TMI Blog2011 (8) TMI 1353X X X X Extracts X X X X X X X X Extracts X X X X ..... s cancelled the registration u/s 12A of the I.T. Act, the assessee will not be entitled for exemption u/s 11 and 12 of the Income-tax Act and, therefore, income under various heads has been assessed in the hand of the assessee. While taking note of the grievance of the assessee, we are not specifically referring the quantum of addition in each assessment year, because after hearing the assessee, we find that reopening of assessment is not sustainable for the reasons, which we are going to discuss. 2. The first common issue in all the assessment years relate to reopening of assessment by issuance of notice u/s 148 of the Income-tax Act. The facts in all the assessment years are common on all vital points, therefore, for the facility of reference we are taking up the fact from assessment year 2005-06. 2.1 The brief facts are that assessee has filed its return of income on 31.10.2005 declaring total income nil. The assessee has submitted audit report in Form No.10B and balance sheet along with income and expenditure account, with the return. The return was accepted u/s 143(1) on 25th July, 2006. The Assessing Officer has observed that he received an information being order No. D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 12AA stipulate the following conditions for registration u/s 12AA of the Income-tax Act, 1961:- i) The objects of the trust should be of charitable in nature. ii) The activities of the trust should be genuine. Since the assessee has been engaged in the business and commercial activities and are not engaged in charitable activity as defined under the provisions of section 2(15) of the Income-tax Act, 1961, it is, therefore, held that registration granted to the assessee is required to be cancelled as the activities of the assessee are not charitable. In conclusion it is held that the assessee is not entitled the exemption u/s 11 as its activities are no longer charitable from assessment year 2005-06 onwards. Therefore, registration granted u/s 12A is cancelled with effect from assessment year 2005-06. 3. It is apparent that in the absence of registration available u/s 12A, the assessee is not entitled to benefit of exemption of income u/s 11 12 of the act for the assessment year 2005-06. Further, activities of the assessee do not conform to charitable activities u/s 2(15) after going through the accounts for the period ended on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal has allowed its appeal and restore the registration granted u/s 12A of the Income-tax Act. The moment registration granted in 1988 got revived, the every information possessed by the Assessing Officer enabling him to form an opinion that income chargeable to tax has escaped within the meaning of section 147 of the Income-tax Act would extinguished. Learned counsel for the assessee took us through the reasons recorded by the Assessing Officer and pointed out that he has simply made reference to the order of DIT(E), rather he has produced that order in the reasons. The moment that order stands set aside by the Tribunal, these observations would automatically extinguished and there would not be any information in the possession of the Assessing Officer which can enable him to believe that any income chargeable to tax has escaped assessment and reopening of the assessment would not be sustainable. He placed on record copy of the Tribunal s order dated 8th July, 2011 passed in I.T.A. No.839/D/2010 along with I.T.A. No.247/D/09. On the other hand, learned DR relied upon the order of CIT(A). He pointed out that assessee is engaged in non charitable activities which are akin to commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reasons recorded by him which enabled him to form the belief that income chargeable to tax has escaped. Now this order of the DIT(E) has been set aside by the Tribunal vide its order dated 28th July, 2011, the finding of the Tribunal read as under:- REGISTRATION U/S 12AA(a) The assessee was granted registration u/s 12A on 27.12.1988. It appears that the ld. DIT(E), Delhi, passed an order under section 80G(5) on 30.06.2001, in which the approval under the said provision was not extended in the case of the assessee on the ground that it is engaged in the business of constructing and letting out properties for earning rental income and, therefore, it was not carrying out any charitable purpose. In view thereof, a notice was issued u/s 12AA(3) on 26.11.2008 requesting the assessee to explain as to why the registration earlier granted on 27.12.1988 may not be cancelled. After hearing the assessee, the registration was cancelled on the grounds that (i) the assessee is really involved in business activities in which huge surplus is realized from year to year, the details of which have been furnished on page no. 9 in paragraph no. 4.4; and (ii) it has not carried out any cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opy of which has been placed before us. The question before the Hon ble Court was-whether the ITAT was right in holding that the registration granted u/s 12A on 4.12.1974 to the assessee could be cancelled/withdrawn by the authorities u/s 12AA(3) of the Act? The Hon ble Court considered the provisions contained in sections 12A and 12AA and came to the conclusion that the power to cancel the registration once granted was only confined to the registration granted under clause (b) of sub-section (1) of section 12AA till 1st June, 2010. Of course, now with effect from 1st June, 2010, the power vests with the Commissioner even to cancel the registration granted under any of the clauses of sub-section (1) of section 12A. In that view of the interpretation, the Hon ble Court was of the considered view that there was no power vested with the Commissioner to cancel or withdraw the registration granted to the assessee under section 12A(a) in the year 1974. 2.1 In reply, the ld. DR submitted that the Director of Income-tax (E) has inherent power to cancel/withdraw registration earlier granted u/s 12A(a). 2.2 We have considered the facts of the case and submissions made before us. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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