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TMI Blog2019 (8) TMI 854X X X X Extracts X X X X X X X X Extracts X X X X ..... irety we are in no doubt to hold that the order dated 22.07.2015 of the Tribunal in confirming the order dated 28.06.2012 of the CIT to cancel the registration of the petitioner granted u/s 12AA is an order passed de-hors, the statutory provisions of Section 12AA(3) and since there is no satisfaction recorded by the CIT either that the activities of the petitioner was not genuine or that it was not being carried in accordance with the objects for which it was set up, the conclusion drawn by the authorities in the order impugned in reference to the provision of Section 13(1) (b), is a confirmation of perversity. - Order to cancel the registration of the petitioner u/s 12 AA is quashed and set aside. - Decided in favour of assessee. - Miscellaneous Appeal No.438 of 2015 - - - Dated:- 13-8-2019 - Mr. Justice Jyoti Saran And Mr. Justice Partha Sarthy For the Appellant/s : Mr.D.V.Pathy, Advocate, Ms. Manju Jha, Advocate For the Respondent/s : Ms. Archana Sinha, Sr. SC, Mr. Alok Kumar, Jr. S.C And Mr. Sanjeev Kumar, Advocate ORAL JUDGMENT PER: HONOURABLE MR. JUSTICE JYOTI SARAN) Thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... smissed on 22.04.2015. It is feeling aggrieved by the said orders that the appellant is before this Court. Mr. D.V. Pathy, learned counsel has appeared for the appellant while the department is represented by their Sr. Standing Counsel, Ms. Archana Sinha. Mr. Pathy after taking this Court through the sequence of events which we have already taken note above has submitted that the order of cancellation of registration granted to the appellant under Section 12AA of the Act is per se illegal and the order passed by the Commissioner of Income Tax as confirmed by the Tribunal in purported exercise of powers vested under Section 12AA(3) lacks foundation as the facts accompanying the present case do not satisfy the prerequisites for such exercise. According to Mr. Pathy the registration to the appellant was granted by the Commissioner of Income Tax after recording satisfaction as to the eligibility of the appellant for grant of such registration and there has been no change in circumstances in between the date on which such registration was granted i.e., 26.04.1985 and the date on which it had been cancelled i.e. 28.06.2012 inasmuch as the petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and which runs as follows : (A) Whether the registration granted to the appellant under Section 12AA of the Income Tax Act, 1961 (hereinafter referred to as the Act ) could be cancelled by the Commissioner in purported exercise of power vested in him under Section 12AA(3) of the Act for alleged violation of the provisions of Section 13(1)(b) of the act? (B) Whether the purported action satisfies the conditions precedent for such cancellation as present in Section 12AA(3), in absence of satisfaction recorded by the Commissioner on such violation. (C) Whether the dis-allowance of any income from exemption for reasons present in Section 13(1) (b) of the Act, can be a circumstance to invite a cancellation of registration under Section 12AA(3) of the Act. Since the respondent department was represented by their Sr. Standing Counsel that we posted the matter for final hearing and disposal on 01.08.2019 and while Mr. Pathy reiterated the submissions which we have already taken note above, the issue was contested by Ms. Sinha to canvass in defence of the impugned action by submitting that the action impugned is in acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cancellation of registration to derive such benefit, relied on the following judgments: 1. (2001) 248 ITR 587 (Ghulam Mohidin Trust vs. Commissioner of Income Tax) (J K) 2. (2002) 254 ITR 2012 (Commissioner of Income Tax v. Palghat Shadi Mahal Trust) (SC) 3. Civil Appeal No. 1381 of 2019 (Commissioner of Income Tax (Exemption) vs. Jagannath Gupta Family Trust) Mr. Pathy in his short reply has submitted that in the entire order passed by the Commissioner of Income Tax as affirmed by the Tribunal, there is no whisper regarding the affairs of the appellant institution not being genuine or that the institution is failing on its object for which it was set up rather it is hiding behind the provisions of section 13 (1) (b) of the Act that the registration is being canceled which is not one of the prerequisites present in Section 12AA(3) of the Act to invite such cancellation even if this objection may be a matter for consideration at the time of assessment. We have heard learned counsel for the parties and we have perused the record. Ms. Sinha is absolutely correct when she submits ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come under Sections 11 and 12 of the Act in view of the provisions of Section 13(1)(b) of the Act thus sufficient to invite a cancellation of the registration of the petitioner granted under Section 12AA of the Act . The exhaustive explanation given by the petitioner to the show cause at Annexure 4 series is met with the order impugned dated 28.06. 2012 Annexure 5, which in fact is a reiteration of the observations present in the show cause notice to conclude at paragraph 4 that since the activities of the petitioner-institution is for furthering the interest of a religious community in particular i.e. Christians, it was not entitiled to a registration under Section 12AA of the Act . Surprisingly, even when the Commissioner has noted that more than 95 % of the students admitted in the school are non Christians yet, according to him it does not change the situation. In fact simply because in the Board s meeting the association reiterated its emphasis on the undisputed fact that being a catholic school run by the assessee association, the members of which are Christians, it has concern towards the Christians of Patna, according to the Commissioner these aspects were sufficient ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in purported exercise under this provision that the show cause notice was issued to the petitioner and the order of cancellation of registration has been passed. A plain reading of the enabling power vested in the Commissioner as present in sub-section 3 of Section 12AA would confirm that it is only in two circumstances that such power can be exercised by the Principal Commissioner or the Commissioner and i.e (a) if the activities of such trust or institution are not found genuine ; or (b) the activities of such trust or institution are not being carried out in accordance with the objects of the trust or institution. The legislative intent of the provision of sub-section 3 of Section 12AA is loud and clear and it is if and only if, the institution in question is found violating either of the two conditions that the Principal Commissioner or the Commissioner can exercise such power to cancel the registration and in no other circumstance. In so far as the case in hand is concerned, it is bearing note of the aims and objects as present in the memorandum of association which also contains the rules and regulations to regulate the activities of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A plain reading of the order impugned would confirm that the Commissioner has got mixed up in between the stipulations warranting exercise under Section 12AA(3) and Section 13(1) (b) in so far as it dis-entitles a trust or a charitable institution to the exclusion from the total income of the previous year, any income, if the same is used for benefit of any particular religious community or caste. It is correctly canvassed by Mr. Pathy that any such issue can be a subject matter of assessment proceeding but certainly cannot lay a foundation for cancellation of registration of the institution altogether unless the two prerequisites as present in sub-Section 3 of Section 12AA are satisfied. Having considered the matter in its entirety we are in no doubt to hold that the order dated 22.07.2015 of the Tribunal in confirming the order dated 28.06.2012 of the Commissioner, Income Tax to cancel the registration of the petitioner granted under Section 12AA of the Act is an order passed de-hors, the statutory provisions of Section 12AA(3) and since there is no satisfaction recorded by the Commissioner Income Tax either that the activities of the petitioner wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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