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2024 (3) TMI 876 - AT - Income TaxCancellation of registration granted u/s 12AB - Assessment of trust - during the course of search proceedings certain documents were seized which is suspected to contain details of the alleged cash collection for admissions of students to Yenepoya Dental College and Yenepoya Ayurveda Medical College - PCIT has cancelled the registration granted to the assessee u/s 12A/12AB of the Act w.e.f. previous year 2020-21 u/s 12A of the Act and for all subsequent previous years as per provision of section 12A(4) - as argued registration for the previous year 2020-21 relevant to assessment year 2021-22 was u/s 12A of the Act and not u/s 12AB (1), so the registration u/s 12A of the Act, which was granted to the assessee on 4.6.1992 cannot be cancelled u/s 12AB (4) HELD THAT - Since the assessee has secured the registration u/s 12A of the Act dated 4.6.1992, which was effective till the date of 23.9.2021 and this registration granted u/s 12A cannot be cancelled u/s 12AB(4)(ii) of the Act for the previous year 2020-21 covering the assessment year 2021-22. On the other hand, he could cancel the registration from assessment year 2022-23 onwards u/s 12AB(4)(ii) of the Act. In our opinion, if there is any violation in the previous assessment year 2020-21 relating to the assessment year 2021-22, this cannot be reason to cancel the registration granted for the assessment year 2022-23 to 2026-27 as the assumption of jurisdiction u/s 12AB(4)(ii) of the Act is itself wrong on the reasons discussed herein above. The specific violation committed by the assessee in any of these assessment years is to be considered independently and not the violation committed in assessment year 2021-22 for cancelling the registration granted u/s 12AB of the Act for the assessment year 2022-23 to 2026-27. As such, we make it clear that the ld. PCIT at liberty to pass the fresh order of cancellation independently u/s 12AB(4)(ii) of the Act for these assessment years i.e. 2022-23 to 2026-27, if so advised. Accordingly, we allow this ground taken by the assessee. Even otherwise, we are of the opinion that this issue of cancellation of registration for the AY 2021-22 is covered by our earlier decision in the case of Amala Jyothi Vidya Kendra Trust 2024 (1) TMI 998 - ITAT BANGALORE as held since the PCIT invoked the provisions of section 12AB(4)(ii) of the Act, which has been introduced by the Finance Act, 2022 w.e.f. 1.4.2022 so as to cancel the registration with retrospective effect from assessment year 2021-22, which is bad in law. Decided in favour of assessee.
Issues Involved:
1. Jurisdiction of PCIT to cancel registration under Section 12AB(4) of the Income Tax Act. 2. Validity of cancellation of registration under Section 12A and 12AB. 3. Alleged cash collections and utilization of income for the benefit of trustees. 4. Applicability of specified violations under Section 12AB(4) for different assessment years. Summary of Judgment: Issue 1: Jurisdiction of PCIT to cancel registration under Section 12AB(4) of the Act The appellant argued that the Principal Commissioner of Income Tax (PCIT), Central Circle, Bangalore, has no jurisdiction to cancel the registration under Section 12AB(4) of the Income Tax Act, as the power to grant and cancel such registration lies with the Commissioner of Income Tax (Exemptions), Bangalore, as per Notifications No. 52/2014 and 53/2014. The Tribunal admitted additional grounds of appeal and agreed with the appellant, stating that the PCIT, Central Circle, Bangalore, is not the authorized authority to cancel the registration granted under Section 12A of the Act. Issue 2: Validity of cancellation of registration under Section 12A and 12AB The Tribunal held that the registration granted under Section 12A of the Act on 04/06/1992, which was effective till the date of 23/09/2021, cannot be canceled under Section 12AB(4) of the Act for the previous year 2020-21 covering the assessment year 2021-22. The Tribunal noted that the provisions of Section 12AB(4) introduced with effect from 01/04/2021, before substitution with effect from 01/04/2022, only enabled the cancellation of registration granted under Section 12AB(1) of the Act. Therefore, the cancellation of registration for the assessment year 2021-22 was held to be invalid. Issue 3: Alleged cash collections and utilization of income for the benefit of trustees The Tribunal found that the appellant had provided sufficient evidence to show that the alleged cash collections were misappropriated by two employees without the knowledge of the management. The Tribunal noted that the employees involved had been terminated, and the cash collected had been assessed in their hands. The Tribunal concluded that there was no specified violation by the appellant to justify the cancellation of registration. Issue 4: Applicability of specified violations under Section 12AB(4) for different assessment years The Tribunal held that the specified violations committed in the assessment year 2021-22 could not be the reason to cancel the registration granted for the assessment years 2022-23 to 2026-27. The Tribunal emphasized that the violations for each assessment year should be considered independently. The Tribunal allowed the appeal on this ground and quashed the order of the PCIT canceling the registration for the assessment years 2022-23 to 2026-27. Conclusion: The Tribunal partly allowed the appeal filed by the appellant, quashing the order of the PCIT canceling the registration under Section 12A and 12AB of the Act. The Tribunal held that the PCIT, Central Circle, Bangalore, had no jurisdiction to cancel the registration and that the specified violations for the assessment year 2021-22 could not be the basis for canceling the registration for subsequent years.
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