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2024 Supreme(Online)(ITAT) 491
INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH)
Shri Anubhav Sharma, JM
Aggarwal Vidya Pracharni Sabha – Appellant
Versus
Principal Commissioner of Income Tax, Central Gurgaon – Respondent
ITA No. 1308 /DEL/2023
For the Appellants/Petitioners: Sh. Kapil Goel, Adv.
For the Respondents: Sh. Dayainder Singh Sindhu, CIT( DR)
A Principal Commissioner lacks jurisdiction to cancel a charitable trust's registration under Section 12AB(4) if proper authority was not vested, leading to an invalid order.
Headnote:(A) Income Tax Act, 1961 - Sections 12AA and 12AB(4) - Cancellation of registration - Registration granted under Section 12AA was cancelled by Principal Commissioner under inapplicable provisions of Section 12AB(4) retrospectively from 01.04.2014, without proper jurisdiction - No proper notice for specified violations was given to the assessee - Tribunal held that the order of cancellation is not sustainable in the eyes of the law and quashed the impugned order. (Paras 1 16)
(B) Jurisdiction - The powers to cancel registration under u/s 12AB(4) rest with the CIT(Exemption) and cannot be exercised by the Principal Commissioner of Income Tax when improper jurisdiction has been assumed - No agreement noted between concerned authorities regarding jurisdiction transfer was observed. (Paras 10, 14, 15)
Facts of the case:
The appellant is a charitable trust registered under Section 12AA, involved in educational activities. A search operation revealed misappropriation of funds by key trustees, leading to the cancellation of the registration by the Principal Commissioner.
Findings of Court:
The appeal was allowed on grounds of lack of jurisdiction and improper procedure in cancellation of registration, resulting in the impugned order being quashed.
Issues: The main concern was whether the impugned order was valid in light of jurisdiction and adherence to procedural requirements as per the Income Tax Act.
Ratio Decidendi: The Tribunal concluded that the Principal Commissioner misapplied the law by acting outside his jurisdiction in cancelling the registration, as the authority lay with the CIT(Exemption) only.
Result: Appeal allowed; the order of cancellation quashed.
ORDER
PER ANUBHAV SHARMA, JM:
The assessee has come in appeal against the order dated 29.03.2023 passed by the Principal Commissioner of Income Tax (Central), Gurgaon (hereinafter referred to as ld. PCIT) U/s 12AB(4) of the Income Tax Act , 1961 (hereinafter referred to as the “Act”), cancelling registration granted to the assessee u/s 12AA of the Act.
2. The relevant facts giving rise to this appeal are that the Appellant assessee known by name ‘Aggarwal Vidya Pracharni Sabha’ is a charitable and registered under the Society Registration Act (XXI of 1860). The assessee trust/society is registered under Section 12AA of the Act vide order dated 27.09.2002 of Ld. CIT, Faridabad. It comes up from the impugned order that the society has been created for charitable purposes especially to promote the cause of education specially Commercial and Industrial education by establishing school and colleges etc. Further, the assessee trust is not registered u/s 80G(5)(vi) of the Act.
2.1 A search and seizure operation u/s 132 of the Act was carried out on 19.02.2020 at various entities of Dev Wine Group including the assessee trust and as a part of this search, its key trustee/members and other related persons were also covered. During the course of search and post search proceedings, various incriminating documents/evidences regarding diversion of funds of M/s Aggarwal Vidya Pracharni Sabha to other entities controlled and managed by Sh. Devender Kumar Gupta were allegedly found and seized. It is also alleged by Revenue that funds of the assessee trust was misappropriated by Sh. Devender Kumar Gupta for his personal benefit. Consequent to the search and seizure action under section 132(1) of the Act, the case of "M/s Aggarwal Vidya Pracharni Sabha" was centralized with the ACIT/DCIT, Central Circle-2, Faridabad vide order F. No. CIT(E)/CHD/Tech/2019- 20/133 passed u/s 127 of the Act dated 26.10.2020 by the CIT(E), Chandigarh. Subsequently, assessment proceedings u/s 153A of the Act were completed in this case for the block period from A.Y. 2014-15 to 2020- 21.
2.2 As per the impugned order, consequent to the completion of assessment proceedings certain facts were communicated to the office of PCIT(Central) Grugaon by the Assessing Officer pertaining to Assessment Years 2014-15 to 2020-21 vide his office letter dated 23.08.2022. Further, the assessment records for all the relevant A.Y.s were requisitioned by the PCIT(Central), Gurgaon. There after the impugned order was passed by cancelling the registration of the assessee by invoking powers under Section 12AB (4) of the Act.
3. The assessee has raised following grounds of appeal.
“1. That PCIT (Central) Gurgaon vide impugned order dated 29.03.2023 has seriously erred in withdrawing registration granted under old law sec. 12AA of 1961 Act with retrospective effect from 01.04.2014 by arbitrarily and unlawfully invoking inapplicable provisions of sec. 12AB(4) of 1961 Act, which is fundamentally flawed and totally contrary to mandate of 1961 Act.
2. That PCIT (Central) Gurgaon vide impugned order dated 29.03.2023 has seriously erred in withdrawing registration granted under old law sec. 12AA of 1961 Act with retrospective effect from 01.04.2014 on basis of invalid and unlawful SCN u/s 12AB(4) dated 06.03.2023 which is totally flawed and without authority of law and totally contrary to mandate of 1961 Act as highlighted in reply dated 23.03.2023
3. That PCIT (Central) Gurgaon vide impugned order dated 29.03.2023 has seriously erred in withdrawing registration granted under old law sec. 12AA of 1961 Act with retrospective effect from 01.04.2014 by not following series of binding/ fully applicable judicial precedents of higher/constitutional courts which squarely covered the issue in hand in petitioner favour thereby acting in total judicial indiscipline which is evident from face of impugned order.
4. That PCIT (Central) Gurgaon vide impugned order dated 29.03.2023 has seriously erred in withdrawing reg
