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TMI Blog2021 (1) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to be cancelled as per the provision of section 12 AA(3) . This term and condition given in the registration has been reiterated by the CIT (E) in the cancellation order. One of the reasoning given by the Tribunal to uphold the cancellation order was that, assessee had suppressed vital and material facts regarding acquisition of shares of AJL and the purpose for which it was acquired at the time of seeking the registration. Thus, there is no substance in this contention that, merely because later on this fact was mentioned in the notes to the account of the balance-sheet filed subsequently along with the return of income amounts to furnishing of information at the time of registration. Accordingly, such contention raised in miscellaneous application is rejected. Erroneous finding that the applicant did not undertake any activity in furtherance of its object prior to cancellation of registration - The finding of the Tribunal and the conclusion drawn besides other facts and material on record was also based on the binding precedent of the finding and the judgment of the Hon ble Delhi High Court, which was rendered almost on the same facts wherein there is a clear-cut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d preferred an appeal before this Tribunal. Both the parties were heard at length and after marathon hearing, order was passed vide order dated 15.11.2019. Now by way of aforesaid miscellaneous application, the applicant assessee has sought to point out that, certain contentions raised during the course of hearing have either not been considered or has not been properly appreciated by the Tribunal, which tantamount to mistake apparent from record within the scope and ambit of section 254(2). In all six grounds/issues raised in the impugned miscellaneous application, applicant assessee has contended that certain inadvertent error has crept in and therefore, the captioned order should be recalled in entirety or in part. 3. The first and foremost objection which has been raised is as under: 1.1 The Applicant humbly submits that in the course of the hearing, the Applicant had contended that the order passed by the Id, CIT(E) u/s. 12AA(3) of the Act in bad in law in absence of a proper show cause notice issued to the Applicant for cancellation of registration u/s. 12AA of the Act. 1.2 The Applicant had invited the attention of the Hon'ble Tribunal to the show cause noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out seeking submissions from the Applicant as to why he should not cancel. The proviso to section 12AA(3) itself states that 'no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.' The Applicant had accordingly prayed that since the Ld. CIT(E) has cancelled the registration of the Applicant by invoking section 12AA(3) without giving any opportunity to show cause as to why the registration should not be cancelled, the same is bad in law and void ab initio. Alternatively, the Applicant had also contended that since the Ld. CIT(E)'s show cause notice is merely based on the communications received from AGT/JCIT, the order passed by him is based on borrowed satisfaction and without any independent application of mind and accordingly, even for said reason, the order passed by the CIT(E) is bad in law. 1.4 The Applicant's contention of order being bad in law for want of proper show cause notice was also included at Paras 11.1 to 11.3 of the written synopsis of the arguments of the Applicant submitted to the Hon'ble Tribunal. Further, the argument on order being bad in law since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord' in the provision takes within its sweep the entire record before the Tribunal. The provisions of section 254(2) could not be construed in a manner which would produce an anomaly or otherwise produce an irrational or illogical result. It is one of the basic principles and a legal policy that when there is a provision for rectification of a mistake apparent from the record, that power should be allowed to be exercised for correcting mistake and/or error from the record and if the Tribunal feels that the Tribunal has committed an error of law, it would be against the concept of justice and fair play and also against the principle of legal policy not to allow the Tribunal to exercise such power . (underlined for emphasis) 1.8 Similar view has also been taken in the following decisions: Shahid Atiq vs. ITO (97 ITD 22)(DEL); Stock Exchange vs. ACIT (68 TTJ 610)(AHD); 1.9 In view of the above, the Applicant prays that the Hon'ble Tribunal may be pleased to rectify the aforesaid inadvertent error by recalling the captioned Order in its entirety or in part and/ or pass such supplemental order as the Hon'ble Tribunal may deem fit under the foreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the material information coming on record before him, the Ld. CIT (E) had issued a show cause notice to the assessee on 21.08.2017 which too has been incorporated in the order of cancellation of ld. CIT ( E) and this fact has also been incorporated in detail in Tribunal order from pages 19 onwards. The assessee had also given various replies in response to the said notice which fact has been noted and summarized by the Tribunal in detail in paragraph 16 to 17. Beside this, same argument was raised during the course of hearing also before the this Tribunal and the Departmental Representative had filed the copies of order sheet entries and the proceedings conducted by the ld. CIT(E) and also the copies of the show cause notice. Thus, it cannot be said that ld. CIT (E) had not issued any notice or has not given any opportunity of hearing before passing of the order. Section 12AA (3) mandates that order of cancellation shall not be passed unless a reasonable opportunity of being heard is given to the assessee. From the records placed before us and after hearing both the sides, this Tribunal was convinced that due and proper opportunity was given to the assessee by the ld. CIT(E) be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2011-12. In response to these notices and material confronted to the assessee, it had duly responded to and had filed the details. 7. Now under these facts, it cannot be inferred that either the assessee was not granted any opportunity of hearing or was not confronted with the material/information coming on record. Once a detail show cause notice has been issued and all the material have been confronted to the assessee, then it cannot be held that no proper opportunity has been given to the assessee. All these facts have been narrated and incorporated in detail in the Tribunal order in the captioned order. In view of these facts, the contention raised by the assessee in the miscellaneous application cannot be accepted and is liable to be rejected. 8. The second contention which has been raised by the assessee in the aforesaid application is under: 2.1 The Applicant humbly submits that at the time of rejoinder to the submissions of the Ld. Departmental Representative (DR), the Applicant had argued that the Id. DR cannot be allowed to make out a new case. The Ld. DR had during his submissions before the Hon'ble Tribunal made various arguments based on new evidences ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. - Mahindra Mahindra Ltd. v. DCIT [2009](30 SOT 374)(Mumbai)(SB); - ACIT v. Prakash L. Shah [2008] 115 ITD 167 (Mumbai) (SB); S.A. Rahim v. CIT [2011] 15 taxmann.com 321 (Andhra Pradesh); and - Supermax Personal Care (P.) Ltd. v. ACIT [2019] 107 taxmann.com 361 (Mumbai - Trib.). 2.4 The Applicant humbly submits that the Applicant had also argued that the Ld. DR cannot be allowed to argue or allege at this stage that the Applicant had suppressed facts at the time of applying for registration. It was argued that that when the Ld. CIT(E) has no where made said allegations, such an allegation cannot be made at the appellate level. 2.5 Reliance in this regard was placed on the decision in the case of Welham Boys' School Society v. CBDT [2006] 285 ITR 74 (Uttaranchal) wherein it is held that where in the show cause notice or in the impugned order, the Commissioner had not alleged that the assessee had obtained the registration by practising fraud or forgery, said ground cannot survive before the Court. Further, reliance was placed on the decision of the Jurisdictional High Court has, in case of Maheshwari Mandal (Delhi) vs The State Of Delhi Ors (W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e apparent from the records. 2.12 In view of the above, the Applicant prays that the Hon'ble Tribunal may be pleased to rectify the aforesaid inadvertent error by recalling the captioned Order in its entirety or in part and/ or pass such supplemental order as the Hon'ble Tribunal may deem fit under the foregoing facts and circumstances. 9. This contention was specifically raised by the Ld. Counsel during the course of hearing and also in the rejoinder proceedings before us. The Ld. Departmental Representative had specifically rebutted the said contention that no new case has been made out by the Department during the course of hearing, because the order of Ld. CIT (E) proceeds on primary satisfaction recorded and his reasoning given on paragraph 16 and 17 that the activities of the assessee was neither genuine nor they have carried out in accordance with the stated objects. The Department had only strengthen the case and the finding given in the CIT (E). No new view or all together different case has been canvassed by the Department before the Tribunal. 10. On going through the detailed argument made by the Ld. Counsel as well as by the Ld. DR, this Tribunal ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that since the Applicant had already suo moto surrendered the registration vide letter dated March 21, 2016 addressed to the Director of Income Tax (Exemptions), the purported show cause notice issued by the Ld. CIT(E) on August 21, 2017 (17 months later) calling for various details in respect of the activities of the Applicant and the order passed by the Ld. CIT(E) is without jurisdiction and bad in law. The surrender letter of the Applicant is at page 70 of PB-I. Further, in response to the allegation of the Ld. CIT(E) that the Applicant had suo moto surrendered the registration as a sequel to the investigation against the Applicant, the Applicant had submitted in detail the sequence of events which clearly shows that the said surrender had no relation to the past investigations proceedings against the Applicant. It was further submitted the Applicant had itself disclosed the transaction of acquisition of shares of AJL by way of a note to its accounts for the year ended March 31, 2011 and hence, there was no reason for the Applicant to be wary of so called investigation . Further, as regards the finding of the Ld. CIT(E) that the surrender was not valid, since the Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax law, it has been held that as soon as registration certificate had been surrendered by assessee, the onus was on revenue to find out cause of surrendering registration and if action was not taken within reasonable time, the same would not be questioned subsequently. 3.6 The foregoing contentions was also included at Paras 6.1 to 7.9 of the written synopsis of the arguments of the Applicant submitted to the Hon'ble Tribunal. The same is also mentioned at Paras 45-48 of the Tribunal's order. 3.7 However, on perusal of the Tribunal's order, it is observed that the Hon'ble Tribunal has not adjudicated upon said contentions of the Applicant. It appears that this aspect has skipped the attention of the Hon'bie Tribunal since there is no adjudication on the said contention of the Applicant. It is most humbly submitted that non-adjudication of the said issue is a mistake apparent from record, which ought to be rectified. Accordingly, the Applicant humbly requests the Hon'ble Tribunal to adjudicate upon the said contentions of the Applicant as they go to the root of the matter. 3.8 Reliance is again placed on the following decisions, wherei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of granting of registration till the date of surrendering of the registration. The Tribunal in paragraph 115 has even noted the paradox of the assessee, which is incorporated hereunder: 115. There is another angle which ponders us is that, if no activities were carried out by YI towards charitable activity between the period 2011 to 2016, then why so much of clamour that assessee should be recognized as charitable institution qua that period only should have the benefit of registration u/s.12AA for this period of five years, i.e., from the Assessment Year 2011-12 to Assessment Year 2016-17 and post 21st March, 2016, the assessee itself chose to surrender its registration and willingly give up its charity status under the Income Tax Act, If both YI and AJL are non-profitable company, then why such a dispute on cancellation from retrospective date. 14. Not only this fact has been reiterated at several places in the impugned order but also detail reasoning has been given that, once the assessee itself has given up its registration to carry out charitable activities, and if for the interregnum period (i.e., from the date of granting of registration to the date of surrender le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lilavati Kirtilal Mehta Medical Trust v. CIT [2019] 108 taxmann.com 272 (Mumbai - Trib.) wherein it is held that violation of provisions of section 13 can be a ground for cancellation of registration only under section 12AA(4) and not 12AA(3) and that section 12AA(4) would take effect only from 1.10.2014. There cannot be retrospective cancellation u/s. 12AA(4) prior to 1.10.2014. 4.4 It was accordingly submitted that since power to cancel registration for holding commercial investment was brought in the statute only in 2014 vide sub-section (4), even if registration was cancelled under section 12AA(4), its operation cannot go prior to 1-10-2014. It was further submitted that since CIT(E) has already passed said order and not invoked section 12AA(4), therefore, he is now precluded from invoking said provision, since one cannot review his own order in absence of specific provision. 4.5 The foregoing contentions was also included at Paras 9.1 to 10.9 of the written synopsis of the arguments of the Applicant submitted to the Hon'ble Tribunal. The same is also mentioned at Para 50 of the Tribunal's order. 4.6 However, on perusal of the Tribunal's order, it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und. 17. In point no.5, the assessee has raised the following contention:- 5.1 On perusal of the Tribunal's order, it is noticed that at Para 106, it is stated as under: Other pivotal and underpinning reasons for cancelling the registration by the Ld. CIT(E) are that the assessee company has not been able to point out any single activity carried out in furtherance of its stated objects, for which it was created during the said period, i.e., from A. Y.s 2011-12 to 2016-17; and the only activity of the assessee was borrowing of ₹ 1 crore from Kolkata based company and making the payment of ₹ 50 lakhs to AICC and applying for allotment of shares against cancellation of loan of ₹ 90 crores assigned by AICC to Young Indian. All these activities definitely cannot be held to be in furtherance of the objects of the Young Indian, because at no point of time, it was ever stated what was the purpose and objective behind acquiring the AJL and making payment of ₹ 50 Lakhs to AICC. As we have already held above, even if AJL was acquired for the purpose of stated objects, but that object was a nonstarter from day one and till the surrender of registr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of its objects and that the same was treated as application of income by the Applicant. 5.5 Attention is also invited to Para 22 of the Tribunal's order, where again, while explaining the order of the CIT(E), again it has been mentioned as under: While explaining the investment to take over AJL the assessee had claimed in notes to account for FY 2010-11 that the investment was for the purpose of the stated object of the assessee company namely Youth Commitment to the ideal of democratic and secular society and the AJL was in process of realigning its business to the stated object of the assessee company. However, findings as discussed above had proved beyond doubts that AJL had never changed its business activities of real estate during AY 2011-12 to 2014-15 to realign itself with the stated object of the assessee company. (emphasis supplied) 5.6 As would be kindly observed, even Ld. CIT (E) at the time of purported cancellation proceedings was aware of the said contention of the Applicant that the investment was made for the stated objects of the Applicant, i.e. Youth Commitment to the ideals of democratic and secular society. 5.7 The said fact was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding in paragraph 18, 22 and finally in paragraph 106. The case of the Revenue as well as one of the main reasoning given by the tribunal in the captioned order was that this material fact was neither disclosed nor brought on record by the assessee at the time of seeking registration. This may have been disclosed in the notes to the account at the time of filing of return post grant of registration, but certainly it was not disclosed at the time of seeking registration that, what was the purpose and objective of acquiring the AGL on a paltry sum of ₹ 50 lakhs to INC. The tribunal has noted that acquisition of shares in such a manner cannot be held to be in furtherance of the objects of the assessee company. One of the conditions put forth by then Ld. DIT(E) at the time of granting registration was that, if later on it was found that registration has been granted by misrepresentation or suppression of any facts then registration so granted is liable to be cancelled as per the provision of section 12 AA(3) . This term and condition given in the registration has been reiterated by the CIT (E) in the cancellation order. One of the reasoning given by the Tribunal to uphold th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had also submitted before the Hon'bie Tribunal the sequence of events at the time of recommencement of newspaper publication activity of AJL. The same is also reproduced at Para 37 of the Tribunal's order. As would be observed therefrom, on 23/01/2014, AJL had written to the Registrar of Newspapers for India (RNI) informing it of its intent to restart publication of the newspapers. Please see page 267 of the AB - PB I. Further, on 26/09/2016, a resolution was passed by the Board of Directors of AJL to resume the publications of newspapers. Please see page 266 of the AB - PB I. Further, on 14/11/2016, AJL launched National Herald Website. Please see pages 204 to 213 of the AB - PB I, Also on 15/11/2016, an agreement was entered between AJL and Press Trust of India for Wire News Services, Please see pages 245-249 of the AB - PB I; Further, on 12/06/2017, AJL launched the Commemorative Edition of National Herald (Publication) in print in Bangalore. Please see pages 133-153 of the AB - PB i. On 23/06/2017, AJL obtained Registration Certificate for National Herald Newspaper from the Registrar Office of Newspapers for India, Ministry of Information and Broadcasting. Please see p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the Tribunal and the conclusion drawn besides other facts and material on record was also based on the binding precedent of the finding and the judgment of the Hon ble Delhi High Court, which was rendered almost on the same facts wherein there is a clear-cut observation that all these transactions were hidden from the Income Tax Department. In fact this vital fact was also hidden from the DIT(E) while seeking the registration under section 12AA; and not only that, post granting of registration also no such genuine activities was carried out from the period of granting of registration till the period assessee has surrendered for registration. In this regard observation and conclusion of the Tribunal in paragraph 122 is reiterated. 21. Lastly, the Tribunal in paragraph 123 has noted that it has noted down various arguments placed by the parties as well as judgment relied upon and also dealt with all the core arguments, but same are not being dealt with, because the findings have been reached on the reasoning and the conclusion given in the foregoing paragraphs and the order of CIT (E) cancelling the registration was upheld. In the impugned miscellaneous application no such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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