TaxTMI 
TaxTMI 
2026 (2) TMI 624
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....served that some of these papers related to assessee. The assessee trust is based in Kanpur and Dehradun, oversees the operations and management of schools and colleges located and operated from Kanpur and adjourning areas and other parts of Uttar Pradesh and Uttarakhand. The trust had got registration u/s 12A(1)(ac)(i) of the Act vide order dated 24.-09.2021 with various conditions. The assessee trust had claimed exemption of income of INR 20,01,52,552/- u/s 11 of the Act for the year under appeal. The income tax return was filed on 27.10.2023 by the assessee trust, declaring income of INR 2,25,22,633/-. Based on the information supplied by the Ao, the ld. PCIT, Central, Kanpur initiated the proceedings for cancellation of registration 12A granted to it and after considering the submissions made, the ld. PCIT concluded that the assessee trust is extensively involved in the business of real estate, land transactions and leasing business during the year under consideration. Since these activities are neither the objects of the assessee trust for which it was formed and got exemptions u/s 11, 12 and 13 of the Act nor income from such profits and gains of the real estate business of s....
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....the objects of the trust, despite extensive documentary evidence filed during the course of proceedings. The observation made by the PCIT are based on mere surmises and conjectures. 8. Without prejudice to the above, the order passed by PCIT, on the basis of reference made by AO under the second proviso to the provisions of Section 143(3) of the Act is void ab initio and bad in law, as no satisfaction note has been prepared by the AO before making a reference under aforesaid proviso to PCIT. 9. That the impugned order fails to satisfy the threshold of 'specified violation' in instant case as defined under the Explanation to Section 12AB(4) of the Act, inasmuch as no cogent material has been brought on record to show non-genuineness of activities or deviation from the stated charitable objects of the trust. 10. That in view of the facts and circumstances of the case and in law, the PCIT has erred in law and on facts, while ignoring the fact that the investment made by the Appellant trust is towards the objectives of the trust and it is not for any business venture. 11. That without prejudice, the PCIT has wrongly and illegally ignored the ....
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....tion), Lucknow to PCIT, Central, Kanpur as the jurisdiction over the assessee with PCIT (Exemption), Lucknow was given in terms of CBDT's order which has not been changed later. 5. Ld.AR for the assessee filed a written synopsis in support of his claim. For ready-reference, relevant contents of the synopsis is reproduced as under:- 1. "The Assessee, Dr. Virendra Swaroop Educational Foundation, was registered under Section 12AA read with Section 12A of the Income Tax Act, 1961 ("the Act') vide order dated 01.04.1998 passed by Commissioner of Income Tax, Dehradun. Thereafter, the registration was granted on 24.09.2021 under Section 12A of the Act up to Assessment Year (AY") 2026-27. 2. A show cause on 19.01.2024 was given to the Assessee by CIT(E), Lucknow, Mrt to transfer the case from the present jurisdictional assessing officer (AO), Ghaziabad to assessing office of Central Charge. Thereafter, the order under Section 127(2)(a) of the Act on 01.02.2024 was passed by CIT(Exemption), Lucknow, Mrt. transferring the case to AO from Exemption Circle, Ghaziabad to DCIT/ACIT, Central Circle, Dehradun. 3. Thereafter, impugned order under Section 12(AB)(4)(....
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.... 12(AB)(4)(ii) of the Act to cancel the registration granted by the CIT(Exemption), Lucknow who has the valid jurisdiction. The reliance is placed on the above-mentioned judgements. 6. It is further submitted that the order under Section 127 dated 01.02.2024 merely transfers assessment files from one Assessing Officer to another. Section 127 falls under Chapter XIII dealing with assessment jurisdiction and does not, and cannot, enlarge or reallocate statutory powers vested in a particular Commissioner. The legislature has consciously bifurcated assessment functions and registration functions under separate Chapters. To permit the PCIT (Central) to rely on a Section 127 of the Act transfer order to usurp exemption powers would amount to a colorable exercise of power. The maxim Quando aliquid prohibetur ex directo, prohibetur et per obliquum squarely applies i.e., what cannot be done directly cannot be done indirectly. 7. The doctrine of institutional competence also deserves emphasis. Registration under Section 12A/12AA/12AB is an exercise involving consideration of charitable objects, genuineness of activities, and compliance with the statutory regime governing ch....
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....cedent is a judicial decision containing a principle, which forms an authoritative element termed as ratio decidendi. An interim order which does not finally and conclusively decide an issue cannot be a precedent. Any reasons assigned in support of such non-final interim order containing prima facie findings, are only tentative. Any interim directions issued on the basis of such prima facie findings are temporary arrangements to preserve the status quo till the matter is finally decided, to ensure that the matter does not become either infructuous or a fait accompli before the final hearing. The observations and directions in Kapil Hingorani (1) and (II) being interim directions based on tentative reasons, restricted to the peculiar facts of that case involving an extraordinary situation of human rights violation resulting in starvation deaths and suicides by reason of nonpayment of salaries to the employees of a large number of public sector undertakings for several years, have no value as precedents. The interim directions were also clearly in exercise of extraordinary power under Article 142 of the Constitution. It is not possible to read such tentative reasons, as final conclus....
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....cle, Dehradun wherein during the course of assessment proceedings, the AO observed that assessee trust has made specific violation of clause (a) to (g) of section 12AB(iv) of the Act. Accordingly, Ld. PCIT, Central, Kanpur passed the order dated 16.09.2025 wherein registration granted u/s 12A//12AA/12BB was cancelled w.e.f. AY 2023-24 and onwards. It is seen that jurisdiction over the assessee was of PCIT(Exemption), Lucknow in terms of CBDT Instruction dated 22.10.2014 according to which all the cases fallen under the States of Uttar Pradesh and Uttarakhand, wherein all the 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 Income Tax Act, 1961 and assessed or assessable by an income tax authority at serial numbers 141 to 151 and 182 to 189 specified in the notification of Government of India bearing number S.O.2752 dated the 22nd October, 2014 with the CIT(Exemption), Lucknow. This notification is issued by CBDT in terms of section 120 sub-section (1) & (2) of the A....
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....nother Notification dated 22.10.2024 has notified the Chief Commissioner of Income Tax (Exemption), Delhi vested the powers u/s 120(1) & 120(2) over the cases vested with all the CIT(E) whose jurisdiction was notified vide Notification dt. 22.10.20214 at S.O. 2754(E). 9. Thus, the jurisdiction over the assessee for granting the registration u/s 12A of the Act cannot be transferred by the CIT(E), Lucknow u/s 127(2) of the Act which can only be transferred by the CBDT in terms of the power confined under sub-section (1) & (2) section 120 of the Act and the jurisdiction over the assessee cannot be assumed by the PCIT, Central, Kanpur to decide the application for registration u/s 12A filed by the assessee, though the jurisdiction to assess the assessee was transferred from the Circle, Exemption Ghaziabad to AC/DC, Central Circle, Dehradun. The jurisdiction transferred to the Central Circle- Dehradun was to complete the assessments due as a result of search carried for better and proper co-ordination of the cases which does not mean that the jurisdiction of the CIT(E) at Lucknow was transferred to PCIT, Central, Kanpur. 10. The identical issue came up before the Co-or....
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....in any way, gave powers to CIT(E), Chandigarh to pass an order u/s 127(2)(b) of the Act to transfer powers vested by Board to any other Tax Authority. 14.3 Next, as we refer to Section 12 AB and Rule 17A which have come into effect from 01.04.2021, and read it with the Circular no. 11 dated 3rd june 2022, it comes up that section 12AB(2) of the Act provides that the pending applications under clause (b) of sub-section (1) of section 12AA before the date on which section 12AB came into force shall be deemed to be applications made under sub-clause (4) of clause (ac) of sub-section (1) of section 12A on that date for grant of registration. 14.4 However, as far as provision of cancellation of the registration provided by sub-section (4) of section 12AA is concerned, sub-section (4) of section 12AB brings into place a completely new self-contained procedural code for conducting inquiry about 'specified violations', cancelling registration or refusing to cancel registration. 14.5 The Rule 17A, as clarified by Circular dated 3rd June 2022 provides that in addition to the 'specified violations', the power of cancellation has also been granted under sub-rule (5) ....
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.... 12AA of the Act was forwarded vide letter dated 23.08.2022 by the AO through the Range head. In this context, if we refer to second proviso to sub-section (3) of section 143 of the Act, the same provides that if the AO is satisfied about any specified violation provided in sub-section (4) of section 12AB, the AO shall send a 'reference' to the PCIT or Commissioner to withdraw the approval or registration, as the case may be, and clause (b) to this proviso provides that no order making an assessment of total income or loss of such institution or trust shall be made without giving effect to the order passed by PCIT or Commissioner. In the case in hand, the ld. PCIT, Gurgaon has reproduced the part of letter dated 23.08.2022 which has observed about a 'proposal' of cancellation of registration u/s 12AB(4) and based upon the same, the ld. PCIT had initiated action. The assessment by said assessing officer was completed in September, 2021, so, before the letter dated 23.08.2022 the assessment proceedings stood culminated. Thus, there was no occasion for concerned AO to invoke 'reference' powers under second proviso to sub-section (3) of section 143 of the Act. To that extent Ld. PCIT o....
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....cted so as to show cause the assessee under sub-section (4) of section 12AB of the Act and ask for information by notice dated notice dated 08.09.2022. 17.2 Rather, in the opening paragraph at page 34 of the impugned order, the ld. PCIT mentions, "it was noticed that the assessee trust has committed one or more specified violation. Thereafter, information was called for from the assessee trust by this letter dated 08.09.2022." We are of the view that when Ld. PCIT was assuming jurisdiction under clause (a) to Section 12AB(4), then while calling for the documents or information under clause (i) of sub-section (4) of Section 12AB, the assessee should be notified as to for which of the 'specified violation' the Ld. PCIT is calling for the information or documents. The same is not coming from the impugned order that before issue of notice on 08/09/2022, calling for the documents or information under clause (i) of sub-section (4) of Section 12AB, Ld. PCIT, Gurgaon had actually 'noticed' one or more of such 'specified violation.' 17.3 In this context further if the final show cause notice dated 14.03.2023 available at pages 7 to 37 of the paper book is considered, it sh....
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....ctivity was specified for which accumulated funds were utilized." 18. Thus it appears that by this notice dated 14.03.2023, only the assessee for the first time was asked to show cause about the 'specified violation' of the nature reproduced below:- "(a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution;" 19. Thus, if it was the case of the PCIT (Central), Gurgaon that he was exercising the powers u/s 12AB(4)(a) on his own cognizance of the 'specified violation', then, at first instance as he was not competent authority u/s 12AB(1) to pass an order of registration of the Trust, then, he had no powers u/s 12AB(4) to call for to show cause an order of cancellation. In any case, the manner of exercise of jurisdiction without first making conclusive notice of the alleged 'specified violation' is not sustainable. 20. We have also taken into consideration the order of the Jaipur Bench of the in the case M/s Wholesale Cloth Merchant Association vs. Pr. CIT (Central), Jaipur in ITA No.688/JP/2019 where this issue of juri....
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....ssessed 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 demonstrated by the department. 19. We further observe that Sec. 127 of the Act empower to transfer cases among Assessing Officers but not to Commissioners of Income Tax as CIT is not an Assessing Officer. In our view, to pass an order u/s 12A for registration or cancellation is not within the jurisdiction or power of an Assessing Officer. Hence registration u/s. 12A ....
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....d 17.09.2008 has relied upon by the Revenue also relates to "search assessment" and was not with regard to proceedings U/s 12A or other proceedings. Even no agreement for initiation proceedings U/s 12AA of the Act has been found out on record. Even, the proposal for centralization was not sent within the statutory time of 30 days from the date of search as admittedly the search was conducted on 30.06.2016 and the proposal was sent on 19.08.2016 i.e. after 30 days of the search. In this respect, the ld AR has relied upon the decision in the case of Rentworks India (P) Ltd. vs. Pr.CIT & ANR.(2017) 100 CCH 0258 Mum HC wherein it has been held that: "Income tax authorities--Power to transfer cases--Jurisdiction--CIT, issued notice to assessee taking recourse to subsection 2 of Section 127--Assessee was put to notice that there was proposal to transfer case of assessee to DCIT, for proper co-ordinated investigation--Impugned order was made by Principal CIT under subsection 2 of section 127 by which case of assessee was transferred to DCIT--Held, in Noorul Islam Educational Trust it was held that as Income-tax/assessment file of assessee had been transferred from one AO in Tamil....
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....) of section 127 provides for consequences when there is no such agreement. When the jurisdiction to pass an order of transfer under clause (a) of sub-section (2) of Section 127 can be exercised only when there is such an agreement, the fact that such an agreement exists ought to have been stated in the show cause notice as the same is a jurisdictional fact. Apart from the failure to mention the same in the show cause notice, the only stand of the revenue is that there is an agreement by implication. This stand is completely contrary to paragraph 5 of the decision of the Apex Court in the case of Noorul Islam Educational Trust (supra). The decision in the case of Ramswaroop (supra) will also bind this Court for the reasons stated above. 10. Coming to the decision in the case of Jharkhand Mukti Morcha, relevant facts are in paragraph 12. In the said case, specific reliance was placed on a document dated 2 7th November 2016. It is on the basis of the written document that a finding was recorded that there was an agreement between the Jurisdictional Commissioners of Ranchi and Delhi. In the present case, even going by the case made out by the respondent, no such agreement is ....
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....: TC69R.693 overruled; Judgment and order dt. 12th Sept., 1974, of the Andhra Pradesh High Court in Writ Appeal No. 626 of 1974 set aside. The Hon'ble Supreme Court in the case of Noorul Islam Educational Trust vs. CIT AND Ors (2016) 388 ITR 0489 (SC) held that Special Leave Petition--Transfer of case--Validity--High Court of Madras, Madurai Bench, upheld order of C.I.T.1, Madurai, Tamil Nadu, transferring file of assessee from Tamil Nadu to Kerala--Held, as Income-tax/ assessment file of assessee has been transferred from one Assessing Officer in Tamil Nadu to another Assessing Officer in Kerala and two Assessing Officers are not subordinate to same Director General or Chief Commissioner or Commissioner of Income Tax, u/s 127(2) (a) an agreement between Director General, Chief Commissioner or Commissioner, as the case may be, of two jurisdictions is necessary-- Absence of disagreement cannot tantamount to agreement as visualized under Section 127(2) (a) which contemplates a positive state of mind of two jurisdictional Commissioners of Income Tax which is conspicuously absent--Transfer of Income-tax/assessment file of assessee from Assessing Officer, Tamil Nad....
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....) In issuing the directions or orders referred to in subsections (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. Therefore, in furtherance of the said provisions, the CBDT vide notification Nos. 52/2014 and 53/2014 both dated 22/10/2014 had given powers to Id. 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), (224), (228), (23), (23A), (23AAA), (238), (23C), (23F), (23FA), (24), (46) and (47) of section 10, section 11, section 12, section 13A and section 138 of the Act and assessed or assessable by an Income-tax authority at serial numbers 131 to 14 specified in the notification of Government of India bearing number S.O. 2752 dated the 22nd October, 2014. Thus, in this way from Oct, 2014 Ld. CIT (Exemption) has been constituted separately for these class or type of cases. Hence, the case of the assessee ad....
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....rincipal 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 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 or Principal Commissioner or Commissioner,- (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in Chief Commissioner or Chief Commissioner or Principal Commissioner o agreement, then the Principal Director General or Director General or Principal Com....
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....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 Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint Director, and, where any order is made under this clause, references in any other provision of this Act, or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such Additional Commissioner or Additional Director or Joint Commissioner or Joint Director by whom the powers and functions are to be exercised or performed under such order, and any provision of this Act requiring approval or sanction of the Joint Commissioner shall not apply. (5) The directions and orders referred to in sub-sections (1) and (2) may, wherever considered necessary or appropriate for the....
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.... 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 demonstrated by the department. 6.7 We further observe that Sec. 127 of the Act empower to transfer cases among Assessing Officers but not to Commissioners of Income Tax as CIT is not an Assessing Officer. In our view, to pass an order u/s 12A for registration or cancellation is not within the jurisdiction or power of an Assessing Officer. Hence registration u/s. 12A can be withdrawn only by the 'Prescribed Authority' who has been empowered to grant the same and by the Notification dated 22.10.2014 the Ld. CIT(Exmp.) has empowered for the same, hence the Pr. CIT (Central) cannot cancel the same." 12. As the facts of the aforesaid cases of the Co-ordinate Benches in the case of Aggarwal Vidya Pracharni Sabha v. PCIT and Pacific Academy of Higher Education and Research Society vs. PCIT(supra) are identical to the facts of the present case of the assessee, thus, by respectfully....