TaxTMI 
TaxTMI 
2026 (3) TMI 1552
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.... 3. The Ld. CIT(E) erroneously taken up for re-determining the issue of registration u/s 12AA, giving a bye-pass to the superior judicial authority's decision i.e, the Hon'ble ITAT dt. 07.09.2021 in the present case only, on the same issue for the impugned asst. year, which is legally bad in law. 3.1. The L.d. CIT(E) ought to have appreciated the fact that the question of the registration u/s 12A to the appellant had already been decided by the Hon'ble ITAT vide order no. 361/Hyd/2019 dt. 07.09.2021 cancelling the CIT(E) order u/s 12A of the Act. 3.2 The Ld. CIT(E) ought to have appreciated the judicial discipline that, when a higher judicial authority gives a legal decision on an appeal, the lower judicial authority has to faithfully and judiciously follow and do the consequential action, even if the decision of the higher authority is unacceptable and that not following the above decision is contemptuous. 3.3 The very revisiting of the issue again by the CIT(E) when the ITAT order is still in force, especially when the AO had passed consequential order too, is not as per law. 3.4. The Ld. CIT(E) has erred in passing of order u/s 12A....
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.... the appellant before him by way of replies to show cause notices and has not discussed anything but decided the issue only on the alleged fact that appellant has made violation to the Act. 9. Without prejudice to any other grounds on this issue, the AO has grossly erred by failing to pass consequential order u/s 254 of the Act, to the ITAT order dt. 26.10.2022 on assessment, within the limitation of time i.e, on or before 31.03.2024. 9.1. The assessment is barred by limitation on 31.03.2024 itself as the AO has not passed any consequential order. Assessment order, if any passed now for the year would be beyond jurisdiction. 9.2. The Ld. CIT(E) had erred in admitting a reference u/s 12AB(4) without considering the limitation of time (i.e, basing on time barring assessment proceedings) and passing an order u/s 12AB(4) of the Act, dt. 30.09.2024 by cancelling the registration u/s 12A of the Act, second time. 10. The Ld. CIT(E) erred in applying the provisions of section 115TD of the Act where it is not applicable to appellant society itself as there is no dissolution of the trust, no merger of the institution in nor was there any transfer of assets....
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....022 and therefore, the reference made by the Assessing Officer as per the 2nd proviso to sec.143(3) of the Act cannot be the basis for cancellation of registration with retrospective effect and particularly, with effect from the assessment year 2015-2016 as this amendment is not retrospective but it is prospective. The procedure adopted by the Assessing Officer as well as the learned CIT(E) u/sec.12AB(4) of the Act does not confer the power to the learned CIT(E) to withdraw or cancel the registration with retrospective effect and specifically prior to the said amendment brought into the statute. He has referred to the following decisions: i. Judgment of Hon'ble Delhi High Court in the case of Centre for Policy Research vs. Pr. CIT (Central) [2024] 461 ITR 540 (Del.); ii. Order of ITAT, Bangalore Bench in the case of Amala Jyothi Vidya Kendra Trust vs. Pr. CIT (Central) [2024] 204 ITD 605 (Bangalore-Tribu.); iii. Order of ITAT, Bangalore Bench in the case of Islamic Academy of Education vs. Pr. CIT (Central) [2024] 160 taxmann.com 217 (Bangalore-Tribu.); iv. Order of ITAT, Delhi Bench in the case of Lakhmi Chand Charitable Society vs. Pr. CIT, Cen....
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....inable in law and liable to be quashed. In support of his contention, he has relied upon the following Judgments: i. Judgment of Hon'ble Delhi High Court in the case of Aircom International India (P) Ltd., [2024] 159 taxmann.com 148 (Delhi.); ii. Judgment of Hon'ble Karnataka High Court in the case of DCIT vs. Biesse India (P) Ltd., [2025] 178 taxmann.com 282 (Karnataka) (HC); iii. Order of ITAT, Delhi Bench in the case of Hitachi Astemo Haryana Private Ltd., Faridabad vs. ACIT, Circle-10(1), New Delhi in ITA.No.3353/Del./2024 dated 03.09.2025; iv. Judgment of Hon'ble Karnataka High Court in the case of Wipro Ltd., vs. JCIT, Special Range-7, Bangalore [2021] 438 ITR 581 (Karnataka); 4.2. The learned Authorised Representative of the Assessee submitted that the Hon'ble High Courts as well as this Tribunal has held that the limitation for passing the consequential order is provided u/sec.153 of the Act and therefore, the Order passed by the Assessing Officer beyond the limitation period is barred by limitation and hence, the same is invalid and nullity. 5. On the other hand, the learned DR has submitted that the learned CIT(E) has initiated th....
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....ndering. The assessee has failed to explain the above violation of involvement of the assessee in allowing its bank account to transfer the fund in the guise of donation received and donation paid. He has relied upon the impugned order of the learned CIT(E) as well as the Judgment of Hon'ble Supreme Court in the case of ITO vs. Vikram Sujitkumar Bhatia in Civil Appeal No.911 of 2022 [SLIP (C) No.29096 of 2019] dated 06.04.2023 and submitted that the Hon'ble Supreme Court has observed that it is the duty of the Court while interpreting the machinery provisions of taxing statute to give effect to its manifest purpose. Wherever the intention to impose liability is clear, the Courts ought not be hesitant in espousing a commonsense interpretation to the machinery provisions so that the charge does not fail. Thus, the learned DR has submitted that the provisions of sec.12AB(4) should be given a meaning so as to achieve its purpose and not to make it redundant. 6. We have considered the rival submissions as well as the relevant material on record. This case has a chequered history as multiple rounds of litigation has taken place regarding the cancellation of the registration and assess....
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....by the Assessing Officer as well as learned CIT(E) for cancellation of the registration u/sec.12AA(3) of the Act. On further appeal against the Order of the learned CIT(A), this Tribunal vide Order dated 26.10.2022 in ITA.Nos.268 & 269/Hyd./2022 for the assessment years 2015-2016 and 2016-2017 set aside the Order of the learned CIT(A) and remanded the matter to the record of the Assessing Officer with a direction to grant one more opportunity to assessee to substantiate its case and decide the issue as per facts and law. The relevant finding of the Tribunal in Para no.11 is as under: "11. We find the Assessing Officer in the instant case denied exemption u/s 11 for the impugned A.Y and following this order he also rejected the claim of benefit u/s 11 of the I.T. Act. for the A.Y 2016-17. After the orders passed by the Assessing Officer for the A.Ys 2015-16 and 2016-17, the Pr.CIT cancelled the registration issued to the assessee u/s 12A of the I.T. Act. We find on appeal by the assessee, the Tribunal vide ITA No.361/Hyd/2019 dated 7.9.2021 restored the registration u/s 12AA of the I.T. Act and the CIT vide order dated 8.6.2022 has given the appeal effect and has granted re....
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....e trust or institution; or (b) The trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c) The trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not ensure for the benefit of the public; or (d) The trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or (e) Any activity being carried out by the trust or institution- (i) is not genuine, or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) The trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or d....
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.... subsequent previous years, if he is satisfied that one or more specified violations have taken place; iii. pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; iv. forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation: For the purposes of this sub-section, the following shall mean "specified violation",-- (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; or (b) The trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment....
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....t "it is a cardinal principle of the tax law that law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication". 6.5. In the case of Karimtharuvi Tea Estate Ltd. v. State of Kerala [1964] 51 ITR 129 (SC) the same view was taken by the Hon'ble Supreme Court. 6.6. Further, the Hon'ble Supreme Court in the case of Shree Choudhary Transport Corpn. v. IΤΟ [2020] 118 taxmann.com 47/272 Taxman 472/426 ITR 289 wherein held as under: 17.4. It needs hardly any detailed discussion that in income-tax matters, the law to be applied is that in force in the assessment year in question, unless stated otherwise by express intendment or by necessary implication. As per section 4 of the Act of 1961, the charge of income-tax is with reference to any assessment year, at such rate or rates as provided in any central enactment for the purpose, in respect of the total income of the previous year of any person. The expression "previous year" is defined in section 3 of the Act to mean "the financial year immediately preceding the assessment year"; and the expression "assessment year" is defined in cla....
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.... (Emphasis Supplied) 17.6. We need not multiply on the case law on the subject as the principles aforesaid remain settled and unquestionable. Applying these principles to the case at hand, we are clearly of the view that the provision in question, having come into effect from April 1, 2005, would apply from and for the assessment year 2005-06 and would be applicable for the assessment in question. Putting it differently, the Legislature consciously made the said sub-clause (ia) of section 40(a) of the Act effective from April 1, 20056, meaning thereby that the same was to be applicable from and for the assessment year 2005-06; and neither there had been express intendment nor any implication that it would apply only from the financial year 2005-06. 6.7. Being so, we find force in the argument of Id. A.R. that in income-tax matters, law to be applied is the law in force in the assessment year unless otherwise stated or implied. In the present case, Id. PCIT is cancelling the registration granted u/s 12AA/12AB of the Act w.e.f. previous year 2020-21 relevant to assessment year 2021-22. In our opinion, the law as stated in the assessment year 2021-22 is to be app....
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....bove discussion, we are of the opinion that cancellation of registration with retrospective effect is invalid in these cases. Since the Id. PCIT invoked the provisions of section 12AB(4)(ii) of the Act, which has been introduced by the Finance Act, 2022 w.e.f. 1/4/2022 so as to cancel the registration with retrospective effect from assessment year 2021-22, which is bad in law. We also note that same view has been taken by Coordinate bench of Mumbai in the case of Heart Foundation of India v. CIT [IT Appeal No. 1524 (Mum.) o 2023, of vide order dated 27-7-2023], wherein held that registration granted u/s 12A of the Act dated 21-7-1989 cannot be cancelled by ld. PCIT (Central) vide order dated 6-3-2023 w.e.f. assessment year 2016-17, by invoking the provisions of section 12AB(4)(ii) of the Act. Accordingly, we allow the primary ground nos.2, 3, 5 & 12 and order of Id. PCIT passed u/s 12AB(4)(ii) of the Act is quashed. 7. In view of our findings in ground Nos.2, 3, 5 & 12, the grounds of appeal in Ground Nos. 4,6,7,8,9,10,11,13 & 14 have become infructuous as the order of Id. PCIT itself has been quashed. 8. In the result, appeals of the assessee are allowed." 6.4....
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....PCIT by the AO under Section 12AA, 12AB of the Act. In that view of the matter application of a particular provision of law which was not in existence during the material point of time cannot be said to have been rightly invoked. 20. So far as the provision of Section 12AB(4) of the Act as exercised by the PCIT is concerned the Ld. A.R relied upon a judgment passed by the Banglore Bench in the case of Islamic Academy of Education v. Pr. CIT (Central) in ITA No. 610/Bang/2023/[2024] 160 taxmann.com 217 (Bangalore-Trib.) for Assessment Year 2021-22, a copy whereof has also been annexed to the paper book filed before us by the appellant. While dealing with this particular aspect of the matter the Bench has been pleased to observe as follows: "8.1.9. Registration Before the amendment by the Finance Act, 2022, Section 12AB(4) provided for cancellation of registration in case of any violation under Section 13. The amended Section 12AB(4) does not consider a violation of Section 13(1)(c) and Section 13(1)(d) as specified violations. Consequently, the registration cannot be cancelled on the ground that the assessee has violated Section 13(1)(c) or Section 13(1)(d). ....
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.... cannot be applied on order after 01.04.2021 the show cause notices issued by the PCIT to the appellant dated 05.07.2023 and 16.08.2023 are, thus, found to be erroneous and therefore liable to be quashed. Once the show cause is found to be non est in the eyes of law, the entire proceeding is naturally found to be on a wrong foundation of law and thus, liable to be set aside. Similarly, invoking the provision of Section 12AB(4) of the Act by the PCIT to cancel registration for specified violation is also not permissible at the same has not seen the light of day prior to 01.04.2022; the same is therefore, not applicable to Assessment Years 2015-16 to 2021-22 as wrongly has been applied in the case in hand. 22. Thus, having regard to these particular facts and circumstances of the case the issuance of show cause notices proposing cancellation of registration alleging specified violation occurred prior to 01.04.2022 i.e. for Assessment Year 2015-16 to 2021-22 and the final order passed by the Ld. PCIT cancelling registration of the appellant society for Assessment Year 2015-16 to 2021-22 by wrongly invoking the provision of Section 12A r.w.s. 12AA and 12AB(4) of the Act is fou....
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....und on account of the act of the department itself in regard to the assessment and in regard to registration by the Id CIT(E). It is also admitted by ld CIT(E) that there are no common trustees nor any related trustee between the assessee trust and Aids Awareness Trust of Orissa. In any case, both the issue had been raised by the Id CIT(E) in its original show cause notice which had been culminated in the orders served on the assessee. A new issue which has been raised by the Id CIT(E) in the show cause notice dated 6.10.2022 is the details of the corpus donation. Admittedly, this was the subject matter of 263 proceedings and that the issue had been considered by the Hon'ble Jurisdictional High Court and the Hon'ble High Court had found the orders of Id CIT to be un-sustainable and also quashed the same. Thus, all the issues on which the Id CIT(E) has raised the show cause notice for the purpose of cancellation of registration u/s.12A have already been decided by the Appellate Authority and same has also reached finality. The Id CIT(E) by his order dated 20.6.2023 being the impugned order has tried to unsettle issues which are already settled in the case of the assessee. Th....
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....ellation of registration. Since the act of cancellation of registration has serious civil consequences and the amended provision is held to have only a prospective effect the effect of cancellation, in' the event the pending tax appeal is decided in favour of the Revenue, will operate only from the date of the cancellation order, that is December 30, 2010. In other words, the exemption cannot be denied to the petitioner for and up to the assessment year 2010-11 on the sole ground of cancellation of the certificate of registration. " 6.9. In this case, the Id. PCIT has cancelled the registration under the new provisions of the Act i.e. 12AB(4) (ii) of the Act, which 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 retrospective, therefore, in view of the above discussion, we are of the opinion that cancellation of registration with retrospective effect is invalid in these cases. Since the Id. PCIT invoked the provisions of section 12AB(4)(ii) of the Act, which has been introduced by the Finance Act, 2022 w.e.f. 1.4.2022 so as to cancel the registration with ....