2023 (8) TMI 1063 - AT - Income Tax

Exemption u/s 11 - Resgistration u/s 12AB cancelled with retrospective effect - Assessement of trust - PCIT (central) jurisdiction to cancel the registration - assessee trust as provided freebies to doctors which are in violation of the Indian Medical Council (Professional Conduct Ethics) Regulations, 2002 - HELD THAT - We notice that as per serial no.12 of the CBDT notification Nos 52 53, the jurisdiction for all cases in Greater Mumbai and Navi Mumbai, claiming exemption under sections 11 and 12 lies with the Commissioner of Income-tax (Exemption) Mumbai. Therefore we see merit in the submissions of the ld AR that the PCIT (Central) does not have jurisdiction to cancel the registration under section 12AB. As decided in Pacific Academy of Higher Education Research 2023 (1) TMI 1283 - ITAT JODHPUR CIT(Exemption) who is having the jurisdiction to handle cases claiming exemption under section 11 and 12 cannot transfer or hand over or give his work or power or duties. In case, if it is necessary to do so then there has to be proper proceedings in writing. In assessee's case the facts are identical where the assessment is centralized and there was no proceeding or communication to the assessee that the CIT(Exemptions) has transferred his power to PCIT. Therefore respectfully following the ratio laid down in the above decision by the Jothpur Bench of the Tribunal and considering the facts of the present case we hold that the PCIT does not have the jurisdiction to cancel the registration u/s 12 AB. Thus the cancellation of registration retrospectively from AY 2016-17 under section 12AB(4) by the PCIT is not valid. Decided in favour of assessee.

Issues Involved:

1. Jurisdiction of the Principal Commissioner of Income-tax (PCIT) to cancel the registration of the trust.
2. Retrospective cancellation of registration under section 12AB of the Income-tax Act, 1961.
3. Alternate contentions regarding the application for registration, filing status, specific violations, and applicability of Supreme Court decisions.

Summary:

Jurisdiction of PCIT:

The assessee contended that the PCIT (Central Circle) is not the prescribed authority for granting or canceling the registration of the trust, which lies with the Commissioner of Income-tax (Exemption). The Tribunal noted the CBDT Notification No. 52 & 53 of 2014, which specifies that the jurisdiction for cases in Greater Mumbai and Navi Mumbai claiming exemption under sections 11 and 12 lies with the Commissioner of Income-tax (Exemption), Mumbai. The Tribunal referenced the Jodhpur Bench's decision in the case of Pacific Academy of Higher Education and Research Society vs. PCIT, which held that the PCIT (Central) does not have the authority to cancel registration issued under section 12A. Thus, the Tribunal concluded that the PCIT (Central) does not have jurisdiction to cancel the registration under section 12AB.

Retrospective Cancellation:

The Tribunal considered the argument that the cancellation of the registration of the trust cannot be done retrospectively. The assessee relied on decisions from the Rajasthan and Madras High Courts, which held that the Commissioner is not authorized under section 12AA(3) to cancel the registration of the trust retrospectively. The Tribunal noted that clause (ii) of section 12AB(4) specifies that cancellation can only be for such previous year and all subsequent previous years, indicating that cancellation cannot be retrospective. Therefore, the Tribunal held that the cancellation of registration by the PCIT retrospectively from AY 2016-17 is not tenable.

Alternate Contentions:

The Tribunal acknowledged the alternate contentions presented by the assessee, including:
1. The assessee never applied for registration under section 12AB, and thus cancellation could only be done under section 12AA(3) or section 12AA(4).
2. The assessee filed the return of income for AY 2021-22 as an Association of Persons (AOP) and not as a trust, and a reference under the second Proviso to section 143(3) could only be made with respect to a trust.
3. The assessee did not commit any specific violations under explanation (f) of section 12AB(4).
4. The Supreme Court decision in Apex Laboratories (P) Ltd. vs. DCIT applies only to Pharma companies and not to the assessee, a trust.

However, since the Tribunal already held that the cancellation of registration retrospectively from AY 2016-17 under section 12AB(4) by the PCIT is invalid, the alternate contentions were deemed academic and did not warrant specific adjudication.

Conclusion:

The Tribunal allowed the appeal of the assessee, holding that the PCIT did not have jurisdiction to cancel the registration under section 12AB and that the cancellation of registration retrospectively from AY 2016-17 was not valid. The order was pronounced in the open court on 27/07/2023.

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