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TMI Blog2021 (3) TMI 1146X X X X Extracts X X X X X X X X Extracts X X X X ..... n and that power of the Commissioner is not dependent on the assessee having powers, under the trust deed, to seek cancellation of registration. On this aspect of the matter also, we are unable to find ourselves in agreement with the learned ASG. It is difficult to understand on the first principles, much less approve, any legitimate justification for the income tax authorities to insist that the assessee must have continue with the registration under section 12A when the assessee does not want it. It is nobody s case that there were certain specific obligations on the part of the assessee which the assessee must perform as a quid pro quo for the registration per se. Whatever obligations a charitable institution has towards the income tax authorities, these obligations are a quid pro quo for exemption and not a foundational requirement for the exemption. All these things are, however, academic in the light of our findings that the Commissioner had the duty, much more than the power, to cancel the registration under section 12A upon the fact of admitted violation of section 13(1) coming to his notice, and that such cancellation had to effective from the date on which the disab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the memorandum of appeal filed before us, are as follows: 1. a) The impugned order dated 31.10.2019 passed by the Learned Principal Commissioner of Income-Tax-17 ('PCIT') under section 12AA(3)/(4) of the Income-tax Act, 1961 ('ITA') cancelling the registration of the Appellant is without jurisdiction and, hence, void ab initio. b) The PCIT failed to appreciate that the power of cancellation of registration vests in the authority who has the jurisdiction to grant registration. Admittedly the Commissioner of Income-tax (Exemption) ['CIT(E)'] is the authority who can grant registration, therefore, he is the only authority who can cancel the registration under section 12AA(3)/(4) of the ITA. c) The PCIT failed to appreciate that when the Trust was registered on 15.03.1976, it was merely communicated that the name of the Trust was entered at TR/10925 in the Register of Trusts. There was no formal order granting registration to start with. Hence there is no requirement in law for passing of an order acknowledging the surrender when the Trust chose to surrender such registration. 2. a) The PCIT erred in holding that the surrender of registr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserving that the provisions of section 115TD of the ITA would apply even if the registration were to be cancelled w.e.f. 11.03.2015 i.e. date of surrender, as according to the PCIT, specified date in section 115TD of the ITA is on date of conversion which in turn has been defined as the date of the order cancelling the registration. c) The PCIT failed to appreciate that multiple SCNs were issued to the Appellant on various dates by the CIT(E) (13.03.2015 and 07.06.2017 referring to the Appellants' surrender letter filed, for violation of section 13(l)(d) of the ITA) as well as the PCIT (dated 08.03.2018 stating violation under section 13(l)(d) and 13(2)(h) of the ITA and 16.08.2019 stating that the activities of the Appellant are not carried out in accordance with the objects of the trust deed in addition to violation under section 13(l)(d) and 13(2)(h) of the ITA) each without disposal of the earlier ones (SCNs) and expanding the scope of the earlier ones. d) The PCIT failed to dispose the SCN dated 13.03.2015 issued by the CIT(E) and failed to appreciate that a change in incumbent who initiated a proceeding cannot abate the proceedings initiated by the erstwhile incumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the PCIT has erred in law and in fact by incorrectly placing reliance on an extract of trust deed to hold that the Appellant and Trustees have not carried out activities in strict adherence to the object clause in the trust deed. In doing so, the PCIT erred in not appreciating that i) by reinvesting the sale proceeds of shares the trustees did not violate the trust deed and was in accordance with the provisions of The Maharashtra Public Trust Act, 1950 ii) the Appellant had applied its entire income for charitable purposes. iii) the trust deed does not mandate the registration or surrender of registration under section 12A of the ITA. iv) the trust deed provides that the Appellant is to expend monies for the various charitable objects as specified in the trust deed so long as those are objects which the ITA permits to enable a trust to qualify for exemption. v) the Appellant did not hold any equity shares in Tata Sons Limited as per the extracts of audited financial statement of Tata Sons Limited provided by the PCIT and hence the PCIT's conclusion that the Appellant was controlling a large business group through Tata Sons Limited was erroneous. 3. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ster of applications under section 12-A(a) maintained in this office. Seal for Commissioner of Income Tax Bombay City- IV, Bombay 6. On 11th March 2015, the assessee trust wrote a letter to the Commissioner of Income Tax concerned indicating that the assessee does not desire to continue to avail the benefits of the registration made by the trustees in 1975 . This communication reads as follows: March 11, 2015 Commissioner of Income Tax (Exemptions) Piramal Chambers, Parel, Mumbai 400 012 Dear Sir, Navajibai Ratan Tata Trust is a public charitable trust created by the trust deed dated 23rd December 1974. The trust, on 1st August 1975, had filed the prescribed form no. 10A for registering itself as required under section 12A(a) of the Income Tax Act. We were informed by the communication dated 15th March 1976 that the said application has been entered at Serial No. TR/10925 in the Register of applications under section 12A(a) of the Act maintained by the Income Tax Department. We now refer to Section 12AA(4) of the Act, inserted with effect from 1st October 2014, by the Finance Act (No. 2) Act, 2014, and submit that some of the activities of the Trust ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t (No. 2) Act, 2014, and submit that some of the activities of the Trust are not in compliance with the provisions of Section 13(1) of the Act. We understand that the said non-compliance would be construed as an activity of the trust which is being carried out in a manner that the provisions of Section 11 and 12 of the Act donot apply to exclude either whole or any part of the income of the Trust resulting in withdrawal of registration obtained by us under section 12A(a) of the Act. Accordingly, the assessee does not desire to continue to avail the benefits of registration made by the Trustees in 1975. Hence, you are hereby informed that the Trust would not be claiming exemption under section 11 of the Act, since, upon withdrawal of the registration or in any event cancellation of the registration under section 12A of the Act, it would not comply with the requirements of Section 12A(1)(a) read with 12AA(4) of the Act. 3. In view of the above, it is proposed to withdraw registration under section 12A of the Income Tax Act, granted in your case vide registration No. TR/10925 of the erstwhile CIT, Bombay City IV, Bombay. 4. You are requested to explain why the registrati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation obtained by the Trust. Pursuant to our letter, we received a Notice dated March 13, 2015, wherein you had proposed to withdraw registration under section 12A of the Act, granted to the Trust vide registration no. TR/10925 and asked us to appear before you on March 20, 2015. Accordingly, on March 20, 2015, the Authorized Representatives of the Trust appeared before you and confirmed their agreement to the action you had proposed to take and stated that the Trust had no objection to your proposal, as the Trust itself had sought the deregistration. As there was no dispute that our request would not be acceded to we proceeded to file our Return of Income for Assessment Year 2015-16, by not availing the benefits under sections 11 to 13 of the Act. The Return of Income was filed on the basis of the normal provisions of the Act. As over fourteen months have elapsed after our meeting on 20th March, 2015, we presume our request has been noted and accepted. We have however, not received a formal communication from you. We therefore, request you to confirm that our understanding is right Thanking you Yours sincerely, On behalf of the Board of Trustees 10. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rayed . 13. Once again, proceedings resumed before the respondent Principal Commissioner of Income Tax. It was, inter alia, explained by the assessee that this exercise is an exercise in futility inasmuch as the registration under section 12A has already been surrendered by the assessee and it stood cancelled/ withdrawn with effect from March 2015, for the reasons as follows: (i) The Trust was constituted by trust deed dated 23.12.1974 and obtained registration as public charitable trust in August 1975 under section 12A(a) of the ITA. In August 1975 it had filed prescribed Form 10A as required under section 12A(a) of the ITA. Vide communication dated 15.03.1976 the Trust was informed that the said application had been entered at Sr No TR/10925 in the Register of Applications under section 12A(a) of the ITA. (ii) In March 2015, referring to section 12AA(4) of the ITA inserted with effect from 1 October 2014 by Finance Act, 2014 the Trust submitted to the CIT(E) that some of its activities are not in conformity with the provisions of section 13(1) of the ITA which would be construed as an activity of the Trust which is being carried out in a manner that provisions of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tail and submitted that this entire exercise of cancellation of registration is a nullity in law inasmuch as by virtue of letter dated 11th March 2015, the registration under section 12 A is no longer in existence. He submits that what is provided by Section 12 A is a registration which is the nature of benefit as it is a foundational requirement for the exemption under section 11. It is thus meant to be a beneficial scheme for the taxation of trusts. A benefit cannot be thrust upon an unwilling person, particularly when what is perceived and claimed to be a benefit turns out to be a liability. Learned counsel submits that a benefit, right or privilege cannot be thrust upon anyone, and it can only be retained by a beneficiary on his own choosing. Our attention is then invited to John W Salmond s very respected and authoritative commentary The Theory Of Law , which at page 642, states as follows: Vestitative facts- whether they create, transfer, or extinguish rights-are divisible into two fundamentally distinct classes, according as they operate in pursuance of the will of the persons concerned, or independently of it. That is to say, the creation, transfer, and extinction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted by such an enactment is obviously, the passenger himself; and no consideration of public policy is involed in it (b). A company authorised by the statute to levy tolls within a specified maximum is not bound to exact uniform tolls from all persons alike; but is entitled, in the absence of an express provision requiring equality, to remit any part of the tolls to particular persons, at its discretion (c). (page 474) 17. Learned senior counsel submits that these principles have been reiterated time and again by the Hon ble Courts above. Our attention is then invited to Hon ble Supreme Court s judgment in the case of CIT Vs Mahendra Mills [(2000) 243 ITR 56 (SC)] wherein Their Lordships have, inter alia, observed as follows: The Officer is required to do no more than to advise the assessee. It does not place any mandatory duty on the officer to allow depreciation if the assessee does not want to claim that. Provision for claim of depreciation is certainly for the benefit of the assessee. If it does not wish to avail that benefit for some reason, benefit cannot be forced upon him. It is for the assessee to see if the claim of depreciation is to his advantage. Rather, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Ram Vs Union of India [(1954) AIR SC 584 (SC)] as also several precedents on the same lines. For the sake of brevity, however, we may not deal with these precedents. 20. It is then contended that unlike Section 18 of the Bombay Public Trust Act, 1950, which mandates every public trust to make an application for registration under the Income Tax Act, there is no such requirement under the Income Tax Act. Registration is mandatory only when exemption under section 11 is claimed. Thus, when the assessee files the registration application on his own will, it is a natural corollary thereto that the assessee may, in his own right, surrender the registration as well. Learned counsel then invites contrast of this situation with the situation under section 115BAA wherein the assessee, once applying for the lower rate of taxation subject to certain conditions, cannot subsequently withdraw from the said scheme. It is contended that when no such fetters are placed under section 12A, the same cannot be inferred. 21. Learned counsel then submits that under section 12AA(4), an assessee can surrender a registration under section 12A and there will be no necessity to pass a formal orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12AA(3) inasmuch as it provides that the Commissioner shall pass the order, the word used in section 12AA(4) is may , and, by implication therefore, passing of the order is not mandatory at all. It is further pointed out that while section 12AA(3) provides for an opportunity of hearing to the assessee, no such provision exists in section 12AA(4). This too, according to the learned counsel, indicate that it is not necessary that a formal order be passed under section 12AA(4). 23. It is then contended that, as held by Hon ble Supreme Court in the case of Moti Ram Vs Param Dev [(1993) 2 SCC 725 (SC)], doctrine of unilateral relinquishment permits a person to give up its rights and privileges, and having done so, it is not necessary for anyone to recognize or give effect to such relinquishment. In such cases, relinquishment becomes complete and operative when relinquisher, by a concomitant act makes good his intention of relinquishment. In this case, according to the learned counsel, Hon ble Supreme Court has held that when there is no provision in the statute requiring another person to accept the relinquishment, a party will have the unilateral right of relinquishment. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the person in receipt of income shall make an application for registration of trust or institution in the prescribed form and in the prescribed manner to the Chief Commissioner or the Commissioner in the specified time. However, there was no provision in the income tax law for processing of such an application and granting or refusal of registration to the concerned trust or institution . It is then contended that so far as registrations under section 12 A are concerned, these were no granted by the Commissioner as there was admittedly no legal process for grant of or refusal of such registrations in the first place. It was obtained by a unilateral act, though confirmed by a communication by the Commissioner, and, therefore, its cancellation cannot entail a different process. 27. Learned senior counsel then submits that in any event, learned Commissioner could not have delayed disposal of the assessee s request for cancellation for an indefinite period. It was his duty to pass the order within a reasonable time frame. Once he does not do so, he is denuded of the powers to pass the order, and the impugned order must, therefore, be held to be time barred. In this background, he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further submitted that these benefits however, are not standalone benefits available to any and all trusts but only to trusts that perform charitable activities and meet the criterions mentioned in the statute for this purpose. He submits that the registration is granted only when the activities and objects of the Trust are in conformity with the Act. The Act lays down a welfare scheme whereby it seeks to permit certain exemptions to Trusts but only such Trusts or entities as are involved in charitable activities. Thus, to assert that registration is merely a benefit with no obligation is clearly contrary to the express language, intent and purport of the Act. It is contended that the concept of benefit per se is not exactly applicable to registration of Trusts. Learned ASG submits that registration is not granted for the asking but is dependent upon the applicant being otherwise in conformity of the provisions of the statute and in a sense, undertaking to comply with the statute and the purpose of rendering charitable services. To put it differently, registration is not a benefit available to all but a benefit which can be claimed by the Trusts which meet the criterions specif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t claiming benefits of section 11 of the Act. Reliance is also placed on the registration certificate of one of the group Trusts wherein it is specifically mentioned that registration in itself does not entitle the Trust for claiming exemption under section 11 of the Act. It is submitted that this would even stand to reason since, otherwise every Trust once registered would need to do nothing further to claim exemption but would be deemed automatically to be entitled to an exemption. This is, according to the learned ASG, clearly not the prevailing law. The distinction between claiming an exemption and the registration as a trust has even been admitted by the Trust also- as is evident from the wordings of ground 2 (e) raised by the assessee. It is thus reiterated and respectfully submitted that registration is not a simplicitor benefit. To illustrate that the registration of a Trust is not merely a benefit but an obligation in terms of continuing to meet the requirements of registration by performing the requisite charitable acts, learned ASG once again goes back to the example of a company, and submits that an analogy could be drawn to the incorporation of a company. The incorpo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for cancelling the registration. Necessity of passing an order is a statutory requirement without which the registration of a Trust cannot be cancelled, meaning thereby that the registration under section 12A of the Act continues till the Commissioner of Income tax/Principal Commissioner of Income Tax cancels the registration by an order in writing. 32. Learned ASG then submits that the appellant has sought to urge that the power to unilaterally surrender must be read into Section 12AA(4). This submission is made on the basis of distinguishing the language between Section 12AA(3) and Section 12AA(4) more particular the distinction between the use of the words 'shall' and 'satisfaction in the former as against 'may' and notice in the latter. It is submitted that such an interpretation is clearly misconceived for the following reasons:- 1. plain and clear language of the provisions does not provide a power to surrender; 2. clear purpose and intent of the provisions relating to registration of Trust and cancellation thereof as explained above, do not envisage registration as a simplicitor benefit which can be unilaterally surrendered. Hence, such an i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing exemption under Section 11 of the Act, since upon withdrawal of the registration or in any event cancellation of the registration under Section 12A of the Act, it would not comply with the requirements of Section 12A(1)(a) read with 12AA(4) of the Act . The clear language of the letter suggests that the Trust understood it was only upon withdrawal of registration or cancellation that it would not comply. Hence, the own understanding of the Trust was that such effect takes place only upon withdrawal and/or cancellation and not by the mere submission of the letter as is being urged. It is further submitted that it is trite law that an Order of cancellation is a quasi-judicial act (See Industrial Infrastructure Development Corporation vs CIT -Order dated 16th February, 2018 passed in Civil Appeal No. 6262 of 2010 -Para 29 and 30). Hence, the question of circumventing such a quasi-judicial act cannot and does not arise. It is reiterated that the statutory scheme which mandates a written order for cancellation places an obligation on the competent authority to carefully consider all relevant parameters in any given case before taking any final view. In the instant case, for exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a difference and distinction between registration and claiming the exemption. It is contended that the letter only suggested that no exemption would be claimed and nothing beyond that. 38. Learned ASG submits that the reliance on the noting dated 20th March, 2015 is misconceived, as it is an admitted position that no formal order thereon was ever passed and hence, the requirement of an order in writing was never completed. Hence, it is incorrect to urge that the cancellation of registration took place by way of surrender or acquiescence to the show cause notice in March, 2015. Such an interpretation would render otiose the requirement of an order in writing as mandated under Section 12AA(3) and (4). It is then submitted that there is no power of surrender vested in the Trustees under the Trust Deed dated 23rd December, 1974, and therefore the question of trustees acting in purported violation of their constitutional document cannot and does not arise. As per the proviso, if at any time after the creation of the Trust, it is held that any of the objects or purposes as delineated in the Trust Deed, for which the corpus and/or income of the Trust Fund or any part thereof, as direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th no other alternative but to give up the benefits of registration. Therefore, it is submitted that this act on the part of the Trust was not a voluntary act but was a fait accompli. There is nothing on record to show that, but for this, the Trust would have suo moto surrendered the benefits of exemption under sections 11 and 12 of the Act. The entire argument on the basis of an option being available to the Trust in light of Section 10(34) of the Act, is not to be found on the record anywhere nor does the letter dated 11th March, 2015 refer to Section 10(34) of the Act. It may be noted that as early as in 2013, the Comptroller and Auditor General of India ( C AG ) in its Report No.20 of 2013 had pointed out that the Trust was violating the provisions of section 13(1)(d) of the Act. The Trust, had sold the shares of TCS (which formed part of the Trust's corpus) and the proceeds thereof were utilized for investing in preference shares of Tata Sons Ltd. Following this, the exemption claimed by the Trust for AY 2010-11 was denied in assessment by Assistant Commissioner of Income Tax(Exemption), Mumbai vide order dated 10/02/2015 under section143(3) r.w.s. 147 of the Act. Meanwhil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no longer eligible for the benefit of exemption under section 11 and, therefore, there is no point in his continuing with the registration, the date on which the first show cause notice in this regard, the date on which the hearing for cancellation was concluded, a date within reasonable time frame of concluding the hearing on cancellation, or a date on the whims and fancies of the tax administration. Our attention is once again invited to the significance of the date of cancellation and tax implications flowing from the same. There is no dispute that the assessee is not eligible for the benefit of Section 11, and that is the reason that the assessee has surrendered the registration. As for the audit observations made by the CAG, learned counsel submits that audit observations are not the gospel truth but simply perceptions of the auditor which may or may not be correct, and just because CAG takes a particular stand, it does not become an accepted fact. There are numerous occasions when these observations are found to be incorrect, and Hon ble High Court has not approved such observations either. There is no question of lack of bonadfides on the part of the assessee in surrender ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, the trust should not be treated as registered charitable trust, for the application of Section 11 tax exemption, with effect from the assessment year 2015-16, the case of the revenue authorities is that since registration is cancelled vide respondent Principal Commissioner s formal order dated 31st October 2019, such cancellation will only have a prospective effect, and, accordingly, the trust is required to be treated as a registered trust, for the application of section 11 tax exemption, for the assessment years 2015-16, 2016-17, 2018-19, 2019-20, as also assessment year 2020-21. 42. The question then arises as to why would an assessee trust decline such a generousity of the income tax department, or, to put it conversely, why is the income tax department is so keen to extend registration under section 12A, for this extended period from March 2015 to October 2019, when the assessee does not want it. On the face of it, nothing really turns on this registration, in favour of the assessee or even against the assessee, so far exemption under section 11 is concerned, since after all, as learned ASG has strenuously argued, the assessee anyway has the option of cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee is denied exemption under section 10(34). Effectively thus, the continuance of registration under section 12A, even when the assessee does not want exemption under section 11, may result in higher tax liability for a trust which has earned, as this Trust has earned, income by way of dividends from domestic companies eligible for exemption under section 10(34). 46. While on this subject, it is perhaps appropriate to look at the way the income tax department itself has understood the related legal provisions. While explaining the purpose of this amendment, CBDT circular no. 1/ 2015 (F No 142/13/2014 (TPL) dated 21st January 2015) has, inter alia, observed as follows: 4. The first issue was regarding the interplay of the general provision of exemptions which are contained in section 10 of the Income-tax Act vis-a-vis the specific and special exemption regime provided in sections 11 to 13 of the said Act. As indicated above, the primary objective of providing exemption in case of charitable institution is that income derived from the property held under trust should be applied and utilised for the object or purpose for which the institution or trust has been established. In m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trust from the domestic companies- an exemption which is available to every taxpayer. To this extent, the scheme of Sections 11, 12 and 13 of the Income-tax Act are special provisions governing institutions which are being given benefit of tax exemption , which was intended to be an optional benefit to the charitable institutions, inasmuch as the assessee could voluntarily opt for the special dispensation, has become source of an additional tax burden for the trusts in question. 48. The other aspect of the matter is that this circular specifically recognizes that Sections 11, 12 and 13 of the Income-tax Act are special provisions governing institutions which are being given benefit of tax exemption and that it is for the assessee to voluntarily opt for the special dispensation . We will, however, come to this dimension a little later. 49. The next important legislative development is the introduction of Section 115 TD. By virtue of Section 115 TD, which is brought by the Finance Act 2016 with effect from 1st April 2016, an additional tax burden is put on the deregistration of a charitable institution in respect of its accreted income. This provision is as follows: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exchequer. That is, in our humble understanding, the reason for canvassing the path followed by the revenue authorities to the correct by them, and the revenue authorities are thus seeking to benefit from their own inertia. Of course, revenue authorities have made out a case that the cancellation can have only prospective effect and it is purely the compulsion of law, rather than any temptation for revenue, that the benefit of registration under section 12A must be extended to the assessee till 31st October 2019- whether the assessee wants it or not. That claim, for the detailed reasons we will set out now, does nor seem to be correct. 52. One of the fundamental issues which have come up before us, in this case, is whether the registration under section 12 A constitutes a benefit or not, and whether an assessee, not inclined to continue with registration under section 12A, can be virtually compelled to continue with the said registration. 53. It is only elementary that, as is the mandate of section 119(1), the Central Board of Direct Taxes may, from time to time, issue such orders, instructions and directions to other income-tax authorities as it may deem fit for the prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption and that it is for the assessee to voluntarily opt for the special dispensation . In our considered view, therefore, for this short reason alone, it cannot be open to the income tax authorities to suggest that the provisions of Section 12A are not in the nature of a benefit or to suggest that it is not voluntary for the assessees to opt for such special dispensation. One it is held, as is our view, that the benefit of this special dispensation of scheme of Section 11, 12 and 13, is voluntary and at the option of the assessee, it is clear that continuance of a registration under section 12A, as a foundational requirement for exemption under section 11, cannot be thrust upon an unwilling assessee. Viewed thus, an assessee has an inherent right to withdraw from this special dispensation of scheme of Section 11, 12 and 13, unless such an withdrawal is found to be malafide. For this short reason alone, once an assessee specifically requests for cancellation of registration, that request cannot be declined. That, however, is not the only reason for our coming to the said conclusion. 55. The present registration is under section 12A. As introduced by the Finance Act 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quid pro quo for the registration inasmuch as a registration under section 12A did not, at that point of time, result in any obligations on the assessee or disadvantage to the assessee- in tax or otherwise. The disadvantageous tax implications on the assessee are only as a result of a much later legislative amendment which were not in effect even when the assessee informed the Commissioner of Income Tax of his disinclination to continue with the registration. The registration under section 12A was thus only an advantage to the assessee, and was a benefit as such. The question then is whether a benefit can be conferred upon an unwilling person. We do not think such a course is permissible in law unless this benefit is coupled with obligation or unless there is specific provision, such as in Section 115BAA, to the effect that once an assessee avails a specific beneficial provision, he cannot opt out of the same on his own in an unfettered discretion. When the law does not provide for such a restriction, even if it is considered desirable for any reasons whatsoever, it cannot be inferred- as is the mandate of the rule of casus omissus in the principle of interpretation of laws. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be correct for the period after insertion of Section 12AA with effect from 1st April 1997, but, so far as the relevant point of time is concerned, the registration was not granted but was simply obtained by the mere filing of an application in the office of the prescribed authority. There was nothing more than mere filing of the form which would entitle the applicant for registration under section. The use, in Section 12AA(3), of expression grant for registrations after 1st April 1997, and use of the expression obtain for registrations under section 12A prior to 1st April 1997, takes that aspect of the matter beyond any doubt or controversy. In the present case, the registration was obtained on 15th March 1976, and, therefore, there was no question of registration being granted upon the satisfaction of the Commissioner about the objects of the trust or institution and the genuineness of its activities , as is the situation post 1st April 1997. It was obtained by the assessee upon the filing of an application within the prescribed time limit, and the letter intimating the assessee of this registration as such, as reproduced earlier in this order, clearly evidences tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the requirement of any other law, as referred to in sub-clause (ii) of clause (a) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality, then, the Principal Commissioner or the Commissioner may, by an order in writing, cancel the registration of such trust or institution [Emphasis, by underlining, supplied by us] 61. It is quite clear that once the admitted violation of law by the assessee came to the notice of the Commissioner, as not only he received the communication of the assessee but also issued a show-cause notice to the assessee requiring the assessee to show cause why the registration not be cancelled and concluded hearing thereon, the Commissioner had the powers, under section 12AA(4), to cancel the registration obtained by the assessee under section 12A. It is well settled legal position that whenever law confers any powers in any public authority, such a public authority has the corresponding duty to exercise these powers when circumstances so justify or warrant. As observed by a coordinate bench of this Tribunal, in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the cancellation of registration cannot take effect from a date prior to the date of the order of cancellation. In the case of Agra Development Authority (supra), Hon ble High Court has observed that it can relate back to the date of show cause notice, and the first showcause notice in the present case is dated 13th March 2015. In the case of Young Indian Vs CIT [(2019) 11 taxmann.com 235 (Del)], a coordinate bench of this Tribunal has observed, and very appropriately so, that The cancellation of registration, whether with retrospective effect or prospective, depends upon the facts and circumstances of the case and the Commissioner has power to cancel the registration from the time when such breach has occurred. It cannot be, and is not, the law that formal order cancelling registration of a trust, on account of disability attracted by the trust or for any other legitimate reason, can only be with a date with effect from the date of the order so cancelling the registration. General implications of this proposition apart, on the peculiar facts of this case, such an approach will incentivise the wilful delay and inertia on the part of the income tax authorities. As we have s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation granted under section 12A, must not put assessee to a disadvantage- particularly when the effect of the cancellation has to essentially relate back to the point of time when the first show-cause notice was issued, or, at the minimum, when hearing on the first show-cause notice were validly concluded and the first show cause notice, requiring the assessee to show cause as to why the registration obtained by the assessee under section 12A, was formally acquiesced by the assessee. 64. Learned ASG has also provided several examples from the corporate law, particularly with respect to removal of a company s name from the records of the Registrar of Companies, which cannot be done unilaterally by the company. In our humble understanding, that example will not hold good in the present context inasmuch as the incorporation of a company brings a new legal entity into existence, and its extinction cannot indeed be a unilateral process, but then registration under section 12AA does not bring into existence any legal entity or even a legal entitlement; all it does is to provide for a minimum qualification for entitlement to exemption under section 11 which must depend on a large numb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for exemption under section 11, it is power, as indeed duty, of the Commissioner to cancel the said registration and that power of the Commissioner is not dependent on the assessee having powers, under the trust deed, to seek cancellation of registration. On this aspect of the matter also, we are unable to find ourselves in agreement with the learned ASG. 67. It is difficult to understand on the first principles, much less approve, any legitimate justification for the income tax authorities to insist that the assessee must have continue with the registration under section 12A when the assessee does not want it. It is nobody s case that there were certain specific obligations on the part of the assessee which the assessee must perform as a quid pro quo for the registration per se. Whatever obligations a charitable institution has towards the income tax authorities, these obligations are a quid pro quo for exemption and not a foundational requirement for the exemption. All these things are, however, academic in the light of our findings that the Commissioner had the duty, much more than the power, to cancel the registration under section 12A upon the fact of admitted violat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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