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2024 (6) TMI 1280 - AT - Income TaxIssues Involved: 1. Cancellation of registration under Section 12AA/12AB of the Income-tax Act, 1961. 2. Retrospective application of Section 12AB(4)(ii) introduced by Finance Act, 2022. 3. Validity of the Principal Commissioner of Income Tax's (PCIT) order based on amendments not applicable to the assessment year in question. 4. Admissibility of evidence and statements under Section 132(4) of the Act. 5. Compliance with the objectives and activities of the trust as per the trust deed. Detailed Analysis: 1. Cancellation of Registration under Section 12AA/12AB: The appeals challenge the cancellation of registration granted under Section 12AA/12AB of the Income-tax Act, 1961 by the PCIT. The PCIT invoked the provisions of Section 12AB(4)(ii) for the assessment year 2018-19, which was introduced by Finance Act, 2022, effective from 01.04.2022. The appellant argued that these provisions were not applicable for the assessment year 2018-19 and that any cancellation should have been under the provisions relevant to that year. 2. Retrospective Application of Section 12AB(4)(ii): The appellant contended that the PCIT erred in applying the provisions of Section 12AB(4)(ii) retrospectively. The law applicable for the penalizing year should be the law in force at the time of the alleged default. The Tribunal agreed, stating that in income-tax matters, the law in force during the assessment year should apply unless explicitly stated otherwise. The PCIT's reliance on the amended provisions for retrospective application was deemed incorrect. 3. Validity of PCIT's Order Based on Amendments: The Tribunal noted that the PCIT's order dated 29.12.2023, canceling the registration for the assessment year 2018-19, was based on provisions introduced by Finance Act, 2022. The Tribunal held that the law as it stood during the assessment year 2018-19 should apply, not the amendments effective from 01.04.2022. The Tribunal cited several Supreme Court judgments reinforcing that the law applicable is the one in force during the assessment year unless stated otherwise. 4. Admissibility of Evidence and Statements under Section 132(4): The appellant argued that the PCIT relied on statements recorded under Section 132(4) from an administrative officer, which were retracted. The Tribunal highlighted that retracted statements require corroboration with independent evidence. The PCIT's reliance on these statements without corroborative evidence was deemed insufficient for canceling the registration. 5. Compliance with Objectives and Activities of the Trust: The appellant maintained that the trust's activities were genuine and in accordance with its objectives. The Tribunal observed that the PCIT failed to prove that the trust's activities were not genuine or were not being carried out per the trust's objectives. The Tribunal emphasized that the law prevailing during the specific assessment year should be invoked, and the PCIT's reliance on post-amended provisions was incorrect. Conclusion: The Tribunal allowed the appeals, quashing the PCIT's order canceling the registration under Section 12AB(4)(ii) with retrospective effect. The Tribunal ruled that the provisions applicable during the assessment year 2018-19 should apply, and the retrospective application of amendments introduced by Finance Act, 2022 was invalid. Consequently, other grounds of appeal became infructuous.
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