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TMI Blog2007 (10) TMI 318X X X X Extracts X X X X X X X X Extracts X X X X ..... epicted in his order. His apprehension and argument that continuance of registration will have a bearing on the search and seizure assessment proceedings is equally vital as on the other hand cancellation of registration will also have a bearing to the assessment proceeding. In our considered opinion both the cancellation as well as continuance of registration will have an effect and a bearing on the assessment proceeding. It does not mean that the assessment proceeding being a quasi judicial proceeding should be interfered like the present one. Rather in all fairness the CIT should have taken precaution to complete the assessment expeditiously and then should have arrived at the conclusion of proposed cancellation of registration. The present act of the CIT amounts to interruption in the assessment proceeding. The power under s. 12AA(3) has been enunciated under the Act is an unbridled power in the hands of CIT to safeguard the interest of Revenue as and when he is satisfied to do so. It does not mean that this unbridled power given by the Act after much deliberation in the Parliament should be utilized without clear cut satisfaction. As per strict judicial discipline we con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned CIT that the donations received were not accounted in the books of account is not correct and his findings were to be rejected. 4. That, in clarifying the point No. 4 of the show-cause notice of the learned CIT it is clearly stated in the submission submitted before him that the entries were made in pen not in pencil. So the apprehension of the learned CIT that the entries in the books of account may be changed subsequently is purely baseless and not justified. 5. That the proper books of account are maintained by the appellant assessee in the ordinary course of its activities. Most of the books of account were seized by the IT Department at the time of search operation and those books of account are till now in their custody. So the learned CIT could have verified that whether the assessee maintained the proper books of account or not. Further the learned CIT had also neither asked nor issued any notice to the assessee for the production of books of account which were not seized in the search operation. So on the mere suspicion of the learned CIT that the assessee does not maintain the proper books account is not correct and not sustainable in law. 6. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur of the Revenue. 5. Learned Authorised Representative on the other hand while arguing on behalf of the assessee has filed a number of case laws in the form of a paper book regarding the power of cancellation of registration by the CIT. 6. We have heard both the vociferous argument and counter argument of both the sides for a longtime for two days. We have gone through the case laws cited by both the sides. We have perused the record and the paper book filed. It is a fact that the appellant society has been registered as a charitable trust under the Societies Registration Act, since 30th June, 1992. It is also a fact that regular assessment has been made in the case of the assessee. There is no dispute or rebuttal of the same by the Revenue. For the first time a search was conducted on 9th Aug., 2005 under s. 132 of the Act and thereafter a show-cause notice was issued by the CIT for cancellation of registration as per the provision of s. 12AA(3). The allegation of the CIT in his order is with regard to diversion of funds of the institution for personal benefits of the founder members of the trust. The CIT cast doubt for maintenance of locker in Allahabad Bank, Nayapalli Bra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9. Sikshya O Anusaruthan v. CIT (IT Appeal No. 351 (Ctk) of 2006) Mere irregular in maintenance of accounts cannot be ground for cancellation of registration under s. 12AA particularly when the aims and objects of the society have never been alleged to have been flouted. 7. On the other hand learned Departmental Representative has cited the case law of Amritsar Bench of Tribunal, wherein the Hon'ble Tribunal have gone into the issues groundwise and have partly allowed the assessee's appeal giving a detailed descriptive order of 39 pp. But the facts of the cited case and the present case are not similar or akin to each other although it is a case after insertion of s. 12AA(3). It is because the cited case of the learned Departmental Representative is not a case of search and seizure whereas the present case relates to search and seizure. Even what the learned Authorised Representative has cited are not at all applicable to the present set of facts and circumstances of the case. 8. Further in order to make the issue concise one, reframe the issue to be decided by the Bench the issue involved pertains to the fact as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordance with the objects of the institution. Specific instances of diversion of funds of the institution for the personal benefits of the founder members have been found. Para 9. In view of the above please explain as to why the registration of the society should not be cancelled under the provisions of s. 12AA(3) of the IT Act, 1961. You are requested to appear for a hearing before the undersigned at 11 A.M. on 28th Nov., 2006 to explain your position which will be considered before passing any order. 10. In our considered opinion paras 2 and 9 are most relevant while considering the issue in hand. From the aforesaid two paras as it appears the CIT has passed the order of cancellation utilizing his administrative power without looking into the quasi-judicial aspect of the same. 11. Registration of a trust and cancellation of the same are administrative functions. Whereas assessment of the trust is a quasi judicial function. Administrative function and quasi judicial functions cannot be mixed up together. We do not have any objection to the power entrusted on the CIT for cancellation of registration, but it should be in consonance with the provisions. In the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the interest of Revenue as and when he is satisfied to do so. It does not mean that this unbridled power given by the Act after much deliberation in the Parliament should be utilized without clear cut satisfaction. As per strict judicial discipline we consider that power of punishment is a unbridled power like the present power of cancellation envisaged under s. 12AA(3). But such unbridled power should be utilized quite cautiously and consciously. With the aforesaid findings we are of the considered opinion that the order of the CIT is a prematured one which has been utilized at a prematured stage in haste. Accordingly the assessee succeeds in its appeal regarding continuance of registration. Before parting with our order it will not be out of place to mention here that our order has nothing to do with the search and seizure assessment proceedings. The concluding finding in the search and seizure assessment proceeding may be utilized by the Revenue or by the assessee in their respective favour accordingly. Again we reiterate that this order is given considering the present facts and circumstances of the case in cancellation of registration only and it has got no bearing to any ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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