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2008 (9) TMI 438 - AT - Income TaxCharitable Trust - Power of cancellation of registration u/s 12AA (3) - A line of demarcation is drawn between the registrations granted u/s 12A and registrations granted u/s 12AA - casus omissus - HELD THAT - In our considered view, a registration granted u/s 12A of the Act cannot be withdrawn or cancelled by the CIT by invoking the provisions of s. 12AA (3) of the Act. The combined reading of both the sections makes it clear that registration can be cancelled only in those cases where the registration has been granted under sub-s. (1b) of s. 12AA. This section nowhere empowers the CIT to cancel or withdraw the registration granted u/s 12A. In the absence of such power, in our opinion, the registration granted u/s 12A cannot be withdrawn or cancelled. This view is supported by the decision of the Tribunal in the case of Kailashanand Mission Trust vs. Asstt. CIT 2003 (10) TMI 273 - ITAT DELHI-C wherein it was held that s. 12A does not empower the CIT to withdraw or cancel the registration granted. We may also add that provisions of sub-s. (3) of s. 12AA were brought on the statute book w.e.f. 1st Oct., 2004 by Finance. The provisions of this section are substantive in nature since the same affect the valuable right of the assessee and therefore, in our opinion are prospective and cannot be given retrospective effect, in view of the decision of the Supreme Court in the case of Sedco Forex International Drill Inc. Ors. vs. CIT 2005 (11) TMI 25 - SUPREME COURT wherein it has been held that even the provisions of an Explanation cannot be given retrospective effect unless specifically provided by the statute. It is not the case of the Revenue that legislature specifically provided the retrospective effect of such provision. Therefore, it is also to be held that even on this ground the provisions of s. 12AA(3) cannot be applied to the registration granted u/s.12A of the Act. When the Hon'ble Supreme Court in the case of Smt. Tarulata Shyam Ors. vs. CIT 1977 (4) TMI 3 - SUPREME COURT declines to supply casus omissus even in a case where their Lordships have noted that the provisions in question are extremely drastic and supplying a casus omissus will make these provisions more in conformity with logic and equity, it is indeed futile to suggest that such a casus omissus can be supplied by this Tribunal. We are not inclined to accept the plea canvassed by the ld DR to the effect that we should interpret the scope of s. 12AA(3) so as to give it an extended meaning beyond what is laid down by specific words of the statute. Therefore, we hold that the impugned order was vitiated in law inasmuch as the ld CIT did not have powers to cancel the registration granted u/s 12A. Accordingly, the impugned order is hereby vacated and, as a corollary thereto, the registration granted to the assessee u/s 12A stands restored. In the result, the appeal is allowed.
Issues Involved:
1. Jurisdiction of CIT under Section 12AA(3) to cancel registration granted under Section 12A. 2. Ownership of cash and documents found during the search. 3. Alleged violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. 4. Basis of cancellation of registration by CIT. Issue-Wise Detailed Analysis: 1. Jurisdiction of CIT under Section 12AA(3) to cancel registration granted under Section 12A: The primary issue contested was whether the CIT had the authority under Section 12AA(3) to cancel a registration granted under Section 12A. The appellant argued that Section 12AA(3) only allows the cancellation of registrations granted under Section 12AA, not those under Section 12A. The tribunal noted that Section 12AA(3) was introduced by the Finance (No. 2) Act, 2004, effective from 1st October 2004, and it specifically empowers the CIT to cancel registrations granted under Section 12AA(1). The tribunal concluded that the CIT did not have the authority to cancel a registration granted under Section 12A, as there was no provision in the Act that allowed for such cancellation. This view was supported by various decisions from Co-ordinate Benches and the Hon'ble Uttaranchal High Court in the case of Welham Boys' School Society, which held that the CIT cannot withdraw or cancel a registration granted under Section 12A. 2. Ownership of cash and documents found during the search: The CIT held that the cash and various loose papers found with Shri R.D. Shinde during the search belonged to the assessee. However, the tribunal noted that under Section 132(4A), the presumption should be that they belonged to Shri Shinde. Shri Shinde had declared the cash as his personal earnings and paid the tax due thereon. The tribunal observed that the CIT's inference that the cash belonged to the assessee trust was not substantiated adequately, especially since Shri Shinde had declared the income in his IT returns for the assessment years 2005-06 and 2006-07. 3. Alleged violation of the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987: The CIT concluded that the assessee had charged donations for admissions, thus violating the Maharashtra Educational Institutions (Prohibition of Capitation Fee) Act, 1987. This conclusion was based on the inference that the seized cash belonged to the assessee trust and that capitation fees were collected from students. The tribunal found that this conclusion was based on presumptions and surmises without concrete evidence. The tribunal emphasized that the CIT should have focused on whether the trust's activities were genuine and carried out in accordance with its objects, which was not adequately addressed. 4. Basis of cancellation of registration by CIT: The tribunal found that the CIT's order to cancel the registration was based on presumptions and not on solid evidence. The tribunal highlighted that the CIT's powers under Section 12AA(3) are limited to cases where the registration was granted under Section 12AA(1) and where the activities of the trust are not genuine or not carried out in accordance with the trust's objects. The tribunal concluded that since the registration was granted under Section 12A, the CIT did not have the jurisdiction to cancel it under Section 12AA(3). The tribunal also noted that the CIT's order was premature as the assessment proceedings were still in progress. Conclusion: The tribunal allowed the appeal, holding that the CIT did not have the authority to cancel the registration granted under Section 12A by invoking Section 12AA(3). The tribunal vacated the CIT's order and restored the registration granted to the assessee under Section 12A. The tribunal emphasized the importance of adhering to the specific provisions of the Act and not extending the scope of Section 12AA(3) beyond its clear and unambiguous language.
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