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2024 (8) TMI 819 - AT - Income TaxStay of demand - ITAT power to grant stay - Cancellation of registration u/s 12A/12AA/12AB - Cancelling the registration of the assessee trust with retrospective effect - Jurisdiction of PCIT (Central)-2, Delhi to Cancel the Registration - HELD THAT - ITAT has the power to grant stay of the operation of the order, which is subject matter of challenge before the Tribunal during its pendency before it, if the Tribunal came to a finding that by not staying the operation of the material order will make the appeal filed by the assessee a nugatory if the assessee succeeds in the appeal at a later stage - we do not agree with the plea of the department that the Tribunal does not have power to grant stay as contended by it and it is held that the Tribunal has powers under section 254(1) of the Act to grant stay in the appropriate cases. Re-assessment proceedings initiated against the assessee, are an independent set of proceedings governed by different set of provisions and cannot be said to be a consequence of the impugned order cancelling registration granted to the assessee - It is a fact that the notice u/s 148 of the Act for AY 2016-17 was issued on 04.05.2023 prior to the date on which the cancellation order was passed on 30.09.2023, but it cannot be denied that such cancellation order dated 30.09.2023, which has been appealed by the assessee will not have an adverse impact on the ongoing assessment proceedings of the assessee for Assessment Year 2016-17. Similarly, as stated by the Revenue that even though for other assessment years, in the reasons recorded for reopening the assessment, the fact of cancellation of registration vide order dated 30.09.2023 of the PCIT(Central)-2, Delhi has been noted for completeness but again it cannot be denied that the cancellation order will not have an adverse impact on the ongoing re-assessment proceedings in the case of the assessee. Maintainability of the stay application - For grant of stay, the assessee has to satisfy all the three conditions i.e. prima facie case in favour of the assessee, balance of convenience and irreparable loss/injury to become eligible for stay and if the assessee fails to pass any of these tests, the assessee will not be entitled for stay. Jurisdiction to the respective PCIT to exercise all the powers under the Act where the assessment of the case has been transferred u/s 127 to the AO for completing the assessment falling under the administrative jurisdiction of the said PCIT - Delhi Tribunal in the case of Aggarwal Vidya Pracharni Sabha 2024 (1) TMI 491 - ITAT DELHI had specifically mentioned that when a query was made to the CIT-DR to produce any further notification by virtue of which the power exercised by the PCIT u/s 124B(4) of the ACT , which had come into effect from 01.04.2021 would also be exercised or that further jurisdiction u/s 12AB of the Act could be transferred to other authorities as per this notification was left unsatisfied and no other Notification or Circular was brought to the notice. We are of the view that in absence of consideration of the Board Notification No.70/2014 dated 13.11.2014, we cannot hold that the Pr. CIT(Central-2), Delhi lacked jurisdiction to pass the order dated 30.09.2023, cancelling the registration of the assessee trust. Jurisdiction of the Pr. CIT(Central-2), Delhi to cancel the registration with retrospective effect - As decided in Young Indian 2019 (11) TMI 996 - ITAT DELHI proceeded to hold that the PCIT had the power to cancel the registration with retrospective effect - thus we are of the view that we cannot hold that the Pr. CIT(Central-2), Delhi had no jurisdiction to cancel the registration with retrospective effect vide his order dated 30.09.2023. Claim of the assessee that it had been carrying its activities as per the objects of the trust, it is seen that prima facie, the same is not in sync with the materials/ emails gathered during the course of survey conducted by the Investigation Wing, Delhi in the case of the assessee on 07.09.2022. Claim for exemption by the assessee on account of suffering irreparable loss and balance of convenience - India is a fast-growing nation and the development of its projects to meet its energy requirements is critical for its growth - PCIT, Central-2, Delhi, in his order has given a finding that the funds received by the assessee from M/s Earth Justice and by LIFE Properitorship Concern of Sh. Ritiwick Dutta, which was later converted in LIFE LLP was utilized to stop coal based Indian Thermal Power Plants and Coal Mine projects. Various emails reproduced prima facie indicates the involvement of the assessee trust in furnishing about the status of Thermal Power Projects and the Coal mining. The discussion by the PCIT, Central-2, in respect of email titled LIFE Coal Cases update 10.07.2016 shows that the assessee trust proposes to file and litigate matter in respect of Thermal Power Plants and Coal Mines. These facts prima facie show the contradiction in the claim of the assessee that it has no involvement with Earth Justice and is not engaged in the stopping the thermal power projects and coal mining with assistance from Earth Justice. Therefore, in view of the facts on record, the claim for exemption by the assessee on account of suffering irreparable loss and balance of convenience is also not satisfied because prima facie the facts on record suggest that the activities of the trust in stopping coal based Indian Thermal Power Plants and Coal Mine projects will cause irreparable loss to the nation rather than the assessee. Therefore, in this background, it is held that the assessee fails to satisfy the test of irreparable loss caused to it by the cancellation order dated 30.09.2023. Consequently, the balance of convenience is also not in favour of the assessee. Assessee has claimed that in similar cases i.e. in the case of Centre for Policy Research 2023 (10) TMI 39 - DELHI HIGH COURT and Oxfam India 2024 (1) TMI 1311 - DELHI HIGH COURT . the Hon ble Delhi High Court has granted stay of the operation of the order cancelling the registration of the said trust. The above decision of the Hon ble Delhi High Court has been carefully perused and it is seen that in the said cases unlike in the case of the assessee, wherein facts showing prima facie lack of transparency in its activities emerges had not emerged in the cited cases in which the Hon ble Delhi High Court has granted the stay. Therefore, we are not inclined to accept the plea of the assessee in this regard. Assessee has failed to satisfy the three conditions for grant of stay i.e. a prima facie case, an irreparable loss and balance of convenience. Activities of the assessee trust prima facie are not being carried out as per the objects of the trust. Therefore, we are of the considered view that the assessee trust is not entitled for stay in this case and we hereby reject the stay application of the assessee. Decided against assessee.
Issues Involved:
1. Jurisdiction of PCIT (Central)-2, Delhi to cancel the registration. 2. Retrospective cancellation of registration. 3. Activities of the trust and their alignment with the trust's objects. 4. Maintainability of the stay application. 5. Prima facie case, balance of convenience, and irreparable loss. Detailed Analysis: 1. Jurisdiction of PCIT (Central)-2, Delhi to Cancel the Registration: The assessee argued that the PCIT (Central)-2, Delhi did not have the jurisdiction to cancel the registration granted under Section 12A and 12AA of the Act. The assessee relied on various case laws to support this contention. However, the Tribunal noted that the decisions cited by the assessee did not consider the Board Notification No.70/2014 dated 13.11.2014, which empowered the PCIT (Central) to perform/exercise powers and functions stipulated in the Act for cases assigned to Assessing Officers subordinate to them under Section 127 of the Act. Therefore, the Tribunal concluded that the PCIT (Central)-2, Delhi had the jurisdiction to pass the order dated 30.09.2023. 2. Retrospective Cancellation of Registration: The assessee contended that the cancellation order could not have been passed with retrospective effect. The Tribunal, however, referred to the Delhi Bench decision in the case of Young Indian, which held that the PCIT had the power to cancel the registration with retrospective effect if the activities of the assessee were not in line with its objects or were not genuine. Therefore, the Tribunal held that the PCIT (Central)-2, Delhi had the jurisdiction to cancel the registration with retrospective effect. 3. Activities of the Trust and Their Alignment with the Trust's Objects: The assessee claimed that it had always acted in accordance with its objects. However, the Tribunal noted that prima facie, the materials and emails gathered during the survey indicated otherwise. The Tribunal highlighted emails and other evidence suggesting that the assessee trust was involved in activities to stop coal-based Indian Thermal Power Plants and coal mine projects, which was not in line with the trust's stated objects. Therefore, the Tribunal found a lack of transparency in the activities of the assessee trust. 4. Maintainability of the Stay Application: The Tribunal referred to various decisions, including those of the Hon'ble Supreme Court and High Courts, to conclude that the ITAT has the power to grant stay in appropriate cases. The Tribunal held that it has the power under Section 254(1) of the Act to grant stay if the facts and circumstances warrant it. 5. Prima Facie Case, Balance of Convenience, and Irreparable Loss: The Tribunal noted that for the grant of stay, the assessee has to satisfy all three conditions: prima facie case, balance of convenience, and irreparable loss. The Tribunal found that the assessee failed to make out a prima facie case as the PCIT (Central)-2, Delhi had the jurisdiction to cancel the registration, and the cancellation could be retrospective. The Tribunal also found that the activities of the trust were not in line with its objects, causing irreparable loss to the nation rather than the assessee. Consequently, the balance of convenience was not in favor of the assessee. Conclusion: The Tribunal dismissed the stay application of the assessee, holding that the assessee failed to satisfy the conditions for the grant of stay, and the activities of the trust were not being carried out as per its objects. The order dated 30.09.2023 cancelling the registration of the assessee trust with retrospective effect was upheld.
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