TMI Blog2021 (7) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... afforded when replies were filed by the assessee raising jurisdictional objections .The said orders undoubtedly have serious adverse implications on the pending assessment proceedings consequent to search action on the assessee. In the absence of registration u/s 12AA of the Act, the income of the assessee no longer remains eligible for exemption u/s 11 and 12 of the Act and further the AO may have his own limitations in conducting a fair investigation on the search material before him when the Ld.Pr.CT on the basis of the very same material has found the activities of the assessee not eligible for registration. Further noting the fact that the limitation for passing the assessment order is 30/09/2021, we are of the view that interest of all would be subserved by an early hearing of the appeals against order of the Ld.Pr.CIT in which the present applications have been filed. The present stay applications relate are directed to be fixed for hearing on 07.07.2021 - Stay Application No.14/Chd/2021, 15/Chd/2021, 16/Chd/2021 In ITA No. 96/Chd/2021, 97/Chd/2021, 98/Chd/2021 (Assessment Year : 2021-22) - - - Dated:- 9-6-2021 - SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI R.L. NE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure action u/s 132(1) of the Act was conducted by the Income Tax Department on the applicant, the main reason being alleged diversion of funds to related parties and excessive claim for salary paid to trustee/members. That during the course of search various documents were impounded and submissions of employees and trustee were recorded by the authorities carrying out search. As a fallout of the same, proceedings u/s 153A of the Act were initiated on the applicant for assessment years 2014-15 to assessment year 2019-20, which was pending, having been interrupted by the current Pandemic of Covid-19. The proceedings were to get time barred on 31.03.2021, but the limitation had been extended by the Legislature to 30.09.2021 and the jurisdictional AO had yet to adjudicate upon the findings of the Investigation Wing of the Income Tax Department and reply of the assessee. Further registration granted to the assessee u/s 12AA of the Act was cancelled by the Ld. Pr.CIT vide his order dated 22.03.2021. The Ld.Counsel for the assessee drew our attention to a chart showing sequence of events chronologically as under: S. No. Date Even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled before the Hon'ble P H HC against SCN so issued for cancellation of registration u/s 12AA by Pr.CIT(C). 12. 17.03.2021 Writ Petition disposed of by Hon'ble P H High Court. Hon'ble High Court has held as under: Limited grievance of the petitioner is that show cause notice, and Annexure P-5 has been issued to it by the authority having no jurisdiction in the matter. Besides, the notice is premature as assessment proceedings are yet to be completed in the first instance. He submits that he had already submitted a reply to the show cause notice but no response has been received. Notice of motion. At this stage, Mr Tejender Joshi, advocate accepts notice on behalf of the respondent. He submits in case reply to the show cause notice has been received, same shall be decided by the concerned authority at the earliest in any case not later than one month. In view of above, no further adjudication of the matter is necessary. Petition is disposed of 13. 22.03.2021 Cancellation order passed by the Pr.CIT cancelling t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e any submission on merit of the show cause which is detailed and list the violations of the provisions along with statements and documentary evidences. The legal submissions made by the AR have been considered and are being discussed as under: - 8. As regards the submission of the assessee that cancellation of registration cannot be made on the basis of the findings of search and seizure operation and cancellation of registration should not be done till the final assessment is completed it is noted that the assessee has not made any submission on the merits of its case. Further, in my considered view, the proceedings u/s 12AA are entirety different from assessment proceedings u/s 153A or 143(3) or 147 of the Act. What is to be tested u/s 12AA(3) is whether the activities of trust are as per its objects or not and whether activities of the trust are being genuinely carried or not? Further, what is required to be seen u/s 12AA(4) is, inter-alia, whether the income of the trust enures for the benefit of the public and any income or property of the trust is not used or applied directly or indirectly for the benefit of specified persons like author of trust, trustees etc.? This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n grave prejudice being caused to the applicant. He therefore prayed that an early hearing be given in the appeal against the order of the Ld. Pr.CIT to the ITAT and in the meanwhile directions be given to the AO not to be influenced by the order of the Pr. CIT while framing assessment in the case of the applicant. In effect he prayed for stay of the operation of the proceedings order of the Ld. Pr.CIT. 9. Per contra the Ld.DR contended that it was factually incorrect that due opportunity of hearing had not been granted to the assessee by the Ld.Pr.CIT while passing the order cancelling the registration granted u/s 12A of the Act. Referring to the chronology of events drawn out by the Ld.Counsel for the assessee before us and reproduced above in our order, Ld.DR stated due opportunity of hearing had been given which is evident from the replies filed dated 04.01.2021 and 01.02.2021 by the applicants. 10. On hearing both the parties we find that a prima facie case has been made out by the applicants of grave injustice being done to them by the passing of the impugned orders of the Ld.Pr.CIT u/s 12AA(3)(4) of the Act ,to which the present stay applications pertain. Prima facie t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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