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TMI Blog2024 (6) TMI 1280X X X X Extracts X X X X X X X X Extracts X X X X ..... been provided or is seen to have explicitly provided to have a retrospective character or intended. Therefore, without a specific mention of the amended provisions to operate retrospectively, no cancellation for the earlier years could be made. As decided in case of Auro Lab Ltd [ 2019 (1) TMI 1478 - MADRAS HIGH COURT ] PCIT has cancelled the registration under the new provisions of the Act i.e. 12AB(4)(ii) of the Act, which specifically provides that cancellation can be done for such previous year and all subsequent previous years, which makes it clear that the cancellation cannot be retrospective, therefore, in view of the above discussion, we are of the opinion that cancellation of registration with retrospective effect is invalid in these cases. Since the ld. PCIT invoked the provisions of section 12AB(4)(ii) of the Act, which has been introduced by the Finance Act, 2022 w.e.f. 1.4.2022 so as to cancel the registration with retrospective effect from assessment year 2018-19, which is bad in law. Also in the case of Heart Foundation of India [ 2023 (8) TMI 1063 - ITAT MUMBAI ] wherein held that registration granted u/s 12A of the Act dated 21.7.1989 cannot be cancelled by ld. PC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on in accordance with objects of the trust or institution and therefore the circumstances contemplated u/s.12AA(4) of the act were not satisfied, eventually there was no case of cancellation of registration u/s. 12AA(4) of the act. 6. The learned Pr. Commissioner of Income Tax (Central), Bengaluru has erred in acting on a reference made under the third proviso to the provisions of section 143(2) of the act Ignoring the fact that, the proviso invoked was introduced by Finance Act 2022 w.e.f. 01.04.2022 and therefore was not applicable for the A.Y.2018-19. 7. The learned Pr. Commissioner of Income Tax (Central), Bengaluru has erred in availing the extended the time limit for conclusion of assessment as provided for under explanation1 (xiii) below the provisions of section 153(9) of the act which was introduced by Finance Act, 2022 w.e.f 01.04.2022 and is in the context of the provisions of section 12AB(4)(ii) of the act which was also introduced by Finance Act, 2022 w.e.f 01.04.2022 and were not applicable for the A.Y.2018-19 and hence the order passed is beyond the time limit and deserves to be annulled. 8. The learned Pr. Commissioner of Income Tax (Central), Bengaluru erred in i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st amended provisions cannot be invoked, implying that, for the A.Y.2018-19 the provisions of 12AA(4) are to be invoked and not the provisions of 12AB(4)(ii) of the act. 13. The learned Pr. Commissioner of Income Tax (Central), Bengaluru erred in not following the ratio laid down by High Court of Gujarath in the case of Commissioner of Income Tax, Gandhinagar Vs. Gujarath Maritime Board (2021) 123 Taxmann.com 35 (Guj) confirmed by SC in (2022) 143 Taxmann.com 278 (SC) (and also Director of Income Tax (Exemption) V. North Indian Association (2017) 79 Taxmann.com 410 (Bombay) Commissioner of Income Tax (Exemptions) V. Mumbai Metropolitan Region Development Authority (2020) 115 Taxmann.com 71 (Bombay)], wherein it is held that, for the reasons not provided for in the provisions of section 12AA(3) of the act which was in existence at that point of time and presently 12AB(4) of the act, the registration granted to the trust cannot be cancelled. 14. The learned Pr. Commissioner of Income Tax (Central), Bengaluru erred in not following the ratio laid down by the Mumbai Tribunal in the case of Lilavati Kirtilal Mehta Medical Trust V. Commissioner of Income Tax (central)-l, Mumbai (2019) 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bserve the rule of law and self-restraint. (xii) To bring out, encourage and develop the inventive and research faculties of the pupils and teachers and to afford opportunity for research work in art, science and industrial undertakings. (xiii) To encourage, assist, support and facilitate students to continue their education by giving scholarships, financial aid, and any other kind or aid or facility. (xiv) To establish, manage or administer professional schools and colleges and to take over any other educational institution or Trust or society or organisation absolutely or for the purpose of management and administration, to achieve its objects. 2.1 M/s. Adarsh Vidya Kendra Trust has been registered u/s 12AA of the Act by the Director of Income Tax (E), Bengaluru vide No. DIT(E) BLR/12AA/A1188/AABTA4093L/ITO(E)-1/Vol./2010-11 dated 27.10.2010 w.e.f assessment year 2011-12. Similarly, Amala Jyothi Vidya Kendra Trust has been registered by the Director of Income Tax (E), Bangalore vide No. DIT(E)/BLR/12A/A- 1104/AANBTA9843Q/E-1/(2007-08) dated 28.11.2007. 2.2 Further, in the case of Adarsh Vidya Kendra Trust, due to amended provisions of the Act w.e.f. 1.4.2021 requiring registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in appeal before us. 3. The first ground is general in nature, which do not require any adjudication. 4. Next grounds for our consideration in ground Nos. 2, 3, 5 12 are with regard to cancelling registration granted u/s 12AA/12AB of the Act by invoking the provisions of section 12AB(4)(ii) of the Act with retrospective effect though this section was introduced by Finance Act, 2022 w.e.f. 1.4.2022. 4.1 The ld. A.R. submitted that there has been various amendments to the provisions dealing with cancellation of registration granted U/s.12AA of the Act. The Pr. Commissioner of Income Tax (Central) has cancelled registration U/s.12AA of the Act invoking the provisions of section 12AB(4)(ii) of the Act alleging violations contemplated in Explanation (a) Explanation (e) below the provisions of section 12AB(4) of the act. This provision of the Act which is extracted hereunder and invoked by the Pr. Commissioner of Income Tax (Central) for cancellation of registration granted U/s.12AA of the Act was introduced by Finance Act 2022 w.e.f 01.04.2022. 4.2 He submitted that prior to introduction of this provision, the following provision was in existence which was introduced by Finance Act 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the assessee of the various benefits which otherwise accrue and hence the provisions are to be considered as in the nature of punishment. 4.5 The ld. A.R. submitted that, the order passed by the Pr. Commissioner of Income Tax, invoking provisions of section 12AB(4)(ii) of the Act dated 29.12.2023 is bad in law and deserves to be annulled. 5. On the other hand, the ld. D.R. submitted that the ld. PCIT cancelled the registration granted to the assessee u/s 12AA/12AB of the Act vide order dated 29.12.2023. As such, provisions of section 12AB(4) of the Act as stood on this date has been applied and there is no error in applying the provisions of section 12AB as substituted by Finance Act, 2022 w.e.f. 1.4.2022. He supported the order of ld. PCIT (Central). 6. We have heard the rival submissions and perused the materials available on record. The main contention of the ld. A.R. is that the ld. PCIT cancelled the registration granted to the assessee w.e.f. the previous year i.e. 2017-18 relevant to assessment year 2018-19 by applying the provisions as stood on 29.12.2023, which cannot be applied for the violations of the provisions of section 12AA or 12AB of the Act. According to the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 12A [as it stood before its amendment by the finance (No.2) Act, 1996 (33 of 1996)] 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 section 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 Pr. Commissioner or the Commissioner may by an order in writing cancel the registration of such trust or institutions. Provided, that the registration shall not be cancelled under this subsection if the trust or institution proves that, there was reasonable cause for the activity to be carried out in the said manner. 6.2 This section has been amended by Finance Act, 2022 w.e.f. 1.4.2022 as follows: 12AB(4): Where registration or provisional registration of a trust or an institution has been granted under clause (a) or clause (b) or clause (c) of sub- section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,-- a) The Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rust 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 non-compliance has occurred, has either not been disputed or has attained finality. 6.3 As per section 12AB(4) of the Act as applicable to assessment year 2017-18, the ld. PCIT if he is satisfied that activities of the Trust or institution are not genuine or not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution after affording reasonable opportunity of being heard. As per section 12AB(5) of the Act, when trust or institution complied wholly or in part of the income of such trust or institution in violation of section 13(1) of the Act or if they complied with any other law, for the time being in force by the trust or institution as are material for the purpose of achieving its objectives as mentioned in section 12AB(1)(b)(ii)(B) of the Act. However, in the present case, the ld. PCIT invoked the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force The High Court has, however, relied upon a decision of this court in CIT v. Isthmian Steamship Lines, where it was held as follows: It will be observed that we are here concerned with two datum lines: (1) the 1st of April, 1940, when the Act came into force, and (2) the 1st of April, 1939, which is the date mentioned in the amended proviso. The first question to be answered is whether these dates are to apply to the accounting year or the year of assessment. They must be held to apply to the assessment year, because in income-tax matters the law to be applied is the law in force in the assessment year unless otherwise stated or implied. The first datum line therefore, affected only the assessment year of 1940-41, because the amendment did not come into force till the 1st of April, 1940. That means that the old law applied to every assessment year up to and including the assessment year 1939-40. This decision is authority for the proposition that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he courts reasoned that even when Parliament had plenary powers to enact retrospective legislation in matters of taxation, the amended section is not seen to have explicitly provided to have a retrospective character or intend. Therefore, without a specific mention of the amended provisions to operate retrospectively, the cancellation cannot operate from a past date. 21 On the third question of the effective date of operation of the cancellation order, it was held that the cancellation will take effect only from the date of the order/notice of cancellation of registration. Since the act of cancellation of registration has serious civil consequences and the amended provision is held to have only a prospective effect the effect of cancellation, in' the event the pending tax appeal is decided in favour of the Revenue, will operate only from the date of the cancellation order, that is December 30, 2010. In other words, the exemption cannot be denied to the petitioner for and up to the assessment year 2010-11 on the sole ground of cancellation of the certificate of registration. 6.9 In this case, the ld. PCIT has cancelled the registration under the new provisions of the Act i.e. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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