TMI Blog2022 (4) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... tution are being carried out in a manner that the provisions of Section 11 and 12 do not apply to exclude either the whole or any part of the income of such trust or institution due to the operation of sub-section (1) of Section 13 or the trust or the institution has not complied with the requirements of any other law. Reading of the provisions of Section 12AA(4) shows that there has to be primarily an order saying that the activities of the trust or the institution are being carried out in the manner that the provisions of Section 11 and 12 do not apply. That order primarily has to be done by the AO, who is a quasi-judicial authority. This is because it is the AO, who makes the assessment after examining all the evidences after putting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y after the quasi-judicial authority being the assessing authority questions the assessee during the course of assessment - reading of 2nd proviso to Section 153A clearly shows that assessments/re-assessments which are pending for a period of six assessment years abates. This clearly shows that even assuming proceedings had been initiated for the purpose of completing an assessment or re-assessment as a consequence of the survey, even those proceedings would stand abated as on the date of search. Thus clearly there is no assessment order nor any evidence specifically conclusively found or established against the assessee on the issues raised by the Ld. CIT(E) by an order of any quasi-judicial authority nor has the violation of any other law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e course of survey, various issues had been looked into. It was the submission that subsequently on 05-11-2020, search proceedings u/s. 132 of the Act had been conducted on all the four assessees. It was the submission that as a consequence of the survey conducted on 26-02-2020, show cause notice had been issued by the Ld. CIT(E) on 04-12-2020 in the case of Last Hour Ministry and on 03-12-2020 in the case of other three assessees. The assessees had responded to the said show cause notices vide letter dt. 15-12-2020, wherein it was brought to the attention of the Ld. CIT(E) that a search had been conducted on the assessees on 05-11-2020 and that substantial seizures and prohibitory orders were in operation. It was also mentioned that the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losures of the unaccounted incomes had been made. It was the submission that at the outset, these reasons at best read to violations of 13(1)(c) and 13(1)(d) of the Act which could have resulted in additions. In regard to the disclosures made in the course of the survey in the sworn statements recorded from the trustee and Chartered Accountants, have been retracted. It was the submission that none of the reasons mentioned by the Ld. CIT(E) questioned the genuineness of the trust. It was the further submission that as the search had taken place on the assessee on 05-11-2020 in view of the 2nd proviso to Section 153A, the proceedings arising out of the survey would also abate in so far as the proceedings under the survey could at best result ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the show cause notice, wherein it categorically says survey and subsequent action carried out taken in the assessee's cases . It was the submission that the order cancelling the registration is liable to be upheld. 5. We have considered the rival submissions. A perusal of the order cancelling registration wherein various reasons have been given as mentioned earlier apparently show that these reasons would at best give rise to violations u/s. 13(1)(c) and 13(1)(d) of the Act which would result in additions in the assessment and reassessment. Such violations, if any to be assessed as income taxable at the marginal rate. A perusal of the provisions of Section 12AA(4) shows that the cancellation of registration is permissible in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This is not permissible. In fact reading of the provisions of Section 12AA(4) clearly shows that it is only after the quasi-judicial authority has completed its part, the violations can be even claimed to be there. In regard to the violation of any other law, the provisions of Section 12AA(4) clearly and categorically says that such violation or recording of such violation should have attained finality. Allegations per se cannot be the ground for the cancellation of registration. On this ground itself, the order passed by the Ld. CIT(E) is liable to be quashed and we do so. Even otherwise, reading of proviso to Section 12AA(4) shows that there is liberty available with the assessee to show that there was reasonable cause for the activit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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