TaxTMI 
TaxTMI 
2026 (9) TMI 779
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....al Commissioner of Income Tax (Central), Jodhpur, (PCIT), resulted into withdrawal of the registration granted under section 12AA of the Income Tax Act vide order dated 27/01/2011 by the Director of Income Tax (Exemption), Ahmedabad, with effect from 01/04/2010 is ab-initio void, illegal and bad in law. Hence the order so passed deserves to be quashed and direction be given as to grant registration under section 12AA from the date of 27/01/2011 of the Income Tax Act. 2. That on the fact and circumstances of the cases as well as in the law the impugned order so passed by the PCIT is on the basis of showcause notice issued bearing No. DN 765 dated 21/06/2019 titled "Cancellation of registration granted under section 12AA of the Income Tax Act" is also prima facie ab-initio void, illegal and bad in law. Hence the subsequent proceeding undertaken by the PCIT, is also ab-initio void, illegal and bad in law. 3. That on the fact and circumstances of the cases as well as in the law there is no infringement/violation to the provision of section 12AA(3) and 12AA(4) of the Income Tax Act in as much as there is no infringement/violation of provision of section 2(15) of the In....
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.... High Court of Rajasthan in case of Commissioner of Income Tax (Exemption) Vs. Shri Shyam Sundar Committee, 400 ITR 466 and other decisions of Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, which are binding in nature. Had in fact, the PCIT gone through the same, no occasion said to have been arises as to withdraw the registration so granted to the genuinely constituted education trust. 4.7 The order so passed is bad in law as the PCIT also ignored the various brochures filed which speaks beyond doubt that PET is doing its activities on the basis of its aims and objects. 4.8 The order so passed is also bad in law as the PCIT vide Page No. 5, Para No. 4 of the order very conveniently mentioned to justify the action that trust engaged as to collect unaccounted capitation fees which is also bad in law. 4.9 The order so passed is also bad in law because as to justify the cancellation of the decision, PCIT very conveniently mentioned collection of capitation fees which is not at all digestible as no concurrent evidences were found during the course of survey s to justify that trust is indulged into collection of capitation fees. 4.10 The order s....
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....n case of Agra Development Authority (2018) 407 ITR 562. Hence direction be given to PCIT to follow the decision of Hon'ble High Court of Rajasthan which is binding in nature in as much as every assessment year is independent and separate. 6. That on the fact and circumstances of the case as well as in the law the PCIT grossly erred in passing an order withdrawing of registration of the genuinely constituted trust in-spite of bringing the specific fact that there is no time limit as to pass order and more particularly the show cause notice issued on the basis of finding given in order of assessments which is subject matter of appeals and appeals are pending before the Commissioner of Income Tax (Appeals), Udaipur Range, Udaipur. 7. That the appellant craves its right to add, alter, amend or modify the grounds of appeal on or before the time of hearing of appeal. Facts of the Case 3. The relevant facts, as emerging from the impugned order, are that the assessee came into existence on 22.07.2010. Its founder trustees were Smt. Leela Devi Agrawal, Shri Rahul Agrawal and Shri Ashish Agrawal. The assessee was granted registration under section 12AA of the Act by ....
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....ted a donation received from a Computer Science student and handed over to Shri Nikhil Agarwal. 7. The PCIT further referred to the statement of Shri Rahul Agarwal, Vice-Chairman of the trust, recorded during the post-search proceedings. Shri Rahul Agarwal had explained that the donations were not received for admission but had been voluntarily contributed by students, pursuant to an appeal, for a common cause and were spent for that purpose. The PCIT did not accept the explanation on the ground that supporting particulars of the stated common cause had not been furnished. 8. In paragraphs 4.1.4 to 4.1.13, the PCIT examined other pages of the impounded material. Pages 29 and 30 of Annexure BI-2 contained particulars of 60 students for the academic year 2012-13, including amounts received, dates of payments and fee status. The PCIT considered the amounts entered in the "received" column, aggregating to Rs. 54,96,000/-, to be separate from the regular fees. Pages 50 to 53 contained particulars relating to 116 students for the academic year 2013-14, including the branch, the amount "decided", the amounts received and due, and payment details. The PCIT treated the amount of Rs. 1....
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....the explanation furnished by Shri Rahul Agarwal. The PCIT rejected these contentions in paragraphs 4.3.2 and 4.3.3, observing that the documents contained identifiable particulars of students, their branches, fees, amounts decided and dates of receipt. He also invoked section 292C of the Act and stated that the inference was based upon the impounded documents and the failure to reconcile the receipts with the books, and not solely upon the employee's statement. 12. The assessee relied upon CBDT Circular No.21/2016 dated 27.05.2016. The PCIT considered that circular inapplicable on the ground that the proposed cancellation was not based merely upon the monetary limit in the proviso to section 2(15) having been exceeded. In paragraph 4.4, he concluded that the alleged collection of capitation fees over and above the recorded fees demonstrated a profit motive, that the activities were not charitable or genuine, and that they were not being carried out in accordance with the objects of the trust. He accordingly considered section 12AA(3) applicable. In paragraph 4.5, he additionally held that non-recording of the alleged capitation fees in the books amounted to a violation of sectio....
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....ances to Ms. Ruchita Bansal, described as the daughter of a trustee, Shri Anupam Bansal, described as the son-in-law of a trustee, and Pacific Medical University. He also referred to loans to Shri Ashish Agrawal and Shri Rahul Agrawal on which interest had been charged at 9%. According to the PCIT, that rate was below the market rate, the loans had not been repaid and even the interest accounted for had not been paid. He treated these transactions as involving utilisation of the trust's funds for the benefit of persons specified in section 13(3). 17. The assessee submitted that Tirupati Balaji Educational Trust was itself registered under section 12AA and that an interest-free loan to another registered trust did not constitute a violation of section 13(1)(c). It further contended that a violation of section 13(1)(c) did not warrant denial of the entire exemption or cancellation of registration and relied upon judicial decisions in support of its contentions. The PCIT rejected the explanation by referring to the denial of exemption to the borrowing trust for assessment years 2015-16 and 2016-17. He also relied upon section 12AA(4), observing that the provision contemplated cance....
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....cancel registration under sections 12AA(3) and 12AA(4) of the Act. 23. The learned AR relied upon the following decisions of the Jodhpur Bench: Case Appeal number Date of order Mahadevia Charitable Trust, Ahmedabad ITA No.396/Jodh/2019 25.01.2023 Global Health Research and Management Institute, Udaipur ITA No.397/Jodh/2019 25.01.2023 Pacific Academy of Higher Education and Research Society, Udaipur ITA Nos.04/Jodh/2020 and 05/Jodh/2020 25.01.2023 24. The learned AR submitted that, in the aforesaid decisions, the Co-ordinate Bench had held that the competent authority for withdrawal of registration was the Commissioner of Income Tax (Exemption) and that the Principal Commissioner of Income Tax (Central), Jaipur was not empowered to cancel such registration. He contended that the legal principle emerging from those decisions applied to the present appeal and that the impugned order was therefore without jurisdiction. 25. The learned AR further relied upon the order dated 27.07.2023 of the Mumbai Bench in Heart Foundation of India, ITA No.1524/Mum/2023. According to him, the Mumbai Bench had followed the Jodhpur Bench orders dated 25.01.202....
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....ecords that only a survey under section 133A was carried out on that date. The impugned order further records that, pursuant to the search and survey action, the cases of the group were centralised with Central Circle-2, Udaipur, for the purpose of coordinated investigation. 31. The learned PCIT (Central), Jodhpur, thereafter passed the impugned order under sections 12AA(3) and 12AA(4), cancelling the registration with effect from 01.04.2010. The cancellation was principally based upon alleged collection of unaccounted capitation fees, the treatment and verification of corpus donations, advances to persons specified under section 13(3), and certain accounting entries. On these premises, the learned PCIT concluded that the activities of the assessee were not genuine or were not being carried out in accordance with its objects and that section 13(1) was attracted. 32. Section 12AA(3), as applicable to the impugned proceedings, authorised the competent Principal Commissioner or Commissioner to cancel registration where he was satisfied that the activities of the trust or institution were not genuine or were not being carried out in accordance with its objects. Section 12AA(4) pr....
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....d as under: "6.2 First of all, we would like to deal with legal objection raised by the assessee with regard to the jurisdiction of Pr. CIT(Central) in issuance of show cause notice and in passing of consequent order. In this respect, our attention was drawn towards Section 120(3) and CBDT Circular No. 52/2014 and 53/2014 both dated 22/10/2014. As per provisions of Section 120(3) of the Act, the criteria of Jurisdictions of Income Tax Authorities has been provided by the CBDT and as per provisions of Sec. 120(3) of the Act, there are four criteria for deciding the jurisdiction and the same are reproduced below:" 37. After reproducing section 120(3), the Bench held: "Therefore, in furtherance of the said provisions, the CBDT vide notification Nos. 52/2014 and 53/2014 both dated 22/10/2014 had given powers to ld. 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 assessabl....
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....ot cancel the same. 6.8 In assessee's case, the case u/s 127 was transferred to the Central Circle for limited purpose of Co-Ordinate assessment admittedly which do not mean that the Section 12A proceeding has been transferred to the Pr. CIT(Central) automatically, when both the proceedings are separately or independent and also has to 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." The ultimate finding of the Bench reads: "Thus, keeping in view the above discussion, we are of the opinion that in the present case the ld. Pr.CIT(Central) has no jurisdiction to pass the impugned order. Accordingly, we quash the same." 38. The decision in Pacific Academy is directly relevant because it concerns an institution belonging to the same group, the same search action dated 26.08.2015 and an order cancelling registration under sections 12AA(3) and 12AA(4). Though the present assessee is situated in Gujarat and was subjected to survey, those factual ....
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....in Mahadevia concerning absence of independent application of mind was rendered on the record of that assessee and is not being mechanically imported into the present case. 41. In Global Health Research and Management Institute v. Principal Commissioner of Income Tax (Central), Jaipur, ITA No. 397/Jodh/2019, order dated 25.01.2023, the Coordinate Bench again decided the same issue. Paragraph 11 records: "11. We heard the parties on this legal issue and perused the record. We notice that an identical legal issue has been considered by this bench in a group case, viz., Pacific Academy of Higher Education and Research Society (ITA No. 04/Jodh/2020) and this issue has been decided in favour of the assessee in line with the decision taken in the case of Wholesale Cloth Merchant Association (supra)." After reproducing the relevant findings, the Bench concluded: "Following the above said decisions rendered by this bench and co-ordinate bench, we hold that the PCIT (Central) does not have power to cancel the registration granted u/s 12A of the Act. Accordingly, the order passed by him is nullity in the eyes of law and accordingly, we quash the same." ....
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.... "11. We have already held that the cancellation of registration retrospectively from AY 2016-17 under section 12AB(4) by the PCIT is not valid. Therefore the arguments presented on the alternate contentions have become academic not warranting specific adjudication." 44. Heart Foundation materially supports the assessee because it applies the ratio of Pacific Academy in a case involving survey and subsequent centralisation. The decision was rendered under section 12AB, whereas the present cancellation was under sections 12AA(3) and 12AA(4). Nevertheless, paragraph 8 concerns the source of jurisdiction of the Central Commissioner and is relevant to the present controversy. 45. We also note that the Revenue's miscellaneous application seeking rectification of the order in Heart Foundation (was dismissed by the Mumbai Bench on 21.03.2025. The Bench held that the Revenue's remedy, if aggrieved, was to challenge the order before the High Court and that the matter could not be reopened in proceedings under section 254(2). 46. In Aggarwal Vidya Pracharni Sabha v. Principal Commissioner of Income Tax (Central), Gurgaon, ITA No. 1308/Del/2023, order dated 08.01.2024, an order....
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....actual footing because, unlike Aggarwal Vidya Pracharni Sabha, the Revenue has not placed before us even the purported transfer order. 48. We have also considered the subsequent decision of the Delhi Bench in Advantage India v. Principal Commissioner of Income Tax (Central)-II, ITA No. 634/Del/2019, order dated 18.09.2025, reported in [2025] 178 taxmann.com 605. In that case, the CIT(Exemption), Delhi, had passed a specific order under section 127(2) dated 01.12.2016 transferring the assessee's case from ACIT(E), Delhi, to Central Circle-16, Delhi, under the charge of PCIT (Central)-2, Delhi. That order and Notification No. 70/2014 were placed before the Tribunal. 49. In paragraphs 26 to 33, the Delhi Bench construed the expression "case" in the Explanation to section 127 as including pending, completed and future proceedings. The material part of paragraph 33 reads: "the Pr.CIT(Central), Delhi assumes the jurisdiction over the assessee for all purposes and proceedings whether pending or completed or to be commenced" 50. In paragraphs 34 to 36, the Bench also considered the CBDT communication dated 19.01.2024 explaining the interaction between Notifications Nos. 5....
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....ed PCIT. No such order or material has been produced in the present appeal. The condition upon which the jurisdictional finding in Rukmini Educational Charitable Trust rested is absent here. 56. In Independent and Public Spirited Media Foundation v. Principal Commissioner of Income Tax (Central), Bengaluru, ITA No. 625/Bang/2023, order dated 16.01.2026, the Bengaluru Bench followed Advantage India. In that case, the CIT(Exemption), Bengaluru, had passed an order under section 127 dated 15.11.2022 transferring the named assessee from ITO (Exemption), Ward-1, Bengaluru, to DCIT/ACIT, Central Circle-1(2), Bengaluru. The transfer order was placed at pages 52 and 53 of the paper book. 57. After considering the actual transfer order, the Explanation to section 127, Notification No. 70/2014 and the decision in Advantage India, the Bench concluded in paragraph 47: "Hence, we hold that The Ld CIT has validly assumed jurisdiction for cancellation of registration u/s 12 AB of the Act." 58. The jurisdictional ground was accordingly dismissed in paragraphs 48 to 50. 59. This decision is also materially distinguishable. The jurisdictional conclusion therein followed examinat....
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....ere being handled by an Assessing Officer in the Central Circle. 65. Once the assessee specifically challenged the jurisdiction of the learned PCIT (Central), it was incumbent upon the Revenue to place the jurisdictional foundation before the Tribunal. The learned DR, however, relied only upon the impugned order. No order under section 127, no applicable notification transferring or assigning the registration proceedings, no order identifying the particular Assessing Officer to whom the assessee's case was transferred, and no material demonstrating that such Assessing Officer was subordinate to the learned PCIT who passed the cancellation order has been produced. 66. The learned PCIT's recital that the cases of the group were centralised with Central Circle-2, Udaipur, for coordinated investigation proves only that such centralisation was asserted in the impugned order. The recital cannot prove the terms and scope of the underlying transfer order. It also cannot establish that the independent jurisdiction concerning registration under section 12AA stood vested in the learned PCIT (Central), Jodhpur. 67. We are therefore unable to accept that the Revenue can invoke Notifica....