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Sidhashram Versus Income Tax Officer, (Tech-II) , Kolhapur

Registration granted to the assessee u/s. 12AA cancelled - approval granted u/s. 80G(5) withdrawn - Held that:- The assessee stated at the Bar that the assessee trust has amended the trust deed by deleting/amending the objects of the assessee trust on which the Commissioner of Income Tax had raised objection. The amended trust deed could not be placed before the Commissioner of Income Tax as the amendment was carried out after the impugned order was passed. In view of the matter, we deem it appr .....

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- 15-4-2016 - SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM For The Assessee : Shri M.K. Kulkarni For The Revenue : Shri Subhash Chandra ORDER PER VIKAS AWASTHY, JM : These two appeals have been filed by the assessee assailing the order dated 06-11-2013 passed by Commissioner of Income Tax-II, Kolhapur cancelling the registration granted to the assessee u/s. 12AA of the Income Tax Act, 1961 (hereinafter referred to as the Act ) and order dated 23-12-2013 withdrawing approval granted u/s. 80G(5) .....

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of the Act vide order dated 24-08-1999. Approval u/s. 80G was also granted to the assessee which was subsequently extended from time to time. The Commissioner of Income Tax vide order dated 21-11-2011 cancelled the registration of the assessee trust on the ground that some of the objects stated in the trust deed were against the spirit of public charitable trust. The Commissioner of Income Tax observed that clause 13(a)(2) and 14(b) of the Trust Deed gives unlimited powers to the President who i .....

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es of natural justice. Before the Commissioner of Income Tax, the assessee contended that the objectionable clauses in the trust deed are being amended/repealed. The Commissioner of Income Tax vide impugned order held that since the assessee has admitted that there were certain objectionable clauses in the trust deed granting unlimited power to the Settlor of the trust, the order of Commissioner of Income Tax in cancelling the registration is vindicated. The Commissioner of Income Tax vide impug .....

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g the provisions of sub-section (3) to section 12AA of the Act. The assessee was granted registration in the year 1999. Sub-section (3) to section 12AA was inserted by the Finance (No. 2) Act, 2004 w.e.f. 01-10-2004. The provisions of sub-section (3) shall not apply retrospectively in the cases where registration has been granted prior to the insertion of sub-section (3) to section 12AA of the Act. In support of his submissions, the ld. AR placed reliance o the following decisions : i. Welham Bo .....

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leted/amended the clauses on which the Commissioner of Income Tax has raised objection. The amended trust deed could not be filed before the Commissioner of Income Tax as the amendments were carried out/approved after the date of passing of impugned orders. 5. On the other hand Shri Subhash Chandra representing the Department vehemently supported the orders of Commissioner of Income Tax in cancelling the registration and consequently withdrawing approval granted u/s. 80G(5) of the Act. The ld. D .....

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the assessee. 6. We have heard the submissions made by the representatives of rival sides and have perused the orders of the authorities below. The assessee is in appeal assailing the order of Commissioner of Income Tax in cancelling the registration granted to the assessee in the year 1999 and the consequent withdrawal of the approval u/s. 80G(5) of the Act. The first contention of the ld. Counsel for the assessee is that the Commissioner of Income Tax has wrongly exercised his jurisdiction in .....

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nate Bench of the Tribunal in the case of Prabodhan Shikshan Prasarak Sanstha Vs. Dy. Commissioner of Income Tax (supra). The question which had come up for adjudication before the Tribunal reads as under: 1. Whether in the facts and circumstances of the case and in law the ld. CIT-II Kolhapur was justified in cancelling/withdrawing the registration granted to the assessee u/s 12A of the Act on 11-2-1998 resorting to provisions of sec. 12AA(3) inserted in the Act w.e.f. 1-10-2004 being prospecti .....

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s of section 11(5) of the Act and that the assessee had failed to apply the funds set apart for the objects of the trust. Apart from the above there were certain other discrepancies. The Commissioner of Income Tax invoked the provisions of sub-section (3) of section 12AA and cancelled the registration granted to the assessee u/s. 12A. The assessee carried the matter in appeal before the Tribunal. The Tribunal considered judgments of various Hon'ble High Courts including the decision of Hon&# .....

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ed under S. 12AA(3) is not retrospective. We find that the Hon'ble Allahabad High Court in CIT v. Manav Vikas Avam Sewa Sanstha (2011) 336 ITR 250 (All) held as under:- It is well settled, proposition of law that the judicial/quasijudicial authority cannot review its own order, unless the power of review is expressly conferred on it by the statute under which it derives its jurisdiction as held in the case of Dr. Smt. Kuntesh Gupta v. Management of Hindu Kanya Mahavidyalaya AIR 1987 SC 2186) .....

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cademy for Career Development v. Cf. CIT (2009) 315 ITR 382 (All) held that since S. 12AA(3) was incorporated in the Act, w.e.f. 1st Oct. 2004, and not applicable retrospectively, Registration granted to assessee on 1st April, 1999 could not ,therefore, be cancelled by the CIT by invoking powers u/s 12AA(3) of the Act. Even assuming that CIT has power to rescind the order of registration on the ground that registration has been obtained by practicing fraud or forgery there was nothing in the sho .....

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of trust or institution and before proceeding to cancel registration of such trust or institution a reasonable opportunity of being heard has to be given". The Coordinate Bench of ITAT Ahemdabad Bench in Director of Income-tax v. N. H. Kapaida Education Trust (2008) 148 TTJ (Ahd) 37 held that registration under S. 12A having been granted to assessee w.e.f. 21st March, 1990, amended provisions of S. 12 AA (3) could not be applied against assessee retrospectively prior to amendment w.e.f. 1s .....

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st June, 2010. The Director of IT (Exemption) was not justified in resorting to cancel the registration granted to the assessee trust earlier by CIT, vide his order dt. 21st March, 1990 w.e.f. 21st March, 1990. Therefore, impugned order was set aside and quashed. The above legal proposition laid down that the provisions of Sec. 12AA(3) are not retrospective and therefore, resultantly the registration granted prior to insertion of S. 12AA(3) of the Act could not be cancelled or withdrawn which wo .....

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e trust where he is satisfied that the activities of the trust are not genuine or are not being carried out in accordance with the objects of the trust or Institution. This could not by any stretch of imagination be regarded as retrospective alternation of the law. In the case before us, as per the amendment by the Finance Act, 2010, the Commissioner has claimed to be empowered to initiate steps for the cancellation of the registration of a trust or Institution where the activities of the trust .....

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within the purview of S. 2(15) of the Act, secondly, the appellant trust has contravened the provisions of Ss. 11(5) and 13(1) (c) of the Act. Thirdly, the trust is treated by the Chairman and family members/relatives as their private property and enjoyed by them for their benefits only. There is nothing on record to suggest that the Trust is not 'genuine'. In fact, the trust is carrying on Educational activities they are charitable in nature. The activities are carried out as per its ob .....

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