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2010 (9) TMI 1108 - AT - Income TaxCIT (A), Wrongly cancelled the registration granted u/s. 12AA - The facts and objects of the society are totally same both at the time of cancellation of registration and at the time of granting the registration - CIT has not brought anything on record to reflect that any one of the conditions u/s 12AA(3) is not satisfied by the society. HELD THAT:- According to the CIT, assessee was not carrying out education as charity, but was doing trade and commerce in the name of education. The decision in case of Pinegrove International Charitable Trust and Ors.[2010 (1) TMI 49 - HIGH COURT OF PUNJAB AND HARYANA AT] opined that merely because profits have resulted from the activity of imparting education, it would not result in change of character of institution that it exists solely for educational purposes. Evidently, identical facet has been considered by the CIT to conclude that generating of surplus from educational activity year after year, changes the character of activity as a trade and commence. The proposition laid down by the High Court belies the argument of the CIT, and it is fully applicable in present case also. Notably, there is no allegation by the CIT that any activity other than education has been carried out by the assessee. Another reason is that the activity of education being carried out by the assessee, cannot be regarded as a "charitable purpose". the action of the CIT on this aspect is beyond the jurisdiction envisaged u/s 012AA(3) and is accordingly liable to be ignored. In the final analysis, we are unable to uphold the conclusion drawn by the CIT that the activities of the assessee are not being carried out in accordance with its objects merely because it was generating profits from such activity. Therefore, invocation of s. 12AA(3) by the CIT on this aspect has to fail. we set aside the impugned order and the registration granted to the assessee vide order dt. 29th Aug., 2007 is hereby restored. Condonation of delay - CIT did not allow any opportunity to the assessee of being heard although the same was specifically directed by the Tribunal in his order. HELD THAT:- The opportunity allowed by the CIT to the assessee to appear before the AO does not tantamount to affording an opportunity by the CIT himself. In our opinion, the CIT was duty-bound to allow an opportunity of hearing to the assessee himself and it was open for him to call for a report from the AO and after considering the rebuttal of the assessee with respect to such report, he ought to have disposed of the appeal of the assessee. In this case, neither an opportunity of hearing has been provided by the CIT and nor has the report of the AO been confronted to the assessee before adjudicating the matter. In our considered opinion, the aforesaid approach is not in conformity with the directions of the Tribunal contained in its order dt. 27th Dec., 2007. Therefore, the impugned order is unsustainable on the preliminary aspect of it being in violation of the principles of natural justice. Accordingly, the impugned order is set aside and the CIT is directed to carry out the directions contained in the order of the Tribunal dt. 27th Dec., 2007 after allowing the assessee a reasonable opportunity of being heard in accordance with law.
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