TaxTMI 
TaxTMI 
TaxTMI 
2026 (3) TMI 178
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....mmissioner of Income-tax (Central) V. Centre For Policy Research, SLP (CIVIL) DIARY NO(S). 44698 OF 2023, JANUARY 5, 2024. 2. Since the assessment for the A.Y. 2013-14 is time barred as held by the jurisdictional High Court of Delhi in the case of Sheetal International (P.) Ltd. V. Chief commissioner of Income 2 Tax W.P.(C) 12632 of 2024 CM APPLS. 52458 and 52459 of 2024, dated November 4, 2024 and accordingly cancellation of exemption u/s 12A r.w.s. 12AA & 12AB (4) of the Income Tax Act, 1961 from F.Y. 2012-13 is also time barred. 3. That the order of the learned PCIT (Central)-3, Delhi is erroneous in law and is against the principles of natural justice by not giving proper show cause notice and without giving proper opportunity to being heard. 4. That the learned Pr. Commissioner of Income Tax (Central)-3, Delhi has erred in law and on facts by not allowing Cross Examination to appellant of all documents/records etc on which PCIT(Central)-3, Delhi heavily relied upon. As per law settled 4 Judgment of Hon'ble Supreme Court of India in case of Commissioner of Income-Tax - Central V. Sunita Dhadda, Special Leave Petition (Civil) Diary No(S), 9432 of 2....
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....) To establish service, educational and research communities in order to further the cause of neo humanistic living symbolising the love for plants, animals, human and over Inanimate world. (ii) To establish necessary educational institutions, fields of humanity, sciences both for vocational and non-vocational purposes for all ages. (iii) To improve living conditions in the educational campus with respect to security, cleanliness, maintenance of parks, sanctuaries, roads, water supply, sewage, drainage energy centres, transportation facilities and amenities that may be required for the residents from time to time. (iv) To undertake research in any field of human interest and establish training programmes to disseminate knowledge for the all-round development of society. (v) To encourage cross-cultural exchanges and foster universal brotherhood/sisterhood through exchange of schools, students, publications or any such collaborations which unite the human Society. (vi) To publish books, journals etc. for nurturing all branches of human knowledge. The income of the publications will be utilised for the development of institutions of learnin....
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....) Raising funds from public through a Ponzi investment scheme. (ii) Diversion of funds of trusts/societies for personal uses. (iii) Mis-match in fee collection data as per school fee software & tally data. (iv) Investment of unaccounted cash in immovable properties. 7. In consequence to the search & seizure action, case of the assessee was centralized with the Central Circle-29, Delhi from Ward (Exemption)- 2(3), Delhi by and under the order under Section 127 of the Income Tax Act) dated 19.01.2023 issued by the CIT(Exemption), Delhi. 8. During the course of assessment proceedings, the assessing officer being satisfied that the Society had committed specified violation as defined in Explanation to sub-clause (4) of Section 12AB, referred the matter to the Pr. CIT(Central)-3, Delhi as per the provisions of the second proviso to sub-section (3) of Section 143 substituted by the Finance Act, 2022, proposing cancellation of registration of the assessee society. 9. The Ld. PCIT on the basis of the proposal and going through the search and assessment records, issued a show cause notice regarding cancellation of registration of the Society under Section....
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....2AB is cancelled from the previous year relevant to the Assessment year 2014-15 and subsequent Assessment years for the specified violations noted in point (f) above. 2) registration of the society under Section 12A r.w.s. 12AA and Section 12AB is cancelled from the previous year relevant to the Assessment year 2016-17 and subsequent Assessment years for the specified violations noted in point (g) above. 3) registration of the society under Section 12A r.w.s. 12AA and Section 12AB is cancelled from the previous year relevant to the Assessment year 2013-14 and subsequent Assessment years for the specified violations noted in point (h) above 4) registration of the society under Section 12A r.w.s. 12AA and Section 12AB1s cancelled from the previous year relevant to the Assessment year 2018-19 and subsequent Assessment years for the specified violations noted in point (i) above. 16 In view of above discussed facts, the activities of M/s The Little Pearl Charitable Society were found to be non-genuine and the income derived from property held under society, wholly or in part for charitable or religious purposes, has been applied, other than for the ob....
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....nd the registration granted under Section 12AB w.e.f. previous year 2021-22. The cancellation would operate perpetually from the first year in respect of which the violation has been done by the assessee irrespective of the fact that the registration having been granted under Section 12A read with 12AA or under Section 12AB or whether this has been violated in any subsequent year or not. 13.1 In fact the registration of the society granted under Section 12A read with Section 12AA and under Section 12AB has been cancelled from the previous year relevant to A.Y. 2013-14 and subsequent year for the specified violation on the premise of incriminating documents/evidences having been gathered discloses that the Society is indulged in non-genuine activities and further that there was diversion of funds of the Society and further violation of Section 13(1)(c) of the Act. However, the assessee before us raised the ground as to whether the registration cancelled by the impugned order is sustainable in the eye of law by invoking the provisions of Section 12AB(4) particularly when the same has been inserted by the Finance Act 2022 w.e.f. 1.4.2022. 14. Relying upon this particular inserti....
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.... assessee are allowed." 14.3 The Bangalore Bench in the case of CIT vs. Islamic Academy of Education vs. PCIT reported in (2022) 160 taxmann.com 217 as relied by the Ld. AR has also duly been considered wherein it has been held that the specified violation committed by the assessee, if any, has to be considered independently and not violation committed in AY 2021-22 for cancelling the registration granted u/s 12AB of the Act for AY 2022-23 to 2026-27. In the case of Heart Foundation India vs. CIT, Pune, as relied upon by the Ld. AR has been duly considered by us wherein withdrawal of registration made with retrospective effect has been nullified. In that particular case, the PCIT has cancelled the registration under the new Section 12AB whereas the clause (ii) to sub-section (4) of Section 12AB specifically provides that cancellation can be done for such previous year and all subsequent previous years which makes it clear that the cancellation cannot be done with retrospective effect. In that particular case, the cancellation with retrospective effect from AY 2016-17 was found to be not tenable. 14.4. We note that on 26.11.2025 the Coordinate Bench in ITA No.214/Del/2025 in t....
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....rused the materials available on record. The present appeal is filed against the order passed by the Learned PCIT (Central) on 30-12-2024 under section 12A r.w.s. 12AA and 12AB(4) of the Act by retrospectively cancelling the assessee's registration earlier granted under section 12AA of the Act. The assessee is an educational society duly registered under section 12AA of the Act and enjoying exemption under section 80G of the Act. The assessee society operates under the name of 'Prudence School' in Ashok Vihar, New Delhi. On 24-08- 2022, a search and seizure operation under section 132 of the Act was conducted on Smt Sudha Gupta, Shri Devendra Gupta and others including the Prudence Group and statements of some individuals were recorded. The case of the department is that the search and seizure operation revealed the modus operandi of Mother's Pride and Presidium group of schools managed by Smt Sudha Gupta and Shri Devendra Gupta and Prudence group of schools managed by Sri G.S. Matharoo in systematic tax evasion i.e. raising funds from public through cash and cheque, siphoning of funds from trusts/ societies for personal use and unexplained investments. The cases belonging to S....
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....tutions 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. ............. 13. The further case made out by the appellant is this that the PCIT invokes Section 12AA of the Act, while issuing show cause notices dated 05.07.2023 and 16.08.2023 whereas Section 12AA(5) of the Act provides that the provision of Section 12AA are not to be applied on or after 01.04.2021. In that view of the matter the show cause notices mentioned hereinafter issued by the Ld. PCIT are flawed and not maintainable in view of the provision of Section 12AA (5) of the Act. The power to cancel registration granted under Section 12A r.w.s 12AB of the Act can no longer be exercised under Section 12AA(3) after 01.04.2021. 14. Section 12AB(4) was substituted by the Finance Act 2022 w.e.f 01.04.2022 vesting jurisdictio....
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.... at page No.32 of the impugned order and it shows that this letter was issued in supersession of earlier letter dated 11.04.2022. Further, the subject of the letter is as follows:- "Sub. Proposal for cancellation of registration granted u/s 12AA/12AB of the Act as per provisions of Section 12AB(4) of the Act in the case of 'Aggarwal Vidya Pracharni Sabha' " - Reg. 13.1 Then what comes up is that the Id. PCIT has made out a case that the powers he had exercised u/s 12AB(4) are by virtue of clause (a) to sub-section (4) of section 12AB on the basis of 'noticing' occurrence of specified violation. The Id. PCIT has considered himself to be empowered by virtue of Explanation attached to section 127, defining 'case', to commence proceedings under this Act u/s 12AB(4) after the order dated u/s 127 dated 16.10.2020. ........ 14.3 Next, as we refer to Section 12AB and Rule 17A which have come into effect from 01.04.2021, and read it with the Circular no. 11 MANU/DTCR/0011/2022 dated 3rd June 2022, it comes up that section 12AB(2) of the Act provides that the pending td applications under clause (b) of sub-section (1) of section 12AA be....
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....und that the assessee has violated Section 13(l)(c) or Section 13(1)(d). 8.1.10 The Finance Act 2023 has inserted clause (g) in Explanation to Section 12AB(4) to provide that giving incomplete, false, or inaccurate information in a registration application under Section 12A(l)(ac) will be deemed as a "specified violation" that can lead to the cancellation of registration. 8.2 Thus, it means that the following registration could be cancelled: 8.2.1 The PCIT/CIT can cancel the following registrations granted to a trust or institution: (a) Final registration or provisional registration granted under section 12AB(1)(a)/(b)/(c); (b) Final registration granted under section 12AA(1). The erstwhile provision did not cover cases of provisional registration granted under section 12AB(1)(c). Now, the provisional registration granted for the first time can also be cancelled by the authorities. 8.3 As seen from the above, since the assessee has secured the registration u/s 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 ....
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....oking the provision of Section 12A r.w.s 12AA and 12AB(4) of the Act is found to be erroneous, bad in law, whimsical, in non application of mind and thus, unsustainable. 23. Before parting we would like to note that the further direction given by the Ld. PCIT to this effect that even if the appellant society is found that specified violation is not in existence then also the consequential cancellation order would continue to operate independently by and under the impugned order dated 31.03.2024 is nothing but colourable exercise of power, not only arbitrary or erroneous but establishes the biasness on the part of the authorities below; by hook or crook the authority was bent upon to cancel the registration of the appellant trust which is evident from such observation and/or decision made by the Ld. PCIT. In fact, on that score alone the order passed by the Ld. PCIT is also found to be bad in law and liable to be quashed. With the aforesaid observations we thus, quash the impugned order passed by the Ld. PCIT. 24. The appeal is, therefore, allowed." 7. Respectfully following the above decision, we are inclined to allow various grounds raised by the assesse....
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....ssessee are allowed. 9. We find that the Learned PCIT (Central) had passed an identical order and had withdrawn the registration with retrospective effect from Assessment Year 2011-12 onwards in the case of Lala Sher Singh Memorial Jeevan VIgyan Trust Society and from Assessment Year 2014-15 onwards in the case of Florence Nightingale Educational Society. Those orders are also quashed in view of aforesaid decision. 10. In the result, the assessee's appeals are allowed." 8. Respectfully following the same, the instant appeals of the six different assessee's are allowed. 9. In the result, all the appeals filed by the assessee are allowed." 14.5. We note that the above order passed by the Co-ordinate Bench has taken into consideration the order passed in the matter of Human Welfare Foundation (supra) and other judgements as mentioned therein and held that the expression specified violation and consequential withdrawal of registration as introduced by the Finance Act, 2022 having effect from 01.04.2022 could not be made applicable prior to AY 2023-24 and only on and from AY 2023-24 onwards and, thus, retrospective operation is found to be bad in l....