AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 94
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....(1) of the Income-tax Act, 1961 by the Ld. CIT (Exemptions), without satisfying the conditions precedent for such cancellation as prescribed under the Act. 2. That the Ld. PCIT (Central), Ludhiana has erred in law and on facts in cancelling the registration granted under section 12AA of the Income Tax Act, 1961, despite lacking jurisdiction to do so; and that, in view of Notification No. 52/2014 [F.No.187/38/2014(ITA.I)], the jurisdiction to take any action for cancellation vested exclusively with the Ld. CIT (Exemptions), Chandigarh. 3. That the Ld. PCIT (Central), Ludhiana has erred in relying on the second proviso to section 143(3) while considering the AO's reference and rejecting the application for Α.Υ. 2015-16 to 2021-22, ignoring that the assessments for these years were reopened under section 148, making such reference under section 143(3) contrary to law. 4. That the Pr. CIT (Central), Ludhiana erred in invoking Section 12AB(4) for alleged violations relating to assessment years 2015-16 to 2021-22, as the purported violations occurred prior to 01.04.2022, and therefore, the cancellation of registration under Section 12AB(4) is ....
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....ncipal CIT (Central) erred in cancelling the registration by raising extraneous issues such as non-maintenance of books of account, purchase of a Bolero Camper vehicle, and alleged unaccounted revenue expenditure, without appreciating that no funds of the society were mis-utilized, and that the differences highlighted merely represent duplication or donations received in kind, duly reflected in the records. 10. That the Ld. Principal CIT (Central) erred in cancelling the registration by taking into consideration the foreign contributions received in the personal bank accounts of the trustees, ignoring the fact that all such individuals are pastors and preachers with a large following, and the amounts received represent their personal honorarium and not any diversion of the society's funds, having no nexus with the activities or accounts of the trust. 11. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off." 3. Brief facts emerging from records are that the assessee is a religious cum charitable society with the object of promoting spiritual development and moral values irrespective of cast....
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....No. 1 Validity of reference in respect of AYs 2015-16 to 2017-18 and AYs 2019-20 to 2021-22 for which notices were issued u/s 148 83-87 Ground No. 3 2 Variance between the value determined by the DVO in respect of the Prayer-cum-Gathering Hall and the New Church Building and the value reflected in the Books of Account 87-88 Ground No. 8 3 Unaccounted revenue and capital expenditure incurred by the Society 99 Ground No. 8 4 Non-compliance with the conditions prescribed in Form 10AC 97, 98, 87 Ground No. 9 5 Improper maintenance of Books of Account 97, 98, 87 Ground No. 9 6 Non-accounting of revenue from YouTube income in the Books of Account 95 Ground No. 10 7 Receipt of foreign donations in the bank accounts of key persons 91-94 Ground No. 10 8 Non-submission of the list of donors 94 Ground No. 8 9 Specified violations within the meaning of Explanation (a), (e), and (g) to Section 12AB(4) of the Act 102, 103, 96 Ground Nos. 5-7 9. In course of hearing the Ld. AR of the assessee submitted a paper book containing copies of valuation report of the DVO in respect of the prayer....
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....ard 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. Drawing reference to the above mentioned CBDT notification he argued that the Id. CIT(Exemption) Chandigarh is the competent person for the State of Punjab 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 4 specified in the notification of Government of India bearing number S.O. 2754 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 admittedly falls in the jurisdiction with the Id. CIT (Exemption), Chandigarh, and for all practical purpose he is the sole authority to grant or cancel the registration and the Ld PCIT has acted be....
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....(Exemption), Chandigarh because the registration under Section 12AB is not an assessment function and it is a distinct statutory power entrusted to CIT (Exemption), more so when chapter XIII deals with assessment jurisdiction and the scope cannot be enlarged to re-allocate statutory powers vested in a particular commissioner. 17. He further emphasised that registration under Section 12A/12AA/12AB is an exercise involving consideration of charitable objects, genuineness of activities, and compliance with the statutory regime governing charitable institutions. This function being a special one is entrusted to the specialised authority of the CIT (Exemption) and the Central Officer, whose domain is specialisation of search assessments and determination of undisclosed income, is institutionally unsuited to adjudicate upon matters of charity law. 18. In support of his arguments the Ld. AR relied on the following decisions: "Lakhmi Chand Charitable Society vs. PCIT, Central-3, New Delhi - 2024 (8) TM11297 (ITAT Delhi); [2025] 1291TR (Trib) 450 ITAT DEHRADUN BENCH Sushila Devi Centre for Professional Studies and Research v. PCIT (Central) [2025] 179 taxmann.com 610....
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....22. On this ground the Ld. AR has filed a written submission along with supporting case laws of various tribunal, which are reproduced for ready reference: 1. Invalid Invocation of Section 12AB(4) for Alleged Pre-01.04.2022 Violations (Prohibition on Retrospective Cancellation of Registration) a. a) It is respectfully submitted that the learned PCIT (Central), Ludhiana has erred in invoking the provisions of Section 12AB(4) of the Income-tax Act, 1961 for withdrawing the registration of the Appellant Society in respect of alleged violations pertaining to AY 2015-16 to AY 2021-22. It is a matter of record that the provisions relating to "specified violations" and consequential action under Section 12AB(4) were brought into the statute by the Finance Act, 2022 with effect from 01.04.2022, and therefore the same cannot be invoked for periods prior to 01-04-2022. b. (b) Your Honours' kind attention is further invited to the provisions of Section 12AA(5), which clearly provide that the provisions of Section 12AA shall not apply on or after 01.04.2021. Consequently, the statutory scheme itself demonstrates that the cancellation mechanism under the new ....
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.... g. ( g ) In the absence of any enabling provision permitting cancellation of registration retrospectively by invoking a provision that itself stood omitted from the statute, the action of the PCIT (Central) is legally unsustainable and liable to be set aside. Accordingly, retrospective cancellation of registration by invoking Section 12AA, after its omission from the statute, is bad in law. h. ( h ) In support of the above contention, reliance is placed on various judicial precedents wherein it has been categorically held that the provisions of Section 12AB(4) cannot be applied retrospectively and cannot form the basis for cancellation of registration for alleged defaults pertaining to earlier assessment years. * [2025] 175 taxmann.com 671 (Delhi - Trib.) IN THE ITAT DELHI BENCH 'A' Lala Sher Singh Memorial Jeevan Vigyan Trust Society v. PCIT(Central)-3 * Section 12AB of the Income-tax Act, 1961 - Charitable or religious trust - Procedure for registration - Assessment year 2024-25 - Whether power to cancel registration vests only with CIT (Exemption), and PCIT is not competent to do so nor can he cancel registration retrospectively - Held, ye....
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.... Trib.) IN THE ITAT DELHI BENCH 'A' Ram Saran Das Kishori Lal Charitable Trust v. Commissioner of Income-tax (Exemption):- Section 12AB of the Income-tax Act, 1961 - Charitable or religious trust - Procedure for fresh registration (Cancellation of registration) - Assessee, a charitable trust established for advancement of education and provision of medical relief, was initially registered under section 12A on 8-10-1975 and later granted fresh registration under section 12A(1)(ac)(i) on 29-3-2022 under new regime - Commissioner (Exemption) cancelled registration with retrospective effect from 1-4-2002 by invoking sections 12AA(3)/12AB(4), alleging specified violations such as carrying on business by leasing hospital premises, involvement in illegal kidney-transplant activities, obtaining registration through misrepresentation, and claiming exemption under section 11 without holding valid registration - It was noted that trust's leasing of hospital premises to doctors was in furtherance of its charitable objects and that allegations of illegal kidney transplants pertained to actions of individual doctors, not trust - It was also noted that cancellation notice was def....
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....ion of old prayer hall determined at Rs. 1.53 crores against Rs. 50 lakhs (as reflected in books), which works out to Rs. 1.03 crores, it was submitted by the Ld AR of the assessee that the construction of the new building has been carried out over several years starting from the FY 2014-15 ( as per column - 2 of DVO report ) and still under progress on the valuation date 31/01/2022, and the same has been determined after physical inspection on 8th June, 2023 ( para- 3.3 of report), as per CPWD rates ( para 8.4 of report ). 22. The Ld. AR argues that the valuation is determined on a single year basis ignoring multi year construction, and the same is just an estimate which represents only an opinion of an engineer, based on technical assumptions standard cost index, and prevailing market rates, which does not necessarily reflect the actual costs incurred, particularly in cases where construction activity is carried out over a number of years phase by phase and it is further submitted that difference in estimation of value of construction cannot form a basis of alleging ' specified valuation ". 23. It was further submitted by the Ld. AR that construction activities for the "Gat....
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....d that the registration is liable to be cancelled on the ground that the Appellant allegedly: (i) did not submit Books of Account up to AY 2018-19, and (ii) did not maintain proper Books of Account for AY 2022-23 and AY 2023-24. 27. It is, however, a matter of record that the assessment for AY 2022-23 has been completed u/s 143(3), during which the Appellant duly produced its Books of Account before the Assessing Officer, thereby clearly demonstrating that proper Books of Account were maintained and furnished. 28. It is further submitted that the Books of Account for the earlier years could not be furnished during the relevant proceedings as the reassessment proceedings-initiated u/s 148 were under challenge before the Hon'ble Punjab & Haryana High Court, and the Hon'ble High Court has since decided the matter in favour of the Appellant. Therefore, such non-submission of books during the pendency of litigation cannot be construed as a ground for cancellation of registration. 29. Without prejudice, the core issue for consideration is whether alleged non-submission or improper maintenance of Books of Account falls within the scope of "specified violation" a....
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....income-tax in any previous year,- (i) the books of account and other documents have been kept and maintained in such form and manner and at such place, as may be prescribed; and (ii) the accounts of the trust or institution for that year have been audited by an accountant defined in the Explanation below sub-section (2) of section 288 before the specified date referred to in section 44AB and the person in receipt of the income furnishes by that date the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars, as may be prescribed;] 32. As such in the absence of any express statutory provision treating non-submission of Books of Account as a "specified violation" under Section 12AB(4), the action of cancelling registration solely on this ground is beyond the scope of the statutory provisions and is liable to be set aside. It is respectfully submitted that even assuming, without admitting, that the Books of Account were not furnished or the audit was not conducted for any particular year, the statutory consequence prescribed under the Act is governed by the provisions of Section 13(10), which prov....
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....us services and the same has been duly accepted by the department after due verification that contributions received are voluntary offerings, honorarium from followers out of personal devotion un connected with the activities of the assessee, and drawing an adverse inference in the case of the assessee Society on the very same facts is legally untenable and the same cannot form a valid basis for cancellation of registration granted to the assessee Society 36. It is further clarified that both the concerned pastors were also earning income from YouTube channels operated by them in their individual capacity, and such income has been received directly in the personal bank accounts and duly offered to tax and assessed in their individual hands and accepted by the department and as such any adverse inference drawn by the CIT (Central) on this account is wholly misconceived and liable to be disregarded. 37. The ld. AR rested his arguments praying for adequate relief. 38. Per contra the Ld DR relied on the order of the Ld PCIT (Central) and submitted that the assessee has committed specified violations in terms of explanation (a),( e ) and (g) of Section 12AB(4) of the Act. He su....
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....l ) has categorically observed in para - 5 ( page 103 0f the order as follows, where the provisions of section 12AB(4) has been invoked for cancellation of registration. The relevant portion of the order is reproduced for ready reference: "5.. In view of above discussion, I am satisfied that the assessee has committed the specified violations in terms of explanation (a), (e) and (g) of section 12AB(4) of the Act. The evidences/proofs discussed above establishes the occurrence of aforesaid specified violations. It is also clear that the aforesaid specified violations have taken place in the previous year 2014-15 (relevant to A.Y. 2015-16) and all the subsequent previous years for which the references have been made by the AO u/s 12AB(4) read with second proviso to sub-section (3) of section 143 of the Income-tax Act, 1961. Therefore, under clause (ii) of section 12AB(4) [say section 12AB(4)(ii)) of the Income-tax Act, 1961, the Registration granted u/s 12AA(1)(b)(i) of the Act to the society, i.e. Open Door Welfare Society (PAN: AABTT9491M) vide order number CIT (Exemption)/Chd/12AA/2019-20/4258 dated 19.11.2019 and thereafter in view of amendments to section 12AA/12AB the ....
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....as per provisions of law and ultra vires the provisions of Section 12AB, and cannot be legally upheld. 49. Similar view has been taken by various tribunal on identical issues and similar circumstances some of which are referred below: "M.M. Patel Charitable Trust vs. Principal Commissioner of Income-tax [Central) [2025] 172 taxman com 316 (Pune Trib] [21-02-2025] [2025] 180 taxmann.com 546 (Delhi-Trib) IN THE ITAT DELHI BENCH 'A' Ram Saran Das Kishori Lal Charitable Trust v. Commissioner of income (Exemptions): Meenakshi foundation vs. Principal Commissioner of Income-tax [2025] 175 taxmann.com 990 (Delhi-Trib.) [23-05-2025]: 50. Moreover, we are of the view that invoking the provisions of Section 12AA of the Income-tax Act, 1961, ( as recorded at page no.103 of the impugned order u/s 12AB(4)(ii)), for the purpose of cancelling the registration in respect of earlier years, cannot be legally upheld because section 12AA stood omitted from the statute with effect from 01.04.2021, and consequently, reliance placed on the said provision thereafter is contrary to the express statutory framework. 51. On merits of the case also we find that there....