TaxTMI 
TaxTMI 
2026 (5) TMI 405
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....sues pleaded in the grounds are peripheral arguments but we deem it appropriate to take note of the pleadings made by the assessee in the grounds of appeal which read as under : 1. The order rejecting renewal of registration of the assessee society under 12A(1)(ac)(ii) of the Act, dated 26.12.2025, passed by the learned PCIT(Central) is bad in law, contrary to facts, and based on erroneous interpretation of statutory provisions and judicial precedents, and is therefore liable to be set aside. 2. That the jurisdiction assumed by the learned PCIT (Central) Gurgaon in the proceedings under section 12A of the Act is bad in law on account of following: 2.1 That the PCIT (Central), Gurgaon has erred in exercising jurisdiction in a proceedings under section 12A of the Act in the case of the assessee society since, in view of Notification No. 52/2014 [F.No.187/38/2014(ITA.I)], the jurisdiction to take any action regarding registration under section 12A of the Act in the instant case, vested exclusively with the Ld. CIT (Exemptions), Chandigarh. 3. That the learned PCIT (Central), Gurgaon exceeded the jurisdiction vested in law in a proceeding under secti....
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....ication of the assessee on issues pertaining to Assessment Years 2014-15 to 2019-20, by completely ignoring the fact that no reference was made by the Assessing Officer, as mandated under the second proviso to section 143(3), for the Assessment Years 2014-15 to 2019-20, despite the fact that the order of the Settlement Commission was passed on 30 December 2023. 6.2 The learned PCIT (Central) erred in rejecting the application of the assessee trust while completely ignoring the fact that learned Assessing Officer had duly submitted an inspection report of the assessee trust affirming that it is conferring education to around 40,000 students as per its objectives. 7. That the PCIT(Central) erred in law and on facts in cancelling the registration of the appellant by alleging that the genuineness of activities and compliance with the requirements of other laws had not been complied with. The learned PCIT failed to bring on record any cogent material or documentary evidence to demonstrate which specific provisions of any other law were violated, or how the activities of the trust were not genuine. The cancellation is thus based on vague, unsubstantiated allegations and....
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....stinguished and reputed educational Institution. 4. The ld. counsel for the assessee has filed brief synopsis running into 29 pages wherein he has filed the details in tabular form exhibiting the date of registration granted by the Income Tax Authorities u/s. 12 A till the present proceedings and which are the documents assessee has placed in the Paper Book. Therefore, in order to appreciate such details in more scientific manner, we deem it appropriate to take note of them from the written submissions filed by the assessee, which read as under : Sr. No Particulars Section Date Remarks 1 Registration Granted 12AA 31-10-2001 Registration granted under Section 12AA of the Income-tax Act, 1961 (Refer page no. 1 of PB) 2 Search on Chandigarh Group 132 03-10-2019 Search conducted under Section 132 of the Act. 3 Cancellation of Registration 12AA(4) 22-03-2021 Registration cancelled by invoking Section 12AA(4). 4 Appeal before ITAT - Matter Rv. stored 31-08-2021 ITAT set aside cancellation and remanded matter for fresh adjudication (Refer page no. 92-124 of PB-2) 5 Application before Interim Board f....
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....l has set aside the order of ld. Pr. Commissioner of Income Tax vide order dated 31.08.2021 and restored the issues for fresh adjudication to the file of ld. PCIT. However, Department was not satisfied with the order of the ITAT and carried the matter in appeal before the Hon'ble High Court vide ITA Nos. 51, 94 and 73 of 2022. A Notice of Motion was issued on 23.11.2023 for 14.03.2024. According to the assessee, these appeals are still pending and matter is sub-judice before the Hon'ble High Court. 7. The assessee has filed application for grant of registration u/s. 12A of the Income Tax Act after change of the Scheme of Registration vide Finance Act, 2020 w.e.f. 01.04.2021. It was granted registration from assessment year 2022 -23 to assessment year 2026 -27. The copy of the registration is available on page No. 2 & 4 of the Paper Book. Since the registration was granted for a specific period, therefore, according to the Scheme of the Act, assessee was required to get it renewed u/s. 12A(1)(ac)(ii) of the Income Tax Act from the ld. CIT(E), Chandigarh. The assessee has filed an application with the office of ld. CIT (Exemptions) Chandigarh and ld. CIT (E) Chandigarh has tra....
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....income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution, (i) where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first day of April, 2021; (ii) where the trust or institution is registered under section 12AB and the period of the said registration i s due to expire, at least six months prior to expiry of the said period; (iii) where the trust or institution has been provisionally registered under section 12AB, at least six months prior to expiry of period of the provisional registration or within six months of commencement of its activities, whichever is earlier; (iv) where registration of the trust or institution has become inoperative due to the first proviso to sub- section (7) of section 11, at least six months prior to the commencement of the....
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....fied, pass an order in writing- (I) in a case referred to in sub- clause (ii) or sub-clause (iii) or sub-clause (v) of clause (ac) of sub-section (1) of Section 12A rejecting such application and also cancelling its registration ; (II) in a case referred to in sub- clause (iv) or in item (B) of sub-clause (vi) of sub- section (1) of Section 12A, rejecting such application, after affording a reasonable opportunity of being heard; (c) where the application is made under item (A) of sub- clause (vi) of the said clause or the application i s made under sub- clause (vi) of the said clause, as i t stood immediately before i t s amendment vide the Finance Act, 2023, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the trust or institution. x x x 10. A perusal of the above clauses would indicate that by way of Finance Act, 2020 w.e.f. 01.04.2021, a new Scheme of Registration has been provided. It is evident from reading of Section 12A(1)(ac)(i) to (vi) of the Act that in order to claim benefit of Secti....
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....aged in any unlawful activities or failed to comply with other laws of the country. 11.1 On satisfaction of above conditions, ld. Pr. Commissioner or Commissioner would pass an order in writing registering the Trust or Institution for a period of five years and if not satisfied, then pass an order in writing rejecting such application. Before rejecting the application, a reasonable opportunity of being heard is to be provided. 11.2 At this stage, we deem it appropriate to take note of Section 12AB(4) which empowers the Pr. Commissioner or the Commissioner to cancel any provisional or regular registration. It is salutary upon us to take note of this clause, which reads as under: "Procedure for fresh registration. 12 AB(1). x x x x x x x (4) Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,- (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b) the P....
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....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 decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality; or (g) the apo referred to in clause (ac) of sub-section (1) of Section 12A is not complete or it contains false or incorrect information. (5) The order under clause (ii) or clause (iii) of sub-section (4), as the case may be, shall be passed before the expiry of a period of six months, calculated from the end of the quarter in which the first notice is issued by the Principal Commissioner or Commissioner, on or after the 1st day of April, 2022, calling for any document or information, or for making any inquiry, under clause (i) of sub-section (4).]] 12. A perusal of above provision would indicate that it empowers the Pr. Commissioner or Commissioner to call for such document or information from the Trust or Institution or m....
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....as to fulfil the conditions of registration as well as its activities should be genuine in accordance with objects. If there is any shortcoming in this area, then it would be considered as 'specified violation'. The Trust has failed to comply with requirement of any other allied law as contemplated in sub-clause (i) or clause (b) of sub-section (1) of Section 12AB. In other words, if any specified law being violated, then it would fall within specified violation for cancellation of registration. The last violation provided in this Explanation is that if Registration Certificate is being obtained by submitting false or incorrect information, then registration could be cancelled. It is pertinent to note that after the search action, registration of the assessee was cancelled by the ld. PCIT vide order dated 22.03.2021 and the assessee has challenged the order of the ld. PCIT before ITAT vide ITA No.98/CHD/2021. The Tribunal has decided three appeals, namely, ITA 96 to 98/CHD/2021 for three assessees, namely, Chandigarh Educational Trust, Chandigarh Educational Society and the assessee. The Tribunal has allowed all these appeals of the assessees and set aside the cancellation order. H....
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....ccording to its objectives and thus, case of the assessee duly falls within the first limb of 'enquiry' i.e. its activities are not genuine. 15. We have duly considered the rival contentions and gone through the record carefully. It is pertinent to note that the assessee was originally granted registration u/s. 12AA on 31.10.2001. W.e.f. Finance Act, 2020, the Scheme to grant registration to 'Charitable Institution' has been changed and assessee has applied for grant of registration in Form No. 10AC on 15.10.2021. This claim was made after the search carried out upon the assessee on 03.10.2019. This was processed by the Department and registration has been granted from assessment year 2022 -23 to assessment year 2026-27. Copy of the order is available on page No. 2 to 4 of the Paper Book. When this registration was going to expire, then assessee has applied for grant of renewal u/s. 12A(1)(ac)(ii) on 19.05.2025. It is an application for renewal of registration already granted to the assessee. The ld. PCIT had called for report of the AO which we have extracted above and thereafter he had issued notices on 17.12.2025 u/s. 12AB(4) of the Income Tax Act. Copies of these notices are....
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....-tax (Central)* [2024] 160 taxmann 217 ITAT BANGALORE 15. The Commissioner of Income Tax-II, Jalandhar Versus M/s. Apeejay Education Society 2015 (4) TMI 303 PUNJAB & HARYANA HIGH COURT 16. The Commissioner of Income Tax, Karnataka (Central), Bangalore Versus M/s. Islamic Academy of Education 2015 (9) TMI 450 KARNATAKA HIGH COURT 17. M.M. Patel Charitable Trust V. Principal Commissioner of Income-tax [2025] 172 taxmann 316 PUNE TRIBUNAL 18. Seth Panna Lal Charitable Trust v. Commissioner of Income-tax (Exemptions) [2026] 183 taxmann 181 DELHI TRIBUNAL 19. Raya Naik Memorial Gowshala Trust v. Commissioner of Income-tax (Exemptions)* [2026] 183 taxmann 35 BANGALORE TRIBUNAL 20. M/s Vishwayatan Yogasharam Versus CIT, (Exemption) reported in 2017 (12) TMI 1546 ITAT AMRITSAR 21. M/s Prabhat (A House of Hope for Special Children) Versus CIT (Exemptions), Chandigarh, And Vice-Versa 2016 (2) TMI 1097 ITAT CHANDIGARH 22. Gopsai Avinandan Sangha Versus Commissioner of Income Tax (Exemption), Kolkata reported in 2021 (4) TMI 731 ITAT KOLKATA CASE LAWS REGARDING ALLEGED VIOLATIONS OF EARLIE....
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.... Arya Smaj Model Town Versus PCIT, Central 3, New Delhi 2025 (7) TMI 31 ITAT DELHI UNSIGNED CANCELLATION ORDER 42. Ambernath City Hospital (P.) Ltd. V. Union of India [2026] 182 taxmann.com 268 (Bombay) HIGH COURT OF BOMBAY 43. Reuters Asia Pacific Ltd. V. DCIT, International Taxation [2023] 157 taxmann.com 705 (Mumbai-Tribunal) ITAT MUMBAI 44. Vijay Corporation v. ITO 12, Mumbai [2012] 18 taxmann.com 88 (Mum.) ITAT MUMBAI 15.1 The ld. counsel for the assessee has also apprised us with Rule 17 A sub-rule (e) which contemplates as under : "Where the Trust or Institution has been in existence during any year or years prior to the financial year in which the application for registration is made, self- certified copies of the Annual Accounts of the Trust or Institution relating to such prior year or years (not being more than three years immediately preceding in the year in which the said application is made for which such accounts have been made up." 15.2 There is no dispute with regard to the fact that assessee is existing for the purpose of imparting education. This fact is discernable from the record of the AO as well as....
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.... to look into annual accounts of three immediately preceding years in which the said application is being made. If those years are to be looked into, then it would reveal that assessee is already having registration upto assessment year 2026-27. The ld. PCIT has committed an error by looking to the accounts for the period under the search which pertains to assessment year 2014-15 to 2019 -20. 16.4 A perusal of the impugned order would indicate that much emphasis has been given by the ld. PCIT to as to why assessee has approached the Settlement Commission and offered additional income for taxation. At this stage, we would like to take note of some of the paragraphs of the order of the Settlement Commission wherein ld. Settlement Commission has rejected the contention of the Department that assessee has siphoned all the funds towards its Trustees. We take note of the findings of the Settlement Commission from page 29 of the order, which read as under: "We have heard the arguments on both the sides and the facts involved. We have considered the submissions made in the Report under Rule 9 and 9A, the Joint verification report as well as the rejoinder filed by the applicant.....
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....we are of the view that the Department's case of siphoning of funds has not been clearly established and therefore the provisions of section 13(1)(c) cannot be invoked on this issue. Regarding the applicants claim of the inflation of receipts, we find that this issue has been examined in the Joint verification, where it is seen that lumpsum entries of cash receipts are made without narration and without routing the same through the students account. Prima facie, the contention of the applicant that the fee was inflated appears to be acceptable Applicant has shown the capital expenditure of Rs. 2,77,54,13,832/-. On reducing the component of inflated fee of Rs. 1.01.24,61,6707- the balance capital expenditure comes to Rs. 176,29,52,162/- Applicant has argued that it has spent Rs. 176,29,52,162/- for building construction and has submitted a valuation report of a government approved valuer, who has confirmed the value of investment shown by the applicant." 16.5 The Settlement Commission has further rejected the contention of the Department that activities of the assessee are not charitable. The Settlement Commission has recorded the finding that assessee is existing fo....
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....(e) provides that accounts of three years are to be looked into. This aspect was brought to the notice of ld. PCIT but he brushed aside this objection by observing that Rule 17A only provides filing of documents. It cannot restrain the competent authority to look into other circumstances beyond the period of three years. However, we are of the view that if a cumulative setting of all the facts are to be taken into consideration, then approach to the Settlement Commission is a procedure vide which determination of income is being provided where details are mixed up in such a manner that it is not practically possible to deduce the true income, then such income has been left for the Board to determine after hearing both the sides and it is an internal part of the Revenue Department presided by three Commissioners. 17.1 We have extracted some of the observations of the Settlement Commission where they say that it is not appropriate to withdraw exemptions granted to the assessee u/s. 11 on the total amount of additional income offered by the assessee. The Department took this objection before the Settlement Commission also but this objection was rejected by the Settlement Commission....
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....ects. Therefore, we deem it appropriate to take note of our finding recorded in the case of Dera Sacha Sauda Vs PCIT (Central) Gurgaon 2025 (4) TMI 1736 (ITAT Chandigarh). It was rendered in ITA No. 21 /CHD/2024. We have held that ld. PCIT has no jurisdiction to adjudicate the issue of renewal of registration u/s. 12A(1)(ac)(ii). The discussion made by us read as under : 3. Since both the additional grounds of appeal are jurisdictional grounds of appeal, which goes to the root of cause of action, the adjudication of these grounds would affect ultimate taxability of the assessee, we have heard both the parties on these preliminary issues. We are of the opinion that the assessee's stand to agitate under these additional grounds of appeal are such which goes to basic issues vide which it is to be decided whether ld. PCIT, Central Circle was having jurisdiction to pass the impugned order or not. Similarly, whether the ld. PCIT, Central Circle could have invoked Section 12AB(4) with retrospective effect or not ? Considering their cumulative effect over sustainability of the impugned order, we deem it appropriate to admit both these additional grounds of appeal for decision on m....
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....CIT in the present case is beyond his jurisdiction and therefore, impugned order is not sustainable. For buttressing his contention, he relied upon following orders of the ITAT whose copies have been placed on the record : 1. Aggarwal Vidya Pracharni Sabha vs PCIT, ITA No. 1308 /DEL/2023 dated 08.01.2024 (ITAT Del.) 2. Heart Foundation of India vs. CIT (Central), ITA 1524/Mum/2023 dated 27.07.2023 (ITAT Mum.) 3. Pacific Academy of Higher Education and Research Society vs. PCIT (Central) ITA 04-05/Jodh/2020 dated 25.01.2023, (ITAT Jodh.) 4. Wholesale Cloth Merchants Association vs PCIT (Central), ITA688/JP/2019 dated 06.01.2021 (ITAT Jaipur) 5. M/s. Amala Jyothi Vidya Kendra Trust, Bangalore vs. PCIT(Central), ITA No.l41/Bang/2024 dated 16.04.2024 (ITAT Bang.) 6. Laskhmi Chand Charitable Society Vs PCIT (Central-3) ITA 1803/Del/2024 dated 22.08.2024. 5. In his next fold of contentions, he submitted that ld. PCIT has cancelled the registration with the aid of Section 12AB(4) whereby new grounds have been assigned for empowering the authority to cancel the registration. If those contentions are present in a particular case....
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.... u/s. 12AA. The appellant has contended that it is the Commissioner of Income Tax (Exemptions)- CIT(E) - and not the Principal Commissioner of Income Tax -(PCIT), who was the competent authority to cancel the registration. The appellant also submitted copies of few judgments of the Hon'ble ITAT Benches in support of his contentions, including the judgment of the Hon'ble ITAT Bench, Delhi in the case of Lakhmi Chand Charitable Society Vs. PCIT, Cen-3, New Delhi in ITA No. 1803/Del/2024 pronounced on 22.08.2024. 3. In this regard, it is submitted that from the plain reading of the text of sections 12AB(4) and second Proviso to section 143(3), it is abundantly clear that the intent of the legislature was to provide the powers of cancellation of registration u/s. 12AA to both the CIT(E) as well as the PCIT. This is because the words 'Principal Commissioner of Income Tax' have been used in marked distinction to the words 'Commissioner of Income Tax (Exemptions)' in both the sections. It is pertinent to mention here that the scheme of the Income Tax Act, 1961 provides for only the Commissioner rank officers to hold the charge of Exemptions. The Income Tax....
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....nal institution referred to in sub-clause (vi) or any hospital or other medical institution referred to in sub-clause (via) is approved or provisionally approved under the said clause and subsequently - (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year'; or (b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or " 6. Furthermore, the judgment rendered in the case of Sri Krishan Educational Trust (supra) is the latest judgment of the Hon'ble ITAT, New Delhi and shall prevail over the earlier judgments rendered by the coordinate Benches of ITAT, Delhi which have been relied upon by the appellant assessee. It will also not be out of place to state that the judgment of the Hon'ble ITAT, Delhi Bench in the case of Lakhmi Chand Charitable Society Vs. PCIT, Cen-3, New Delhi, so heavily relied upon by the assessee, has been challenged by the Department before the Hon'ble Delhi High Court (screenshot attached as evidence). 7. Thus, wh....
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....r 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. (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 Assessing Officer by or 471 of 801 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 ....
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....Act would exercise powers according to the jurisdiction vested in them by the CBDT. In exercise of this power, Board has issued Notification No. 52 and 53 of 2014 whereby Commissioner of Income Tax (Exemptions) Chandigarh was authorized to grant registration under Section 12AA as well as cancel such registration. The identical issue was considered by ITAT Delhi Bench in the case of Aggarwal Vidhya Pracharni Sabha Vs PCIT, ITA 1308/Del/2023. Copy of this decision is available on page No. 1 to 40. In this case also, PCIT, Central, Gurgaon has exercised the powers under Section 12AB sub-section (4) and cancelled the registration granted to the assessee under Section 12AA. The Tribunal has considered all attendant circumstances and thereafter held that PCIT, Central Circle, Gurgaon was not competent to cancel the registration. The ITAT took into consideration Notification No. 52 and 53 as well as the order passed under Section 127(2) of the Income Tax Act. The Notifications dated 22.10.2014 are being taken note in paragraph No. 12 page No.17 to 21 of this order of the Tribunal. Thus, the Tribunal has also considered whether Section 12AB(4) brought on the Statute Book w.e.f. 01.04.2022 ....
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.... 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 agreement, then the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner from whose jurisdiction the case is to be transferred 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, pass the order; (b) where the Principal Directors General or Directors General or Principal C....
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....sary in order to satisfy himself about- (A) the genuineness of activities of the trust or institution; and (B) the compliance of such requirements of any other law for the time being in force by the trust or institution as are material for the purpose of achieving its objects; and (ii) after satisfying himself about the objects of the trust or institution and the genuineness of its activities under item (A), and compliance of the requirements under item (B), of sub-clause (i),- (A) pass an order in writing registering the trust or institution for a period of five years; (B) if he is not so satisfied, pass an order in writing rejecting such application and also cancelling its registration after affording a reasonable opportunity of being heard; (C) where the application is made under sub-clause (vi) of the said clause, pass an order in writing provisionally registering the trust or institution for a period of three years from the assessment year from which the registration is sought, and send a copy of such order to the trust or institution. (2) All applications, pending before the Principal Commissioner or Commissioner ....
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....) of section 12AB read with sub-section (3) of the said section in Form No. 10AC and issue a sixteen digit alphanumeric Unique Registration Number (URN) to the applicants making application as per clause (i) of the sub-rule (1). (6) If, at any point of time, it is noticed that Form No. 10A has not been duly filled in by not providing, fully or partly, or by providing false or incorrect information or documents required to be provided under sub-rule (1) or (2) or by not complying with the requirements of sub-rule (3) or (4), the Principal Commissioner or Commissioner, as referred to in subrule (5), after giving an opportunity of being heard, may cancel the registration in Form No. 10AC and Unique Registration Number (URN), issued under sub-rule (5), and such registration or such Unique Registration Number (URN) shall be deemed to have never been granted or issued. (7) In case of an application made under sub-clause (vi) of clause (ac) of sub-section (1) of 4 [section 12A as it stood immediately before its amendment vide the Finance Act, 2023,] during previous year beginning on 1st day of April, 2021, the provisional registration shall be effective from the assessme....
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....garwal vidhya Pracharni Sabha (Aggarwal College, Ballabhgarh) AABTA3409Q Circle-2(E), Chandigarh DCIT, Central Circle-2, Faridabad DLC-CC-136-4 This order shall take effect from 26.10.2020." 12. We also consider it appropriate to reproduce the relevant part of the Notification dated 22.10.2014 providing for the territorial jurisdiction of CIT(E) in furtherance of powers given to the Board u/s. 120 (1) and (2) of the Act, made available at pages 2 to 5 of the paper book:- "NOTIFICATION New Delhi, the 22nd October, 2014 (Income-Tax) S.O. 2754 (E).-In exercise of the powers conferred by sub-section (1) and (2) of section 120 of the Income-Tax Act, 1961 (43 of 1961) and in supersession of the notification of the Government of India, Central Board of Direct Taxes number S.O.880(E), dated the 14th September, 2001, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub section (ii), dated the 14th September, 2001, except as respects things done or omitted to be done before such supersession, the Central Board of Direct Taxes hereby - S. No Designation Headquarters Territorial Area Cases or cla....
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....evant clauses of sub-section (1) of section 12AB or subsection (1) of section 12AA. Subsequent to examination by the Principal Commissioner or Commissioner of Income-tax, an order is required to be passed for either cancellation of the registration or refusal to cancel the registration. Similar provisions have also been introduced in clause (23C) of section 10 of the Act by substituting the 21 ITA No. 1308/Del/2023 fifteenth proviso of the said clause with respect to fund or institution trust or institution or any university or other educational institution or any hospital or other medical institution referred under sub-clauses (iv), (v), (vi), (via) of this clause and which have been approved or provisionally approved under the second proviso to the said clause. These amendments are effective from 1st April, 2022. In addition to the specified violations referred above, the power of cancellation has also been granted under sub-rule (5) of rule 17A and subrule (5) of rule 2C of the Income-tax Rules, 1962 (the Rules) to the Principal Commissioner or Commissioner authorised by the Board. This Circular only relates to cancellation of registration/approval or provisional registration/ap....
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.... exercising powers under sub-section (1) and sub-section (2) of section 120 vested powers to perform all the functions in respect of class of cases referred in the column No.5 of the Schedule of this Notification and had created a specific 23 ITA No. 1308/Del/2023 jurisdiction on territorial basis in regard to the provisions generally dealing with claim of exemptions u/ss 10,11,12, 13A and section 13B of the Act. 14.2 Thus as we refer to the Notification dated 22.10.2014, the clause (a) vested powers with Commissioners of Income-tax (Exemptions), for class or class of cases pertaining to section 10, section 11, section 12, section 13A and section 13B of the Act and clause (b), to issue orders in writing for the exercise of 'their' powers and perform all 'their' functions by Additional Commissioners of Income-tax or Joint Commissioners of Income-tax and Tax Recovery Officers who are subordinate to them and that signifies that again this delegation of powers by CIT(E), Chandigarh could have been qua officers subordinate to CIT(E), Chandigarh only and not, 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 Boa....
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....27 of the Act on 26.10.2020, CIT(E), Chandigarh could have transferred his powers u/s. 12AB of the Act to any other authority. 15.1 On the other hand, ld. PCIT, Gurgaon by virtue of the Explanation defining the scope of 'case' for the purpose of section 127, did not have power vested in him to cancel registration u/s. 12AB(4). The 'case' refers to assessment initiated as a consequence of search or consequential proceedings to such assessments only and cannot be extended to special powers of ld. CIT(E), Chandigarh. Thus, the assumption of jurisdiction on the basis of the order dated 26.10.2020 of CIT(E), Chandigarh is completely illegal and that makes the whole exercise of ld. PCIT passing the impugned order liable to be quashed. 16. Furthermore, if examine the legality of the procedure followed by ld.PCIT, Gurgaon to pass order u/s. 12AB(4), by recourse to exercise of powers by virtue of clause (a) of sub-section (4) of section 12AB, it comes up that ld.PCIT, Gurgaon admits that a 'proposal' for cancellation of the registration of the assessee trust granted u/s. 12AA of the Act was forwarded vide letter dated 23.08.2022 by the AO through the Range head. In this co....
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....sioner or Commissioner to take cognizance on the basis of a 'specified violation' coming into his notice during any previous year. At the cost of repetition, we observe that reference in section 12AB is not to PCIT or Commissioner to whom the said Assessing Officer would be subordinate, but, the CIT(E) who has been given special power for grant and cancellation of the registration as original jurisdiction. 17.1 Furthermore, here in this case, the exercise of power u/s. 12AB(4) of the Act seems to also not have been done in accordance with law. As what comes up further is that, if at all, PCIT, Gurgaon was acting under clause (a) to Section 12AB(4), then, before issuing the notice dated 08.09.2022, itself the ld. PCIT, Gurgaon should have first formed his opinion that the assessee had committed one or more of a 'specified violation'. However, as we go through the relevant part of the impugned order we find that the ld.PCIT has not mentioned as to which amongst the various specified violations mentioned in Explanation attached to subsection (4) of section 12AB were attracted so as to show cause the assessee under sub-section (4) of section 12AB of the Act and ask for inf....
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....pecify the activities of which the accumulated funds have been utilized. • Copy of account of the Aggarwal Vidya Pracharni Sabha with M/s Tirupati Realbuild Pvt. Ltd. And M/s Radhey Krishna Infratech Pvt. Ltd. For the above AYs explaining the nature and purpose of transactions undertaken with the said entities including advance given for the purpose of construction along with supporting evidences in order to substantiate the genuineness of the same. • Relationship of the Aggarwal Vidya Pracharni Sabha and its members with the directors of M/s Tirupati Realbuild Pvt. Ltd. And M/s Radhey Krishna Infratech Pvt. Ltd." 17.4 Then in para 4.1.2 sub-clause (d), the ld. PCIT mentions of the earlier letter dated 08.09.2022 that: "d) Further, vide this office letter dated 08.09.2022, the assessee was requested to furnish details of capital and revenue expenditure incurred for various assessment years. In response, the assessee only submitted copy of Form 10B which is not supported with the details of capital expenditure and copy of accounts and documentary evidence. Further, no activity was specified for which accumulated funds were utilized." ....
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.... 15. Even otherwise, in the said notification, there is no mention where CIT(E) can transfer to other CIT or Pr.CIT. 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'." 20.1 The Jaipur Bench has dealt with this issue further in paras 18 to 21 as under:- "18. We also observe that as per Sec. 120(6) of the Act, the CBDT by its Notification No. 52/2014 and 53/2014 dated 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-....
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....so as to centralise cases relating to D.Y. Patil Group--Assessee objected that such notice did not referred to any agreement being reached by officers of equal rank at Mumbai and Kolhapur--These objections were however overruled and assessee's case was transferred--High Court quashed purported transfer u/s. 127--Held, "Centralisation Committee" which took decision for transfer of jurisdiction, is not authority envisaged u/s. 127(2)-- Counter-affidavit filed on behalf of Revenue does not disclose that there was any agreement between authorities of equal rank, as a pre-condition for invoking powers u/s. 127-- "Absence of dissenting note" from officer of equal rank who has to agree to proposed transfer would not constitute agreement, envisaged u/s. 123(2)(a)--Assessee's petition allowed." 21. It was also been brought to our notice that the AR had inspected the records of the case but there was no agreement between both the CIT's regarding initiation of proceedings u/s. 12A of the Act. The entire communication on record is with regard to limited purpose of Coordinate assessments only. Even the Instruction No. F.No.286/88/2008IT(Inv-II) dated 17.09.2008 has relied u....
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.... agreement was spelt out. 8. The Apex Court has categorically held that the absence of disagreement will not be tantamount to an agreement as visualized under section 127(2)(a) which contemplates positive state of mind of the two jurisdictional Principal Commissioners of Income Tax. The agreement contemplated by clause (a) of subsection (2) of section 12 7 may not be a drawn up agreement. What is necessary is that there has to be an agreement which will involve positive state of mind of the two jurisdictional Principal Commissioners. Both of them must consent to the transfer after application of mind. 9. In the present case, it is not even the case made out in the show cause notice that the agreement as contemplated by the first part of clause (a) of sub-section (2) of section 127 exists. The existence of such agreement between two jurisdictional Commissioners is a condition precedent for passing the order of transfer.Except for the request which came from the investigation office, Chennai of transferring the case, 38 ITA 688/JP/2019_ M/s Wholesale Cloth Merchant Association Vs Pr.CIT there is no reference whatsoever to any such agreement. Clause (b) of subsection....
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.... from Nellore to Hyderabad. The short question that arises for consideration is whether failure to record the reasons in the order which was communicated to the appellants is violative of the principles of natural justice for which the order should be held to be invalid. Held : The requirement of recording reasons under s. 127(1) is a mandatory direction under the law and non-communication thereof is not saved by showing that the reasons exist in the file although not communicated to the assessee. When law requires reasons to be recorded in a particular order affecting prejudicially the interests of any person, who can challenge the order in Court, it ceases to be a mere administrative order and the vice of violation of the principles of natural justice on account of omission to communicate the reasons is not expiated. Non- communication of the reasons in the order passed under s. 127(1) is a serious infirmity in the order for which the same is invalid.--Kashiram Aggarwalla vs. Union of India (1965) 56 ITR 14 (SC) : TC69R.660 and S. Narayanappa vs. CIT (1972) 86 ITR 741 (All) : TC51R.651 distinguished; Sunanda Rani Jain vs. Union of India 1975 CTR (Del) 135 : (197....
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.... and are left open. Resultantly, the appeal of the assessee is allowed and the impugned order is quashed. Order pronounced in the open court on 08.01.2024." 9. The arguments raised by the ld. CIT DR have been identically taken note by the ITAT. The ld. CIT DR has made reference to an order of the ITAT Delhi in the case of Shree Krishna Educational Trust Vs Director General of Income Tax. In this case issue before the Tribunal was whether DGIT (Investigation) Lucknow was justified in cancelling the approval granted under Section 10(23C)(vi) of the Income Tax Act. This approval was to be granted to an educational institution and once an approval is being granted by CIT (Exemptions), then income of an educational institution will not be liable to tax upto a certain quantum. The DG (Investigation), Lucknow has cancelled such approval and this issue travelled upto the Tribunal. The Tribunal has held that DG(Investigation) has no power to cancel the approval granted for the purpose of Section 10(23C)(vi). In the opinion of the Tribunal, it was the CIT (Exemptions) or PCIT, the ld. DR wants to persuade the Bench to take note of the passing reference made by the Tribunal ....
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....ure. 10. Respectfully following the judgement of the Co-ordinate Benches on these two propositions, we are of the view that impugned order passed by the PCIT is not sustainable on both the folds of grievances. Hence, we quash the impugned order. We do not deem it necessary to adjudicate any other issue on merit. Accordingly, we allow the appeal of the assessee. 11. In the result, appeal of the assessee is allowed. 20. In view of the above discussion, we are of the view that impugned order of the ld. PCIT is not sustainable on both the folds, hence, we set aside this order and direct the Revenue to renew registration of the assessees u/s. 12 A(1)(ac)(ii) of the Income Tax Act and issue necessary certificate as per the procedure. 21. In the result, the appeal is allowed. Order pronounced on 28.04.2026. ============= Document 1 C GOVERNMENT OF INDIA INCOME TAX DEPARTMENT Office of the Dy. Commissioner of Income Tax, Central Tax, Central Circle-2, Room No. G-02, C.R. Building, Sector-17-E, Chandigarh E-mail: [email protected] No. ACIT/CC-2/CHD/2025-26/733 Phone: 0172-2701548 Dated: 04.12.2025 To. The Pr. Commissioner of In....
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....ational Society (SGRDES) were centralised with this office. The assessee, Shri Guru Ram Dass Educational Society then preferred an appeal before the Interim Board of Settlement (IBS) u/s 245C(1) of the I.T. Act, 1961 on 17.09.2021 for A.Y. 2014-15 to 2020-21 and also disclosed additional income of Rs. 11,06,66,000/- on which the assessee had paid tax and interest. The IBS-V, Mumbai vide order dated 30.12.2023 settled the application of the assessee and further enhanced the income of the assessee for A.Y. 2014-15 to 2019- 20 (copy attached as Annexure-2). The total income settled is as follows :- A.Y. Returned Income (in Rs.) Settled Income (in Rs.) 2014-15 NIL/- 74,45,000/- 2015-16 NIL/- 2,98,55,000/- 2016-17 NIL/- 1,11,50,000/- 2017-18 NIL/- 1,04,50,000/- 2013-19 NIL/ 2,35,25,000/- 2019-20 NIL/- 12,00,67,188/- Total NIL/- 20,25,92,188/- The order of the Hon'ble IBS-V, Mumbai has been accepted by the department and further no CWP has been filed against the order of the Hon'ble IBS-V, Mumbai. Further, the assessee, Chandigarh Educational Trust (CET) was also provided immunity from the penalty and prosecution proceedings in the IBS order. Thus, neither pe....