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2012 (10) TMI 50 - AT - Income TaxWithdrawal of registration u/s 12A - twice alteration of objects - engagement in commercial activities - Revenue contended that when the said objects, which formed the basis of the grant of registration, stand altered, the very foundation of the registration stands removed, so that it could not survive - assessee contesting power of the CIT as the competent authority in invoking section 12AA(3) - Held that:- CIT as the competent authority, is empowered by law to examine if the activities being actually pursued are genuine or carried out in agreement or in accordance with those objects. Change in the object clause (s) is violative of an implied and fundamental condition for continuation of registration, cognizance of which can be taken of by the income tax authorities even de hors section 12AA(3) as well as u/s 293C. Commercial activities - Held that:- Unless the functioning of the assessee, which is stated to be on commercial lines, so as to disqualify it as a charitable entity, is shown to be so with reference to its revised/ amended objects, we are unable to see as to how the same (the changes or the revision of its objects and the rules/regulations) has a bearing on its registration or entitles the Revenue to revisit the same, i.e., considering that it has accepted the assessee's functioning as a charitable entity up to the AY 2007-08. Neither the continuation of registration nor its withdrawal is automatic, and there is or can be no presumption with regard to either. The assessee was bound, notwithstanding the genuineness of the reasons motivating or leading to the changes, i.e., assuming so, to have reported them to the Revenue, in absence of which its claim for continuation of registration cannot hold. The said changes having come to the notice of the Revenue now, i.e., during the course of the assessment proceedings for the AY 2008-09, it is obliged and empowered under law to take cognizance of the same. It shall follow the same procedure, as it would have, had the assessee voluntarily reported those changes in time. And, again, there can be no presumption for consequential cancellation/withdrawal of registration. If on basis of examination of facts, explanations and objections, CIT comes to the conclusion that registration as granted cannot be continued, he shall withdraw the same per a speaking order. The withdrawal could have, even as directed per the impugned order, a retrospective effect, i.e., from the date from which the impugned object(s), i.e., which the Revenue finds as objectionable from the standpoint of the assessee's registration or its continuation as a public charitable institution u/s. 12A of the Act, comes into effect. Matter remanded back for fresh consideration. CIT shall adjudicate per a speaking order; his order being appealable - Decided in favor of assessee for statistical purposes
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