the Assessing Officer who are the subordinate to them. In section 124 of the Act, the jurisdiction of Assessing Officer has been given and not 'Jurisdiction of Commissioner'. 6.5 Further in Sec. 127 of the Act, the power of transfer of cases is given from one Assessing Officer to another Assessing officer not from CIT to CIT. For ready reference, we reproduce Sec. 127 of the Act, which provides as under: 127. (1) The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner 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, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Off....
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....ame is specified in any order or direction issued there under, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year. 6.6 Sec. 120 (4) to 120(6) also provide the work assigned to the subordinate officers which is reproduced below: (4) Without prejudice to the provisions of sub-sections (1) and (2), the Board may, by general or special order, and subject to such conditions, restrictions or limitations as may be specified therein,- (a) authorise any Principal Director General or Director General or Principal Director or Director to perform such functions of any other income-tax authority as may be assigned to him by the Board; (b) empower the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the A....
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....ed 22.10.2014 has given power to CIT(Exemption) Jaipur for the State of Rajasthan for all cases of persons in the territorial area specified in column (4) claiming exemption under clauses (21), (22), (22A), (22B), (23), (23A), (23AAA), (23B), (23C), (23F), (23FA), (24), (46) and (47) of section 10, section 11, section 12, section 13A and section 13B of the Act and assessed or assessable by an Income-tax authority at serial numbers 131 to 140 specified in the notification of Government of India bearing number S.O. 2752 dated the 22nd October, 2014. Thus firstly as per above notification and provisions of Sec. 120 and 127 the ld. CIT(Exmp.) cannot transfer or hand over or given his work or power or duties to the other same rank of CIT at all to cancel the Registration u/s 12AA. However, in case, if it is necessary to do so then there has to be proper proceedings in writing. As there has to be some order in writing from higher authorities i.e. from Chief Commissioner of Income Tax (Exmp.) Delhi or CBDT in writing and an opportunity of being heard is to be given to the assessee before transferring the case whereas all these are absent in the present case and nothing has been demonstrat....
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.... decisions rendered by this bench and co-ordinate bench, we hold that the PCIT (Central) does not have power to cancel the registration granted u/s 12A of the Act. Accordingly, the order passed by him is nullity in the eyes of law and accordingly, we quash the same. 12. We also noticed that the registration has been cancelled by Ld PCIT (Central) with retrospective effect from 1.4.2014. Since we have quashed the impugned order, this issue becomes academic. Nevertheless, we notice that the question as to whether the registration could be cancelled with retrospective effect has also been considered and decided in the case of Pacific Academy of Higher Education and Research Society (supra) as under:- "6.9 We further observe that the ld. Pr. CIT (Central) cancelled such approval from A. Y. 2014-15, though the assessee has already assessed from A.Y. 2014-15 under section 143(3)/148 of the Act. It is also settled legal position of law that Registration cannot be cancelled from retrospective effects. In this regard, the ld AR has relied on the decision of the Hon'ble Supreme Court in case of State of Rajasthan and others vs Basant Agrotech India Ltd. and other 388 ITR 81(S....
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....nt Vs. Commissioner of Income Tax: (2009) 315 ITR 382, it was thus observed that: 16. In the instant case, the petitioner is a registered society, which was earlier granted registration under Section 12A on 1-4-1999. A survey was conducted at the business premises on 20-9-2002, from where documents were impounded. The registration was cancelled for the assessment years 2000-01 and 2001-02 for the reasons that the surplus was quite heavy. In the impugned order, it was mentioned by the CIT that there was an unusual huge margin and the petitioner was engaged in the commercial activities rather than charitable. As per the balance sheet, huge amount from the student was charged. The profit margin embodied in the charges taken from the students are so huge and it proves the profit motive of the petitioner. The funds were misused by the president and his family members of the petitioner. 20. The expression "charitable purpose" is defined in Section 2(15) of the IT Act, 1961. It is of inclusive nature as revealed in the language. Earlier the words "the advancement of any other object of general public utility" in this definition were succeeded by the words "not involving ....