TaxTMI 
TaxTMI 
2026 (5) TMI 457
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....ion 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 registeration 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 section 12A of the Act on account of following: 3.1 That the learned PCIT (Central), erred in law by relying on records of A.Ys. 2014-15 to 2019-20 in the Show Cause Notice dated 17-12-2025 and final rejection order dated 26.12.2025, which is in contravention to Rule 17A of the Income-tax Rules, 1962, which permits examination of only three assessment years preceding the year of application. As the application before learned PCIT (Central) pertained to A.Y. 2026-27, only A.Ys. 2023-24 to 2025-26 could have been examined; hence....
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....ubmitted 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 is arbitrary, unjustified, and liable to be quashed. 8. That the Ld. PCIT (Central), Gurgaon has erred in law and on facts in rejecting the exemption/registration of the appellant society by making various unfounded assertions regarding alleged misutilisation of funds, which are contrary to the material on record and the binding findings of the Settlement Commission. 8.1 That the Ld. PCIT (Central) has erred in law and on facts in rejecting the registration by ignoring the categorical findings of the Settlement C....
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.... only A.Ys. 2023-24 to 2025-26 could have been examined; hence, the show cause notice based on earlier years is legally untenable. 3.2 That the impugned order of the Ld. PCIT (Central), Gurgaon, founded solely on allegations relating to Assessment Years 2014-15 to 2019-20 (i.e., prior to 01.04.2022), is unsustainable in law, as the appellant trust had already been granted registration on 15.10.2021 for AYs 2022-23 to 2026-27, after the search dated 03.10.2019, and no adverse action could thereafter be taken on the basis of alleged past violations. 4. That the order of learned PCIT (Central), Gurgaon is violative of principles of natural justice since; 4.1 The learned PCIT (Central), Gurgaon, erred in cancelling the registeration of the assessee society on various grounds which were never show caused to the assessee, hence, the order dated 26.12.2025 is bad in law. 5. That the order of the learned PCIT (Central), Gurgaon, is legally flawed and hit by the principle of judicial discipline since; 5.1 That the Ld. PCIT (Central), Gurgaon has erred in law and on facts in cancelling the registration of the appellant trust by completely ignoring....
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....CIT Central, Gurgaon has alleged that the appellant made a corpus donation of Rs. 54,52,200 to Capital CU-TBI as on 31.03.2024 and failed to disclose the same in replies to notices, without appreciating that the details of any corpus donation given by the assessee trust were never called for during the course of proceedings, and that a corpus donation made to another eligible organisation does not constitute application of income in the hands of the appellant and, therefore, could not be made a basis for any adverse inference. 10 That the Ld. PCIT (Central), Gurgaon has erred in law and on facts in rejecting the exemption/registration of the appellant society by making various unfounded assertions regarding alleged misutilisation of funds, which are contrary to the material on record and the binding findings of the Settlement Commission. 10.1 That the Ld. PCIT (Central) has erred in law and on facts in rejecting the registration by ignoring the categorical findings of the Settlement Commission that no siphoning, diversion, or misutilisation of funds was established, and that the mere absence of vouchers relating to capital work- in-progress cannot, by itself, just....
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....tails from the written submissions filed by the assessee: Chandigarh Educational Society Sr. No. Particulars Section Date Remarks 1 Registration Granted 12AA 24-02-2014 Registration granted under Section 12AA of the Income-tax Act, 1961. 2 Search on Chandigarh Education Society 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 Restored - 31-08-2021 ITAT set aside cancellation and remanded matter for fresh adjudication. 5 Application before Interim Board for Settlement 245C 17-09-2021 Application filed seeking settlement of issues. 6 Application in Form 10AC 12A(1) (ac)(i) 15-10-2021 Application filed for registration under amended provisions post 01 -04-20.21 from AY 2022-23 to AY2026-27 7 Appeal before Punjab & Haryana High Court 260A 03-02-2022 Department filed appeal; substantial questions of law admitted. 8 Order by IBS 245D(4) 30-12-2023 Settlement order passed; binding on the Department. 9 Tr....
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....ltimately passed orders u/s 245D(4) on 30.12.2023 for assessment year 2013-14 to 2020-21. In between, the registration granted to the assessee u/s 12AA by the Income Tax Department vide order dated 22.02.2011 in the case of Chandigarh Educational Trust and 22.02.2014 in the case of Chandigarh Educational Society were cancelled by the ld. PCIT, Central, Gurgaon vide order dated 22.03.2021. 5. The assessee were aggrieved with the cancellation of registration, hence filed appeals before ITAT, ITA No.96/CHD/2021 in the case of Chandigarh Educational Trust and ITA No. 97/CHD/2021 in the case of Chandigarh Educational Society. The Tribunal has decided appeals of the assessee vide order dated 31.08.2021 and set aside the orders passed by the ld. PCIT Central, Gurgaon with a direction that he would adjudicate the cases of both the assessee afresh after providing due opportunity of hearing. 6. The Department was not satisfied with the orders of ITAT and filed appeals bearing ITA Nos. 51, 94 and 173 of 2022. In these appeals notice of motion was issued on 23.11.2023 for 14.03.2024. According to the assessee, the appeals are pending. 7. Both the assessee have filed application for gr....
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....rust 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 is 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 assessment year from which the said registration is sought to be made operative; (v) where the trust or institution has adopted....
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....f 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 is made under sub-clause (vi) of the said clause, as it stood immediately before its 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 Section 11 and 12, if any Trust or Institution is in receipt of income, it has to file an application in the prescribed form and manner to the Pr. Commissioner....
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....issioner 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 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 ....
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....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 make such enquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation. If there is any specifie....
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.... 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. 12.3 It is pertinent to note that after the search action, registration of the assessee was cancelled by the ld. PCIT vide separate orders and assessee had challenged the order of the ld. PCIT before ITAT vide ITA Nos. 96 & 97/CHD/2001. The Tribunal has allowed appeals of both the assessee and set aside the cancellation order. However, an opportunity has been given to the ld. PCIT to adjudicate the cancellation of registration afresh. As observed earlier, the Department was not satisfied with the order of the ITAT and appeals have been filed before the Hon'ble High Court bearing ITA Nos. 51, 94 an....
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....erved that the education institute/ colleges are setup on the said premises and prima facie, the education is being provided to the students as per the stated objectives and around 18,000 students are enrolled in the said college/ institute. The inspector report in this regard along with all other annexures is hereby attached as Annexure-1. ii. Copy of ITRs, Form 26AS, AIS, TIS and Financial statements filed by the assessee available on the system for F.Y. 2021-22 to F.Y. 2024-25 have already been provided via earlier mail dated 03.12.2025. iii. A search and seizure action under section 132(1) of the Act was carried out on various concerns and persons related to the Chandigarh Group of Colleges on 03.10.2019. As a part of the search, Chandigarh Educational Trust (CET), Chandigarh Educational Society (CES) and Shri Guru Ram Das Educational Society (SGRDES) along with its key trustees/ members including Mr. Satnam Singh Sandhu and other related persons were also covered. During the course of search and post search proceedings, various incriminating documents and evidences regarding siphoning off the funds of the Societies by booking bogus expenses and diversion of f....
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....21 has allowed the appeal of the assessee with the direction to the Pr. CIT (Central), Gurgaon to decide the issue of 12AA registration afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee/appellant and also keeping in view the findings given by the Assessing Officer as regards to the violation of the provisions contained in section 13(1)(c) of the Act (copy attached as Annexure-4). The assessee then filed the applications before the Hon'ble Income Tax Settlement Commission (ITSC)/lnterim Board of Settlement on 17.09.2021. Due to this, the assessment proceedings before Assessing Officer stands abated and the AO does not have the power to complete the pending search assessment proceedings. Therefore, the directions issued by the Hon'ble ITAT with respect to deciding the issues of grant of 12AA registration by the PCIT only after conclusion of assessment proceedings by the AO in respect of violation of provisions contained in section 13(1)(c) of the Act have practically become non-implementable for reasons beyond the control of PCIT or AO. Thereafter, miscellaneous application was filed to bring the fact to the n....
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....TIS and Financial statements filed by the assessee available on the system for F.Y. 2021-22 to F.Y. 2024-25 have already been provided via earlier mail dated 03.12.2025. iii. A search and seizure action under section 132(1) of the Act was carried out on various concerns and persons related to the Chandigarh Group of Colleges on 03.10.2019. As a part of the search, Chandigarh Educational Trust (CET), Chandigarh Educational Society (CES) and Shri Guru Ram Das Educational Society (SGRDES) along with its key trustees/ members including Mr. Satnam Singh Sandhu and other related persons were also covered. During the course of search and post search proceedings, various incriminating documents and evidences regarding siphoning off the funds of the Societies by booking bogus expenses and diversion of funds of the Societies for the benefit of its trustees were found and seized, which show that the activities of the aforementioned Societies are not fully genuine and the same are not being carried out in accordance with the objectives of the Society in a transparent manner. Pursuant to a search carried over on assessee, Chandigarh Educational Society on dated 03.10.2019 u/s ....
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....(copy attached as Annexure-4). The assessee then filed the applications before the Hon'ble Income Tax Settlement Commission (ITSC)/lnterim Board of Settlement on 17.09.2021. Due to this, the assessment proceedings before Assessing Officer stands abated and the AO does not have the power to complete the pending search assessment proceedings. Therefore, the directions issued by the Hon'ble ITAT with respect to deciding the issues of grant of 12AA registration by the PCIT only after conclusion of assessment proceedings by the AO in respect of violation of provisions contained in section 13(1)(c) of the Act have practically become non-implementable for reasons beyond the control of PCIT or AO. Thereafter, miscellaneous application was filed to bring the fact to the notice of Hon'ble ITAT and seek directions from the Hon'ble ITAT with respect to implementation of its order dated 31.08.2021. The Hon'ble ITAT vide its combined order dated 15.06.2022 has dismissed the miscellaneous applications by holding that only the mistake apparent from the record could be rectified under 254(2) of the Act, however, in the instant case, no such mistake was apparent. Thereaf....
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....OCHIN 2. Kosuke Sports Foundation Versus DCIT, Exemption Circle, Pune 2025 (11) TMI 452 ITAT PUNE 3. Saraswati Educational & Welfare Society Versus CIT Exmp., Chandigarh 2021 (9) TMI 840 ITAT AMRITSAR 4. Commissioner of Income-tax, Rohtak vs. B.K.K. Memorial [2013] 213 Taxman 1 Punjab & Haryana 5. C/7 v. Baba Deep Singh Educational Society [2012] 206 Taxman 131 Punjab & Haryana 6. Director of Income-tax vs. Garden City Educational Trust [2010] 191 Taxman 238 Karnataka 7. Commissioner of Income-tax-ll, Chandigarh vs. Surya Educational & Charitable Trust [2011] 15 taxmann.com 123 Punjab & Haryana 8. Commissioner of Income-tax v. Red Rose School PRADEEP KANT AND B.B. AGARWAL, JJ [2007] 163 TAXMAN 19 HIGH COURT OF ALLAHABAD 9. Ajit Education Trust vs. Commissioner of Income-tax-III, Baroda 2010] 42 SOT 415 ITAT AHMEDABAD 10. Mata Parvati Educational & Innovative Society Versus CIT(E), Delhi 2019 (4) TMI 213 ITAT DELHI 11. Vidyadayani Shiksha Samiti Versus CIT(Exemptions) -5, Lucknow 2017(12) TMI 1251 ITAT DELHI 12. Bhartiya Kisan Sangh Sewa Niketan Versus CIT (E....
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....MI 1011 ITAT DEHRADUN 29. Lakhmi Chand Charitable Society vs. PCIT, Central-3, New Delhi 2024 (8) TMI 1297 ITAT Delhi 30. Sushila Devi Centre for Professional Studies and Researchv. PCIT (Central) [2025] 179 taxmann ITAT DEHRADUN CASE LAWS REGARDING LACK OF JURISDICTION WITH PCIT 31. Aggarwal Vidya Pracharni Sabha vs. PCIT 1308/Del/2023 ITAT Delhi 32. Pacific Academy of Higher Education and Research Society vs. PCIT (Central), Jaipur -IT AT Jaipur 2023 (1) TMI 1283 ITAT JODHPUR 33. Lala Sher Singh Memorial Jeevan Vigyan Trust Society vs. PCIT(Central) 3 [2025] 175 taxmann 671 DELHI TRIBUNAL 34. Meenakshi foundation VS. Principal Commissioner of Income-tax [2025] 175 taxmann 990 DELHI TRIBUNAL 35. Hemkunt Foundations VS. Principal Commissioner Income-tax, Central [2025]175 taxmann 918 DELHI TRIBUNAL 36. M/s Dera Sacha Sauda Versus The PCIT (Central), Gurgaon 2025 (4) TMI 1736 ITAT CHANDIGARH 37. Dr. Virendra Swaroop Educational Foundation Versus ACIT Central Circle Dehradun 2026 (2) TMI 624 ITAT DEHRADUN 38. M/s Wholesale Cloth Merchant Association Versus Pr. C.I.T....
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....le Purpose' provided in Section 2(15) of the Income Tax Act. This Section contemplates 'charitable purpose' which includes relief to the poor, education, yoga, medical relief, preservation of environment including watersheds, forest, wild life and preservation of monuments or places or objects of artistic or historic interest and the advancement of any other object of general public utility. Thus, this definition contemplates two fold of activities : a) Activities which are per-se charitable and, b) The advancement of any other object of general public utility. The assessee is imparting education, thus t falls within the first limb of the definition which is 'pre se' 'Charitable'. b) The ld. PCIT has committed an error by inter- linking two aspects which are independent, namely ; a) For grant of registration/renewal of registration u/s 12A(ac)(ii) vis-a-vis cancellation of such registration as contemplated in clause (12)(AB) sub-section (4). 16.2 We have discussed both the procedures in the upper part of this order. As far as for grant of registration u/s 12A(1)(ac)(ii) is concerned, only two circumstances ....
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....i Satnam Singh Sandhu and Smt Damandeep Kaur. This contention is based on the statements made by Shri Arun Rahi and is not supported by any other documentary evidence. It is noted that the cash and other valuable assets found and seized during the search action are not commensurate with the amount of Rs. 78,55,16,398/- allegedly siphoned out by the trustees. Applicant has argued that it has spent Rs 78,55,16,398/- for building construction and has submitted a valuation report of a government approved valuer who has almost confirmed the value of investment shown by the applicant. Department has not been able to clearly establish that the money was not spent on construction but was diverted to the trustees. Absence of bills and vouchers cannot be the only ground for Establishing the siphoning of funds Therefore, it is difficult to accept the argument of the Department that entire amount of Rs. 78,55,16,398/- was bogus and was siphoned out by the applicant. Considering the facts put forth before us, 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. ....
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....that assessee has approached the Settlement Commission and made disclosure of additional income which in itself suggests that it has not acted according to its objectives. With regard to the above finding of the ld. PCIT, we are of the view that firstly Rule 17A sub-rule (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 Section 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 i....
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....fore us. 19. The ld. counsel for the assessee, at the time of hearing raised one more fold of grievance vide which it was submitted that ld. PCIT has no jurisdiction to adjudicate this issue. It was to be adjudicated by ld. CIT (E), Chandigarh. He relied upon a large number of decisions and one of the decision was of Chandigarh Bench wherein we have discussed all these aspects. 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 decide....
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....o. 1 to 40. The Co-ordinate Bench of the Tribunal took note of these Notifications and we will be referring these Notifications. On the strength of Section 120 coupled with the Notification issued by the Board, ld. Counsel for the assessee emphasized that CIT (Exemptions) was the competent authority to cancel the registration granted under Section 12A. The powers exercised by the PCIT 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. 141/Bang/2024 dated 16.04.2024 (ITAT Bang) ....
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.... Tax Act. Apart from his oral submission, he has filed a written note after conclusion of the hearing and such note read as under : "The aforementioned case came up for hearing before the Hon'ble Bench on 05.03.2025. 2. The appellant assessee has taken an additional ground of appeal challenging the jurisdiction of the Ld. PCIT in cancelling the registration 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....
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....e text and the content of the 15th proviso to section 10(23C) is the same as that of section 12 AB(4). To augment my contention, the relevant 15th Proviso of section 10(23C)(vi) is reproduced below: "Provided also that where the fund or institution referred to in sub-clause (iv) or trust or institution referred to in sub- clause (v) or any university or other educational 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 r....
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....authorise any other income-tax authority to issue orders in writing for the exercise of the powers and performance of the functions by all or any of the other income-tax authorities who are subordinate to it. (3) In issuing the directions or orders referred to in sub-sections (1) and (2), the Board or other income-tax authority authorised by it may have regard to any one or more of the following criteria, namely :- (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases. (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 wri....
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....perusal of sub-clause (1) to (3) would indicate that Board would issue directions authorizing the authorities to exercise the powers and perform all or any of the functions conferred on them by way of that Notification. While issuing Notification, Board would keep in mind four criteria mentioned in sub- clause (3) of this Section. In other words, the authorities under the Income Tax 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 canc....
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....l or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner,- (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners or Principal Commissioners or Commissioners to whom such Assessing Officers are subordinate are in agreement, then the Principal Director General or Director General or Principal Chief Commis....
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....on is made under sub-clause (i) of the said clause, pass an order in writing registering the trust or institution for a period of five years; (b) where the application is made under sub-clause (ii) or sub-clause (iii) or subclause (iv) or sub-clause (v) of the said clause,- (i) call for such documents or information from the trust or institution or make such inquiries as he thinks necessary 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 h....
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....sioner or the Commissioner may, by an order in writing, after affording a reasonable opportunity of being heard, cancel the registration of such trust or institution.". Rule 17A "(5) On receipt of an application in Form No. 10A, the Principal Commissioner or Commissioner, authorised by the Board shall pass an order in writing granting registration under clause (a), or clause (c), of sub-section (1) 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 ....
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....s behalf, I, the Commissioner of Income Tax(Exemptions), Chandigarh hereby transfer the following case(s), particulars of which are mentioned hereunder in Columns (2) and (3) from the Assessing Officer mentioned in Column (4) therein, to the of the Assessing Officer mentioned in Column (5) - S. No. Name and Address of the Assessee PAN From To 1 (2) (3) (4) (5) M/s Aggarwal 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, Ce....
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....axes (TPL Division) Dated: 3rd June, 2022 Sub: Clarification regarding Form No 10AC issued till the date of this Circular - reg. Finance Act, 2022 has inserted sub-section (4) in section 12AB of the Income tax Act, 1961 (the Act) allowing the Principal Commissioner or Commissioner of Income-tax to examine if there is any "specified violation" by the trust or institution registered or provisionally registered under the relevant 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 ....
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....order passed dated 26.10.2020, under sub-clause (a) to sub-section (2) of section 127 of the Act only referred to transfer of jurisdiction of 'assessing officer' subordinate to CIT(E) Chandigarh to DCIT, Central Circle-2, Faridabad DLC-CC136-4 as assessing officer and not original jurisdiction of CIT(E) Chandigarh with regard to the subject matter as stands vested by order of CBDT dated 22/10/2014. 14.1 Further, what is material is that by the Notification dated 22.10.2014 the Board, 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), ....
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....notice. 15. Thus, at one end, in the absence of any specific reference of section 12AB in the Notification dated 22.10.2014 or there being subsequent authorisation by any Circular or Notification of the Board, we conclude that at the time of passing the order u/s 127 of the Act on 26.10.2020, CIT(E), Chandigarh did not have powers to as such transfer his jurisdiction u/s 127(2)(a) of the Act, for the purpose of Section 12AB has come into effect from 01.04.2021. Accordingly, under no circumstance while passing order u/s 127 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 illega....
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....us, there was no occasion for concerned AO to invoke 'reference' powers under second proviso to sub-section (3) of section 143 of the Act. It appears that when confronted with the situation that the second proviso of section 143(3) having come into effect from 01.04.2022 is not applicable to the assessment initiated consequent to search and seizure operations u/s 132 of the Act carried out on 19.02.2020, the ld. PCIT, Gurgaon improved his case by claiming that he had exercised his powers by virtue of clause (a) of sub-section (4) of section 12AB, which entitles a Principal Commissioner 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 ....
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....tails of information called for the relevant period i.e. AY 2014-15 to 2020-21 is as under: ● Copy of registration u/s 12AA/12AB(1) of the Act. ● Copy of memorandum of association containing the objects for which the Aggarwal Vidya Pracharni Sabha was set up along with copy of registration with the relevant authorities. ● Details of capital expenditure and revenue expenditure incurred for various A.Ys. as mentioned above. ● Copies of Form 10 and Form 10B in respect of funds accumulated u/s 11(1)(a), 11(2) of the Act and year wise utilization of the same. ● Specify 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....
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....ent has been completed u/s 148/143(3) of the act vide order dated 19.12.2018. As the assessment has been completed, the purpose of transfer u/s 127A has also been completed. Although No notices regarding the transfer of the cases u/s 127 have been sent to the assessee for the purpose of Co-ordinate assessment and the purpose of transfer was only Co-Ordinate Assessment as clearly mentioned in the transfer letter 19.08.2016. The assessment was completed u/s 148 r.w.s 143(3) 19.12.2018 and the proposal was sent to the Pr. CIT(C) which has been received on 31.12.2018 in the office of Pr. CIT(C) on 23.01.2019 after a lapse of more than one month. 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 ....
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....be done or conducted by the different rank Authorities. More particularly when for the purpose of Exemption cases or 12A registration a Separate Commissioner of Income Tax has been Authorized for whole of Rajasthan by the CBDT by its Notification dated 22.10.2014. In support of the above contention, the ld AR has relied on the decision in the case of Dilip Tanaji Kashid vs. M.I. Karmakar PR. CIT& ANR. (2018) 304 CTR 0436 (Bom) wherein It has been held: "Transfer of jurisdiction -- Power of competent officers -- Centralization of case -- Dissenting note -- Assessee was issued notice enshrining proposal for transfer of his case from Kolhapur to Mumbai, 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 ag....
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.... of agreement between two jurisdictional Commissioners was condition precedent for passing order of transfer -- Clause (b) of sub-section (2) of section 127 provides for consequences when there was no such agreement -- When jurisdiction to pass order of transfer under clause (a) of subsection (2) of Section 127 could be exercised only when there was such agreement, fact that such agreement exists ought to had been stated in show cause notice as same was jurisdictional fact- - It was on basis of written document that finding was recorded that there was agreement between Jurisdictional Commissioners 35 ITA No. 1308/Del/2023 of Ranchi and Delhi -- Even going by case made out by revenue, no such 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....
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....r as to costs. The Hon'ble Supreme Court in the case of Ajantha Industries & Ors. vs. Central Board of Direct Taxes & Ors. (1976) 102 ITR 0281 has been held that: "The CBDT sent a notice to the appellants under s. 127 proposing to transfer their case files "for facility of investigation" from the respective ITO at Nellore to the ITO, B Ward, Special Circle II, Hyderabad. By this notice they were also asked to submit in writing if they had any objection to the proposed transfer within 15 days of receipt of the notice. The appellants made their representation objecting to the transfer and on 26th July, 1973, the Central Board passed the impugned order transferring the cases 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 communi....
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....at the ld. PCIT had no jurisdiction to pass order U/s 12AA(3) & 12AA(4) of the Act and the same is not sustainable in the eyes of law and accordingly stands quashed." 21. In the light of the aforesaid discussion and the law cited before us, we are of the considered view that the impugned order has been passed by Ld. PCIT, Gurgaon, without jurisdiction in context to territorial powers and subject matter as well not in accordance with law and same is liable to be quashed. Accordingly, the additional ground raised by the assessee is allowed. Since the relief is granted to assessee by allowing additional ground itself, the adjudication of other grounds raised by the assessee become academic in nature 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) Luckn....