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2021 (4) TMI 51 - AT - Income TaxExemption u/s 11 - registration under section 12A cancelled - effective date of cancellation of registration - Authority to cancel the registration under section 12AA(3)/(4) - PCIT jurisdiction in cancelling the registration of the Appellant - whether PCIT failed to appreciate that the power of cancellation of registration vests in the authority who has the jurisdiction to grant registration and the CIT(E) is the authority who can grant registration, therefore, he is the only authority who can cancel the registration under section 12AA(3)/(4) of the ITAT - HELD THAT - No reasons to take any other view of the matter than the view so taken by the coordinate bench in the case of Navajbai Ratan Tata Trust vs PCIT 2021 (3) TMI 1146 - ITAT MUMBAI These observations will apply mutatis mutandis in the present case as well. Respectfully following the same, we hold that the impugned order cancelling registration granted to the assessee trust will have effect from the date on which hearing, on the first show cause notice requiring the assessee to show cause as to why registration under section 12A not be cancelled, and the assessee formally acquiesced to the said notice 10.03.2015, i.e on 20th March 2015.
Issues Involved:
1. Jurisdiction of the Principal Commissioner of Income Tax (PCIT) to cancel registration under Section 12AA. 2. Validity of the surrender of registration by the appellant. 3. Effective date of cancellation of registration. 4. Alleged violation of principles of natural justice. 5. Application of Section 115TD of the Income Tax Act. 6. Additional ground of appeal regarding the order being barred by limitation. Detailed Analysis: 1. Jurisdiction of the PCIT to Cancel Registration: The appellant challenged the PCIT's jurisdiction to cancel the registration under Section 12AA(3)/(4) of the Income Tax Act, arguing that only the Commissioner of Income-tax (Exemption) [CIT(E)] had the authority to grant and cancel such registration. The Tribunal observed that the PCIT had the power to cancel the registration if the trust's activities were not genuine or not in accordance with its objects. 2. Validity of the Surrender of Registration: The appellant contended that the surrender of registration was valid and should be accepted. The Tribunal noted that the appellant had informed the Commissioner about non-compliance with Section 13(1) and expressed the desire to surrender the registration. The Tribunal held that the registration under Section 12A was a benefit and could not be thrust upon an unwilling party. The appellant had the right to surrender the registration, and the Commissioner should have acted on the appellant's request. 3. Effective Date of Cancellation of Registration: The appellant argued that the cancellation should be effective from the date of surrender (26.02.2015) or the date of the first show cause notice (10.03.2015). The Tribunal held that the cancellation should be effective from the date on which the hearing on the first show cause notice was concluded and the appellant acquiesced to the notice, i.e., 20th March 2015. The Tribunal emphasized that the delay in passing the cancellation order should not disadvantage the appellant. 4. Alleged Violation of Principles of Natural Justice: The appellant claimed that the PCIT violated principles of natural justice by not providing an opportunity to make submissions. The Tribunal did not specifically address this issue in its detailed analysis, focusing instead on the effective date of cancellation and the appellant's right to surrender the registration. 5. Application of Section 115TD of the Income Tax Act: The appellant argued that the PCIT's order aimed to apply Section 115TD, introduced from 01.06.2016, retrospectively. The Tribunal noted that the cancellation should be effective from 20th March 2015, thus avoiding the application of Section 115TD. The Tribunal emphasized that the inordinate delay in cancellation should not lead to adverse tax implications for the appellant. 6. Additional Ground of Appeal: The appellant filed an additional ground of appeal, arguing that the order was barred by limitation. The Tribunal did not specifically address this additional ground, considering it academic in light of its conclusion on the effective date of cancellation. Conclusion: The Tribunal held that the impugned order cancelling the registration granted to the appellant under Section 12A should be effective from 20th March 2015. The Tribunal emphasized that the registration under Section 12A was a benefit that could not be thrust upon an unwilling appellant, and the Commissioner had a duty to cancel the registration upon noticing the admitted violation. The appeal was allowed to the limited extent of determining the effective date of cancellation.
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