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TMI Blog2024 (6) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by CBDT, the order admittedly is non-est and is liable to quashed. However, the issue having been stayed by the Hon ble Supreme Court in the case of Brandix Maritius Holdings Ltd. [ 2024 (1) TMI 276 - SC ORDER ] this finding of the Tribunal quashing the order of CIT(Exemptions) dated 20.6.2023 on account of non-availability of DIN in the said order would stand suspended till the issue is decided by the Hon ble Supreme Court. Cancellation of Registration u/s 12AA - Previous Show Cause Notices and Proceedings - Scope of New Show Cause Notice issued - the activity of the assessee is a business activity or charitable activity? - The provisions of section 12AB(4) provide for the time limit in regard to passing of an order in respect of cancellation of the registration but the said provision refers to the first notice to be issued on or after 1st April, 2022. There is no saving provision in regard to the proceedings initiated prior to 1st April, 2022 and which admittedly being not calumniated into an order being served on the assessee. A perusal of the show cause notice issued by the ld CIT(E) on 6.10.2022 admittedly also does not refer to a show cause notice having been issued on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stration granted to the assessee stands quashed. As worthwhile to mention here that the ld CIT(E) mentions that the ITAT had sustained the order of the ld CIT(E) in respect of 263 order but this order of the Tribunal sustaining the order u/s. 263 by the ld CIT(E) has already been quashed by the Hon ble Jurisdictional High Court [ 2023 (8) TMI 337 - ORISSA HIGH COURT ], which is also extracted earlier. In these circumstances, the order cancelling the registration stands annulled on merits also. Appeal filed by the assessee stands allowed - SHRI GEORGE MATHAN, JUDICIAL AND MANISH AGARWAL, ACCOUNTANT MEMBER For the Appellant : Shri S.K. Agrawala, CA/S.K. Hota, Adv For the Respondent : Shri Sanjay Kumar, ld ORDER Per Bench 1. This is an appeal filed by the assessee against the order of the ld CIT dated 20.6.2023 u/s.12AB(4) of the Income tax Act. 2. The assessee has also filed stay petition No.12/CTK/2023 arising out of ITA No.358/CTK/2023. 3. Shri S. K. Agrawala, and Shri S.K. Hotala, ld ARs appeared for the assessee and Shri Sanjay Kumar, ld CIT DR appeared for the revenue. 4. At the time of hearing, ld AR submitted that he desires to withdraw the stay petition. Consequently, the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Number (DIN No.) and consequently in view of the circular issued by CBDT in Circular No.19/2019 dated 14.8.2019, the order was non-est. At this point, ld CIT DR submitted that the Hon ble Supreme Court in the case of CIT vs Brandix Maritius Holdings Ltd.,158 taxmann.com 247(SC) has stayed the issue of cancellation/annulment of an order on account of non-recording of DIN No. against the judgment of Hon ble Delhi High Court in the case of Brandix Maritius Holdings Ltd in 332 CTR 221(Del). 9. Admittedly, the circular issued by CBDT is binding on the authorities below and the ld CIT(Exemptions) is an authority under the CBDT. As the order passed by ld CIT(E) in the case of the assessee, has admittedly been passed without issuing a DIN, in view of the circular issued by CBDT, the order admittedly is non-est and is liable to quashed. 10. However, the issue having been stayed by the Hon ble Supreme Court in the case of Brandix Maritius Holdings Ltd(supra), this finding of the Tribunal quashing the order of CIT(Exemptions) dated 20.6.2023 on account of non-availability of DIN in the said order would stand suspended till the issue is decided by the Hon ble Supreme Court. 11. Ld AR furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c; e Society, please explain as tc why the registration granted u/s.12A of the IT Act, 1961, in your case, should not be withdrawn 12AA(3) of the Act. In this connection, I am directed to inform that you are required to appear before the Commissioner of Income Tax (Exemptions), Hyderabad at Camp office, Room No.407, Aayakar Bhavan, Annexe Building, Rajaswa Vihar, Bhubaneswar, Odisha along with relevant information/documents on 24.10.2016 at 2.15 PM, failing which, it will be presumed that you have no submissions to be made and appropriate orders would be passed. 12. It was the submission that the show cause notice was replied to. It was the submission that after the reply of the assessee on 24.10.2016, no action came to be taken in regard to cancellation of the registration and, therefore, it is to be deemed that the proceedings had been dropped. It was the submission that no specific order dropping the proceedings has been received by the assessee and that normally when proceedings are dropped, entries are passed in the order sheet and no communication normally comes to the assessee. It was the submission that in any case as the ld CIT(E) has not passed the order in regard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vis. Trib), the activity under consideration falls under the expression relief to poor as envisaged under section 2(15) of the Act. Therefore, in my considered view simply because an activity undertaken in commercial line in pursuance to furtherance of the object of society to poor does not make the activity non-charitable within the meaning of section 2(15) of the Act. In the circumstances, I do not find any good reason to interfere with the conclusion' of the Id CIT(A). Hence, this ground of the revenue is dismissed. 13. It was the submission that no further appeal has been filed by the Revenue against the orders of the Tribunal and the issue has attained finality. It was the submission that the next issue was in regard to donation to Aids Awareness Trust of Orissa. It was the submission that assessment u/s.143(3) in the case of Aids Awareness Trust of Orissa was done by the Assessing Officer on 26.12.2016 much after the survey and also much after the show cause notice originally issued by the ld CIT(E) on 18.10.2016. It was the submission that the ITO (Exemption), Ward, Bhubaneswar has passed the order in the case of Aids Awareness Trust of Orissa accepting the returned inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is revealed from MCA website that Sri Gobinda Chandra Pattnaik is also one of the Directors of M/s Annapuma Micro Finance Pvt Ltd. vi) It is noted that one of the object of assessee society is to promote and manage self held groups of poor women/men through their solidarity groups and raise loans for further on lending to them from various organisations like Rashtriya Mahila Kosh, SIDBI, NABARD, National and International Bank with a view to providing collateral free credit for suitable livelihood option to them. vii) Whereas analysis of the balance sheet of the assessee society depicts that the society has substantial borrowed funds in the form of loans from various banks/financial institutions and substantial amount of such borrowed funds has been invested to SHGs for giving loans by charging various charges. It is noted that while advancing loans, the assessee not only charges interest but collecting processing fee, membership fee etc which resulted in commercial surplus over the years. Such kind of micro finance activity cannot be termed as charitable activity rather than business activity. Although the assessee was involved in carrying out certain objects of general public ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or (c) the trust or institution has applied any part of its income from the property `held under a trust for private religious purposes, which does not endure for the benefit of the public; or (d) the trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or (e) any activity being earn to the trust or institution (i) is not genuine (ii) is nor being carried out in accordance with all or any of the conditions subject to which it was registered; or (f) the trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub- section (1), and the order, direction or decree, by whatever name called, holding that such noncompliance has occurred, has either not been disputed or has attained finality. In view of the facts stated above, I, am of the opinion that the assessee trust has violated the provisions of Sec. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply to the show-cause notice, where in paragraph 3.2 the assessee said it had again enclosed therewith, detailed list of donors along with their complete address and amounts of donations given by them as annexure-1. The paragraph is reproduced below. 3.2. That thereafter the Ld. Assessing Officer complied all the details filed by the assessee with the books of account and other documents impounded which were found to be in order, therefore did not make any additions or did not treated the corpus donations as anonymous donation and passed the assessment order u/s. 143(3) by accepting the returned income. For your kind perusal again herewith we are enclosing the detailed list of the donor along with their complete address and the amount of donations given by them as Annexure-1 (emphasis supplied) The Commissioner went on to only say, the assessee s reply had been considered but not found tenable. In the circumstances, we did not find a dispute regarding disclosure of identity of donors, their addresses and the amount of donations they had made to the assessee. This fact is sufficient for compliance of requirement under section 115-BBC(3), in claiming exemption of the donations from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as been amended and the ld CIT(E) could cancel the registration of such trust or institution after affording reasonable opportunity of being heard for such previous year and or subsequent previous year, as he satisfy that one or other specific violation had taken place. It was the submission that in the show cause notice the ld CIT(E) refers to the survey and details regarding violation of provisions of section 11 of the Act for the financial year 2013-14 and 2014-15. It was thus the submission that this was a reason why the ld CIT(E) had cancelled the registration w.e.f. 1.4.2014. It was the further submission that just because certain reliefs had been granted to the assessee by the appellate forums would not mean that all the violations as done by the assessee have been exonerated. It was the further submission that if at all the issues could be restored to the file of the ld CIT(E) for re- examination and passing appropriate orders. Ld CIT DR vehemently supported the order of the ld CIT(E). 19. We have considered the rival submissions. Admittedly, the proceedings for cancellation of the registration u/s. 12A to the assessee had been initiated by the ld CIT(E) as early as on 18.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which the ld CIT(E) has raised the show cause notice for the purpose of cancellation of registration u/s. 12A have already been decided by the Appellate Authority and same has also reached finality. The ld CIT(E) by his order dated 20.6.2023 being the impugned order has tried to unsettle issues which are already settled in the case of the assessee. This is not permissible. This being so, as it is noticed that all the issues on the basis of which, ld CIT(E) has cancelled the registration u/s. 12A granted to the assessee has already been settled by various appellate authorities on earlier occasion and the issue had reached finality, same cannot be used for cancelling the registration of the assessee. This being so, on merits also, the order passed u/s. 12AB(4) by the ld CIT(E) on 20.6.2023 cancelling the registration granted to the assessee stands quashed. 20. We are not going into the issue as to whether the registration can be cancelled retrospectively though we are of the view that retrospective cancellation w.e.f. 1.1.2014 is erroneous as we have already quashed the cancellation of registration. 21. It would also be worthwhile to mention here that the ld CIT(E) in para 8 of h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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