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TMI Blog2024 (7) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... f the order of ld CIT(E) clearly shows that the reasons given for the show cause notice are the reasons which are considered by the Assessing Officer in the assessment order for the assessment years 2013-14 2014-15. The assessee has also given reply to various issues in the show cause notice. In any case, the show cause notice for cancellation of registration having been issued on 6.10.2022, ld CIT (E) could not have cancelled registration retrospectively w.e.f 1.4.2014 insofar as the provisions of section 12AA/12AB does not provide for the cancellation of registration with retrospective effect. on perusal of provisions of section 12AB(4) of the Act shows that the said provision has been substituted by the Finance Act, 2022 w.e.f. 1.4.2022. Before 1.4.2022, the registration could have been cancelled u/s. 12AB(5). However, the provisions of section 12AA and Section 12AB came into effect from 1.4.2015. Before that registration was done under section 12A of the Act. One needs to understand that the provisions of section 12A of the Act was amended to 12AA and then 12AB because registration scheme for Trust was to corollary to claim file and smile i.e. to file the registration as admitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f assessment order for the assessment years 2013-14 and 2014-15. It was the submission that this assessment was on account of reopening done on the basis of Investigation report dated 7.2.2020/13.2.2020. It was the submission that when the assessee was granted registration on 5.4.2022, the said investigation report was very much available and the fact that the registration had been granted to the assessee even when the investigation report existed itself showed that the investigation report was a make belief document and it had no sanctity or relevance to the evidence. It was the further submission that in any case, the retrospective cancellation is not permissible in view of the decision of the Co-ordinate Bench of Bangalore Tribunal in the case of Amala Jyothi Vidya Kendra Trust vs Pr. CIT (2024) 206 ITD 601 (Bang). 4. In reply, ld CIT DR vehemently supported the order of ld CIT(E) cancelling registration u/s. 12AA of the Act. It was the submission that the assessee has been misusing the funds received under the guise of donation which was evident from the investigation report. It was the submission that the order of ld CIT(E) cancelling the registration is liable to be upheld. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, other than for the objects of the trust or institution; or b) The trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books 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 ensure 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 carried out by the trust or institution (i) is not genuine, or (ii) is not 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, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry in order to satisfy himself about the occurrence or otherwise of any specified violation; ii. ii. pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; iii. iii. pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; iv. iv. forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation: For the purposes of this sub-section, the following shall mean specified violation ,- - a) Where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or b) The trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cardinal principle of the tax law that law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication . 6.5 In the case of Karimtharuvi Tea Estate Ltd. Vs. State of Kerala reported in 51 ITR 129 (SC) the same view was taken by the Hon ble Supreme Court. 6.6 Further, the Hon ble Supreme Court in the case of Shree Chowdhary Transport Company Vs. ITO reported in 426 ITR 289 (SC) wherein held as under: 17.4 It needs hardly any detailed discussion that in income-tax matters, the law to be applied is that in force in the assessment year in question, unless stated otherwise by express intendment or by necessary of implication. As per section 4 of the Act of 1961, the charge of income-tax is with reference to any assessment year, at such rate or rates as provided in any central enactment for the purpose, in respect of the total income of the previous year of any person. The expression previous year is defined in section 3 of the Act to mean the financial year immediately preceding the assessment year ; and the expression assessment year is defined in clause (9) of section 2 of the Act to mean the period of twelve months commencing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing these principles to the case at hand, we are clearly of the view that the provision in question, having come into effect from April 1, 2005, would apply from and for the assessment year 2005-06 and would be applicable for the assessment in question. Putting it differently, the Legislature consciously made the said sub-clause (ia) of section 40(a) of the Act effective from April 1, 20056, meaning thereby that the same was to be applicable from and for the assessment year 2005-06; and neither there had been express intendment nor any implication that it would apply only from the financial year 2005- 06. 6.7 Being so, we find force in the argument of ld. A.R. that in income-tax matters, law to be applied is the law in force in the assessment year unless otherwise stated or implied. In the present case, ld. PCIT is cancelling the registration granted u/s 12AA/12AB of the Act w.e.f. previous year 2020-21 relevant to assessment year 2021-22. In our opinion, the law as stated in the assessment year 2021-22 is to be applied and not the law as stood in the assessment year 2022-23. 6.8 Thus, we are of the view that no retrospective cancellation could be made u/s 12AB(4)(ii) of the Act as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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. 6.10 It is noted that coordinate bench of this Tribunal in both assessee s case for AY 2021-22 has taken similar view and as quashed the retrospective applicability of the new amended provision u/s 12AB(4)(ii) of the Act. We also note that same view has been taken by Coordinate bench of Mumbai in the case of Heart Foundation of India in ITA No.1524/Mum/2023 vide order dated 17 27.7.2023, wherein held that registration granted u/s 12A of the Act dated 21.7.1989 cannot be cancelled by ld. PCIT (Central) vide order dated 6.3.2023 w.e.f. assessment year 2016-17, by invoking the provisions of section 12AB(4)(ii) of the Act. Accordingly, we allow the primary ground nos.2, 3, 5 12 and order of ld. PCIT passed u/s 12AB(4)(ii) of the Act is quashed. 6. Further, on perusal of provisions of section 12AB(4) of the Act shows that the said provision has been substituted by the Finance Act, 2022 w.e.f. 1.4.2022. Before 1.4.2022, the registration could have been cancelled u/s. 12AB(5). However, the provisions of section 12AA and Section 12AB came into effect from 1.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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