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TMI Blog2021 (3) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... urisdiction 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 10.12.1990, it was merely communicated that the name of the Trust was entered at TR/27966 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 registration by the Appellant vide its letter dated 19.02.2015 filed on 19.02.2015 is not valid and cannot be given effect to as there is no provision under law for acceptance of such surrender. The PCIT erred in not appreciating that the Appellant is entitled to surrender the registration under section 12A of the ITA as there is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . c) The PCIT failed to appreciate that multiple SCNs were issued to the Appellant on various dates by the CIT(E) (10.03.2015 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 10.03.2015 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 incumbent. e) The PCIT ought to have held that the impugned order passed under section 12AA(3)/(4) of the ITA, cancelling the registration of the Appellant is effective from the: i) date of the surrender application i.e. 19.02.2015 filed on 19.02.2015. Without prejudice, date of the issue of the initial SCN for cancelling registration i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax -17, dated 31st October 2019, is barred by limitation inasmuch as it passed after an unreasonable time from the date of alleged default as well as surrender application filed by the appellant, and the first show cause notice issued by the (income tax) department in this regard. 4. Learned representatives fairly agree that whatever we decide in ITA No 7238/Mum/2019, in the case of Navajbai Ratan Tata Trust vs PCIT which was heard alongwith this set of appeal, will apply mutatis mutandis in this case as well. 5. Vide our order of even date, we have in the case of Navajbai Ratan Tata Trust vs PCIT, observed as follows:- 5. To adjudicate on this appeal, only some of the relevant facts need to be taken note of. The assessee before us is a trust settled by way of the trust deed dated 23rd December 1974, with its main objects including "the advancement of education, learning and industry in all its branches including in economy, sanitary science and arts, or for the relief of human suffering or for any other works of public utility". Shri Ratan Naval Tata and late Shri N A Palkivala were the founder trustees of this trust. A copy of this trust deed is placed before us at pages ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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. We request you to kindly take note of the above an oblige. Thank you, Yours sincerely, On behalf of the Board of Trustees Trustee 7. Promptly, the Commissioner of Income Tax concerned took note of the above communication, and issued a show cause notice as to why the registration under section 12 A not be cancelled, which is exactly what the assessee trust had prayed for. This communication, dated 13th March 2015, reads as follows: No CIT(E)/12AA/Withdrawal-16/14-15 Date: 13.3.2015 The Trustee Navajibai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 Sir, Sub: Show cause for withdrawal/ cancellation of registration under section 12AA in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earing did take place on 20th March 2015. The record of proceedings on that day, as recorded in the office of the Commissioner of Income Tax (Exemptions) is as follows: Shri Dilip Thakkar, CA, attended, alongwith Ms R Savaksha and Shri B S Taraporewala, and relied on letter dated March 11. Heard. Sd/xx D J T Sd/xx B S T Sd/xx R S Sd/xx CIT (E) 9. There was a long pause thereafter. Even tough the hearing was concluded on 20th March 2015, as evident from the remark "Heard" which is invariably followed by a formal order in respect of the hearing, the assessee did not receive any further communication from any of the income tax authorities in this regard. In the meantime, the assessee had filed its return of income for the assessment year 2015-16 on 27th August 2015 in which the assessee did not claim the exemption under section 11. The assessee claimed exemption of dividend under section 10(34), as is normally admissible, in respect of the dividends from the domestic companies. On 24th May 2016, the assessee, once again sent a communication to the Commissioner of Income Tax concerned placing on record his understanding that with his surrender of registration, he is not requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017-18/1 Date: 08/03/2018 Navajibai Ratan Tata Trust Bombay House, Homi Mody Street Mumbai 400 001 Sir, Sub: Show cause for cancellation u/s 12AA of registration granted under section 12A to Navajibai Ratan Tata Trust- reg- Kindly refer to the above. 2. Navajibai Ratan Tata Trust was granted registration under section 12 A of the Income Tax Act, by the Commissioner of Income Tax, Bombay City-IV, Bombay vide registration no. TR/10925 dated 15.03.1976 3. However, it is seen from the records that you have violated statutory obligations as regards the mode of investment of your fund as per section 11(5) of the Income Tax Act, 1961 and further consistently been hit by the Section 13(1)(d) and 13(2)(h) of the Income Tax Act, 4. In view of the above, you are requested to show cause as to why the registration granted under section 12A of the Income Tax Act to you, as mentioned above, should not be cancelled. You may appear before the Pr CIT-17 Mumbai on 14.03.2018 at 11.30 AM either in person or through the Authorized Representative. Yours truly, Pr CIT-17, Mumbai 12. The assessee, alongwith five other similarly placed assessee trusts- namely R D Tata Trust, Tata So ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Copy of the said letter dated 11.03.2015 is enclosed at page 42 to 43 of the PB, the show cause notice dated 13.03.2015 is enclosed at page 44 to 45 of the PB and a copy of the order Sheet of hearing on 20.03.2015 before CIT(E) is enclosed at page 46. Thus, the Trust submits that it has already surrendered the registration in 2015. iv) Pursuant to the surrender in 2015, the Trust filed its income tax return without claiming exemption under section 11 and 12 of the ITA. v) The surrender of registration was accepted by the CIT(E) which is evident from the fact that the Trusts file was transferred by CIT(E) to the PCIT-17 vide letter dated 28.11.2017. vi) It is pertinent to note that subsequently the case records of the Trust with respect to the assessment were transferred to the Assessing Officer under your Honor's jurisdiction vide letter dated 07.12.2017 and Trust has been assessed by the non-exemption ward thereafter. vii) The above shows that surrender/ cancellation has been accepted and the same has been consistently reflected in the department's own actions. 14. None of these submissions, however, impressed the respondent Principal Commissioner of Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner no longer desires to retain them. Of that great multitude of rights and duties of which the adult member of a civilised community stands possessed, the great majority have their origin in agreements made by him with other men. By agreements of contrary intent he may strip himself almost as destitute of rights and duties, as when in the scantiest of juridical vesture he made his first appearance before the law. Invito beneficium non datur, said the Romans; and the maxim is fundamental." (page 375) "Invito beneficium non datur- The law confers upon a man no rights or benefits which he does not desire. Whoever, waives, abandons or disclaims a right will lose it." (page 642) 16. Our attention is then invited to certain extracts from the well-known book 'Interpretation of Statutes' authored by Maxwell, which are reproduced below for ready reference: "Another maxim which sanctions the non-observance of a statutory provision, is that cuilibet licet renuntiare juri pro se introducto. Every one has a right to waive, and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual, in his private capacity (b), and which may be dispen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court: "The general principle is that every one has a right to waive and to agree to waive the advantage of a law or rule made solely for the benefit and protection of the individual in his private capacity which may be dispensed with without infringing any public right or public policy. Thus the maxim which sanction the non- observance of the statutory provision is cuilibet licat renuntiare juri pro se introducto. (See Maxwell on Interpretation of Statutes, Eleventh Edition, pages 375 & 376). If there is any express prohibition against contracting out of a statute in it then no question can arise of any one entering into a contract which is so prohibited but where there is no such prohibition it will have to be seen whether an Act is intended to have a more extensive operation 'as a matter of public policy. In Halsbury's Laws of England, Volume 8, Third Edition, it is stated in paragraph, 248 at page 143. "As a general rule, any person can enter into a binding contract to waive the benefits conferred upon him by an Act of Parliament, or, as it is said, can contract himself out of the Act, unless it can be shown that such an agreement is in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... celling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. (4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A and subsequently it is noticed that the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of section 13, then, the Principal Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institution: Provided that the registration shall not be cancelled under this sub-section, if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner. [Emphasis, by underlining, supplied to highlight the plea of the assessee] 22. Learned counsel submits that while section 12AA( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s statutory duty cannot prejudice the assessee. Reliance is placed on the judicial precedents in the cases of Kusheshwar Prasad Singh Vs State of Bihar [(2007) 11 SCC 447 (SC)], CIT Vs TVS Electronics Ltd ( TCA No 1457 of 2008; serial 38 of the legal paper book) and Strides Acrolab Ltd Vs ACIT [(2015) ITA No. 1727/Mum/2006; serial 39 of the legal paper book]. 25. Learned counsel's next contention is that one is to proceed on the basis that until the registration under section 12 A is cancelled by the Commissioner, it will continue to bind the assessee, it will result in an absurdity inasmuch as an assessee will have to deliberately commit a breach, as contemplated in section 12AA(3) or (4) so as to give the Commissioner an occasion to cancel the registration. That is clearly incongruous and could never have been intended by the legislature. 26. Learned counsel further submits that under the scheme of Section 12A, as it then existed and quite in contrast with the scheme of Section 12AA introduced by the Finance Act 1996, there was no requirement for the Commissioner being satisfied about genuineness of the activities of the trust and the requirement of registration was satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d but a benefit coupled with obligations, and, is elementary, obligations cannot be unilaterally waived or surrendered. It is then contended that assuming whilst denying that a unilateral surrender is permitted under the statute, even then letter dated 11th March, 2015 is not and does not amount to a surrender of registration and that there is no power of surrender provided for in the Trust Deed. It is then further contended that assuming whilst denying that a unilateral surrender is permitted under the statute and that the letter dated 11th March, 2015 amounts to a purported surrender which the Trust Deed permitted, even then the purported letter is not bona fide but written for collateral/oblique purposes and hence, invalid. It was therefore, according to the learned Additional Solicitor General, necessary, to issue a show cause notice and after giving due opportunity to the Assessee to respond to the same, pass a reasoned Order as has been done in the instant case. 29. Learned ASG contends that the registration under section 12A does not amount to a benefit simplicitor to the assessee. His line of reasoning is as follows. It is submitted that as would be evident on a bare peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of rendering such charitable services. Therefore, according to the learned ASG, it is evident that the registration of a Trust under the provisions of the Act also carries with it responsibilities and obligations. It is, for example, an obligation on the part of a registered charitable Trust to utilize the exempt income for specified purposes, and even if Trust funds are accumulated for future, the accumulated money is required to be used for charitable purposes and be invested as per the Act- as is the scheme of Section 11 to 13. Therefore, unlike in the case of CIT vs. Mahendra Mills (supra) relied on by the appellant, grant of registration cannot be regarded as mere grant of a right comparable to grant of depreciation allowance which is a benefit available to all assessee. The concept of depreciation is clearly distinct and different from that of registration as a charitable trust, and, for this reason, what is held in the case of Mahendra Mills (supra) would not be applicable in the present context. 30. It is then contended that while the assessee has an option to claim or not to claim the benefit of Section 11, as it is optional, but then, once a registration is granted, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 25 of the Companies Act, 1956), such company cannot unilaterally convert itself to a private company. Section 8(4)(i) expressly provides for permission of the Central Government before such conversion and detailed Rules have been prescribed for such conversion which include several disclosures to show due compliance of the law whilst having been registered as a Section 8 Company and obtaining NOC's from other authorities as well. Our attention is drawn to Rule 21 and 22 of the Companies Incorporation Rules, 2014. Hence, it is not as if a company having taken the benefits of being a charitable institution can unilaterally surrender or convert the same. Such conversion is subject to the express provisions of the Companies Act, 2013. Failure to perform or deliberate violations cannot be brushed aside by surrendering the registration unilaterally as is attempted to be done. If this is allowed, it would result in Trusts registering themselves on the pretext of charitable purposes, then carrying out commercial activities and upon being told to explain the wrongful use of the registration to claim exemptions (if exemptions were otherwise available), surrendering the registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay in Section 12AA(4), it is respectfully submitted does not buttress the Appellant's submission any further. Firstly, it is submitted that the provision would have to be read in its entirety and bearing in mind the above scheme of the statute of conferring not only a benefit but a benefit coupled with an obligation. Secondly, the proviso to Section 12AA(4) expressly uses the word 'shall' and not 'may'. Thus, it would be evident that the necessity of passing an "order in writing" is maintained and is not diluted as urged by the Appellant. 5. It is therefore respectfully, submitted that there is no power for unilateral surrender provided for in the Act. 33. It is contended that the above submission is even buttressed by the clear legislative mandate of an Order in Writing being passed to cancel the registration. Hence, the legislature has consciously provided for an order of cancellation to be passed and not permitted a unilateral act of surrender. 34. It is contended that the appellant on its own considered it necessary to have the formal cancellation order as necessary as would be evident on a bare perusal of the letter dated 11th March, 2015. The letter date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at an enquiry into these issues would be not only relevant but it is respectfully, submitted mandatory to ensure that no Assessee uses the provisions permitting for registration as an unlawful device to make gains in the name of charitable purpose and then surrenders the same to avoid being penalised for the violations, if any. 36. On the strength of these submissions, learned ASG reiterates that a unilateral surrender is neither envisaged under the Act nor can it be permitted since registration is not a simplicitor benefit but a benefit coupled with obligations. 37. It is then pointed out that the letter dated 11/03/2015 sent by the Trust to Commissioner of Income tax (Exemptions), Mumbai admits that there has been a violation and hence, states that they would no longer seek exemption. The letter expressly records that, "Accordingly, the Trustees do not desire to continue to avail the benefits of the 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e not in accordance with the objects of the Trust Deed. The trustees have no authority whatsoever to withdraw or surrender the registration granted under section 12A of the Act, since no such power is vested with them in the Trust Deed. On the contrary, they have to ensure that all the conditions required for the exemption of the income as per the provisions of Income Tax Act currently in force, is always ensured by the trustees. The conscious decision of the trustees not to claim exemption under sections 11 and 12 of the Act w.e.f. A.Y. 2015-16 (as per their ITRs filed) rather than to correct their default of holding the impermissible investments or prohibited modes of investment, shows their disregard to the objects of the Trust Deed as well as to the provisions of Income Tax Act. The aforesaid wilful / conscious activities carried out by the trustees are against the basic objects of the trust within the meaning of the provision of section 12AA(3) of the Act. It is also contended that in the present case, the purported surrender on 11th March, 2020 was not genuine but merely an attempt to escape liability for past wrongdoings and as such a letter addressed for collateral and/or o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... much before the said surrender letter, categorically observed that investments of the trusts are in violation of Section 13, and, therefore, it was not the generousity of the assessee to have triggered this surrender of registration. It was then contended that the cancellation cannot be retrospective in effect and must take effect from the date of the order. It was also pointed out that fresh show cause notice was issued as the assessee had objected to the earlier show cause notice. Learned ASG thus submits that the respondent Principal Commissioner was justified in cancelling the trust registration, by way of the impugned order, and in disregarding the so called unilateral surrender of registration granted to the assessee under section 12A. We are thus urged to uphold the impugned order and decline to interfere in the matter. Learned ASG vehemently opposes admission of the additional ground of appeal as it would require reference to many facts of the case which are not already on record. He submits that what is an inordinate delay, and what is not an inordinate delay, is essentially a factual question which cannot be agitated at this stage. In any case, such an investigation would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in March 2015. Learned counsel once again submits that when benefit can be given, without any pre-conditions, as was given to the assessee under section 12A, there cannot be any question of attaching any preconditions thereto while assessee surrendering the said benefit. He once again invites our attention to Section 115 BAB and the scheme of the said provision which specifically puts a bar on giving up the said benefit once availed. In the absence of such a scheme of law, the same cannot be inferred in Section 12 A. Learned counsel once again reiterates his submissions, points out that his contentions remain unaddressed and submit that we must hold the cancellation to be effective from 11th March 2015. 40. We have given our careful consideration to submissions made by Shri P J Pardiwala, learned senior counsel for the assessee, as also by Shri Anil C Singh, learned Additional Solicitor General of India. We have also carefully perused the material on record and duly considered facts of the case in the light of the applicable legal position. Our analysis: 41. It is only elementary that the registration under section 12A of the Income Tax Act, 1961 is a foundational requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 12A. This sub section provides as follows: (7) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) of section 12AA or has obtained registration at any time under section 12A, as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996), and the said registration is in force for any previous year, then, nothing contained in section 10, other than clause (1) and clause (23C) thereof, shall operate to exclude any income derived from the property held under trust from the total income of the person in receipt thereof for that previous year. [Emphasis, by underlining, supplied by us] 45. The manner in which the above provision has been construed is this. As long as the assessee trust is registered as a charitable institution, by obtaining registration under section 12A or by being granted registration under section 12AA(1)(b), the assessee will not be entitled to any of the exemptions, barring under section 10(23C)(1), under section 10 of the Act. That is how this provision has been construed by the income tax authorities. Without going into the validity of that approach, which is not the subject matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g given benefit of tax exemption. It is therefore imperative that once a person voluntarily opts for the special dispensation it should be governed by these specific provisions and should not be allowed flexibility of being governed by other general provisions or specific provisions at will. Allowing such flexibility has undesirable effects on the objects of the regulations and leads to litigation. 47. Clearly, therefore, the amendment was brought in to ensure that the assessee does not have the benefit of choice between special provisions and general provisions. Once an assessee, to borrow the words used in the circular, "voluntarily opts for the special dispensation, it should be governed by these specific provisions and should not be allowed the flexibility of being governed by other general provisions or specific provisions at will". The intention of the legislature was thus unambiguous; all that the legislature intended was to eliminate the unfettered choice between the general exemption and the specific exemption. However, the way this provision is being interpreted by the income tax authorities is that once an assessee is a registered charitable institution, irrespective o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-clause (vi) or sub- clause (via) of clause (23C) of section 10, within a period of twelve months from the end of the month in which the dissolution takes place, then, in addition to the income-tax chargeable in respect of the total income of such trust or institution, the accreted income of the trust or the institution as on the specified date shall be charged to tax and such trust or institution, as the case may be, shall be liable to pay additional income-tax (herein referred to as tax on accreted income) at the maximum marginal rate on the accreted income. (2) ............................ 50. This additional tax burden would not come into play in case the deregistration is with effect from the date on which the registration is claimed to have been surrendered i.e. 19th February 2015, the date on which the hearing in this respect is concluded by the Principal Commissioner of Income Tax, i.e. 20th March 2015, or even when it is taken as within a reasonable period from the date of conclusion of this hearing, say within 365 days from the date of closing the hearing i.e. 20th March 2016. Therefore, the date of cancellation of registration has an important bearing on this tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vs Patel Brothers & Co Ltd [(1995) 215 ITR 165 (SC)], Hon'ble Supreme Court has observed that The CBDT circular conveying "departmental understanding of the effect of the 1999 amendment even if it were assumed not to bind the respondents under section 119 of the Act, nevertheless affords a reasonable construction of it, and there is no reason why we should not adopt it". In the case of K P Verghese (supra), Hon'ble Supreme Court has observed that the "circulars of the CBDT are, as we shall presently point out, binding on the tax department in administering or executing the provisions enacted in subsection (2), but quite apart from their binding character, they are clearly in the nature of contemporanea expositio furnishing legitimate aid in the construction of sub-section (2). The rule of construction by reference to contemporanea expositio is a well-established rule for interpreting a statute by reference to the exposition it has received from contemporary authority, though it must give way where the language of the statute is plain and unambiguous". Quite clearly, therefore, the CBDT circulars, as an aid for interpretation of the law as also as a binding authority on the field au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of any trust or institution after the expiry of the period aforesaid; (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of section 11 and section 12 exceeds twenty- five thousand rupees in any previous year, the accounts of the trust or institution for that year have been audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and the person in receipt of the income furnishes along with the return Of income for the relevant assessment year the report of such audit in the prescribed form duly signed and verified by such accountant and setting forth such particulars as may be prescribed.". 56. Clearly, therefore, registration under section 12A was a condition precedent for availing section 11 exemption. An exemption is clearly in the nature of a benefit, and, therefore, meeting a precondition for exemption is also a benefit. The registration under section 12A did not put the assessee under any obligation to do, or refrain from doing, anything. It was so for the reason that even if someone has registration under section 12A, and yet it does not perform any charitable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efit simplictor but is coupled with an obligation to perform, and regulate, its philanthropic activities in a particular way. In his written note, learned ASG gives an example and states that "It is, for example, an obligation on the part of a registered charitable Trust to utilize the exempt income for specified purposes, and even Trust funds are accumulated for future, the accumulated monies are required to be used for charitable purposes and be invested as per the provisions of the Act (See Section 11 to 13)". These obligations, however, are vis-à-vis the exemption under section 11 and not vis-à-vis registration under section 12A. An assessee may be registered under section 12A and yet it may not claim an exemption under section 11, and, in such a situation, all these provisions relied upon by the learned ASG do not come into play. The registration under section 12A does not, therefore, put any such obligations on the assessee. It is an exemption under section 11, which puts these obligations on the assessee, but that is not the issue before us. Right now, we are only concerned about the implications of Section 12A. 58. Learned ASG has repeatedly stated that "reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it does not wish to avail that benefit for some reason, benefit cannot be forced upon him" and that "It is rightly said that privilege cannot be a disadvantage and an option cannot become an obligation" which will apply, with equal vigour, in the present context, we are also of the considered view that the registration under section 12A cannot be thrust upon an unwilling assessee. 60. We have also noted that, on 11th March 2015, the assessee on his own had informed the assessee that on account of its investment pattern becoming incompatible with the amended provisions Section 13(1) and in view of the provisions of Section 12AA(4), the assessee is no longer eligible for the continuance of registration under Section 12A. Once the learned Commissioner "noticed" this position admitted by the assessee, it was his duty to pass an order in writing withdrawing the registration. For ready reference, the relevant legal provision, i.e. section 12AA(4), is being reproduced once again as below: (4) Without prejudice to the provisions of sub-section (3), where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise his authority in a manner appropriate to the case when a party interested and having a right to apply moves in that behalf and circumstances for the exercise of authority are shown to exist. Even if the words used in the statute are prima facie enabling the courts will readily infer a duty to exercise power which is invested in aid of enforcement of a right-public or private-of a citizen". While it was well within the notice of the Commissioner that it was a fit case for cancellation of registration obtained under section 12A and the assessee had informed, as also accepted, that position, learned Commissioner did not exercise his powers of cancellation. The Commissioner does not have a choice about taking or not taking a call in these proceedings. He had to take a call one way or the other in this matter. Such inaction on the part of the Commissioner simply cannot meet any judicial approval. What is done next is to ignore these proceedings without bringing them to a logical conclusion and start fresh proceedings, after a long gap, on a standalone basis, dehors the pending proceedings. That is equally impermissible. When the proceedings for cancellation of registration are pend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before us. In the present case, the assessee's acquiescing to the show cause notice dated 13th March 2015, which was formalized in hearing on 20th March 2015, itself should have brought an end to the matter. In this view of the matter, in our considered view, the cancellation of registration was thus required to be effective, at the most, from 20th March 2015. 62. We have also held that registration under section 12A, on the facts of this case and having been granted prior to 1st April 1997, was in the nature of a benefit to the assessee, and, therefore, it could not have been thrust upon an unwilling assessee. Be that as it may, this aspect of the matter is not really decisive, even if quite relevant, because as we have in the preceding discussion, once the Commissioner notices the admitted violation of Section 13(1), it was his duty, not only power, to cancel the registration granted under section 12A, and this has to relate back, at the minimum, to the date on which hearing in this matter was concluded. The inordinate delay in cancellation of registration, which is wholly attributed to the revenue authorities, cannot be placed to the disadvantage of the assessee. 63. As lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is that the assessee does not get exemption under section 11, and the assessee has no issues with that position. The discussions about these aspects in the impugned order are not really relevant inasmuch as it is not at all in dispute that the assessee is not eligible for exemption under section 11, and the assessee is content with that position. Any academic discussions about the nuances of this position at this stage is unwarranted. Of course, at the time of the related assessments or related proceedings, the Assessing Officer can deal with that those aspects of the matter. The trouble, however, is that given the complex web of legal developments, the cancellation is made effective from a later date the assessee is being put to a disadvantageous legal position and tax implications. If the assessee does not comply with the permissible mode of investment, for trusts what follows is the denial of exemption under section 11, but such a non-compliance cannot justify or legitimize the cancellation of registration being effected from a later date, than the date on which cancellation ought to have been effected, so as to put the assessee in a disadvantageous legal position w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 12A must be held to be effective from the date on which the hearing on first show-cause notice was concluded and the show cause notice issued by the Commissioner was formally acquiesced by the assessee in the said hearing, i.e., 20th March 2015, since, without disposing of the said matter, the Commissioner, or his successors, could not have started other parallel proceedings for cancellation of registration obtained under section 12A. The registration having been "obtained" under section 12A was in the nature of a benefit to the assessee, and it was, therefore, entirely at the option of the assessee. In our considered view, an assessee unwilling to avail the "benefit" of registration "obtained" under section 12A cannot be, directly or indirectly and by actions or by inactions, compelled by the revenue authorities, to continue with the said registration "obtained' by the assessee, particularly when it pertained to the registration obtained in a period prior to the insertion of section 12AA. The present cancellation of registration under section 12A must, therefore, be held to be effective from 20th March 2015. To this limited extent, we uphold the plea of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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