TMI Blog2023 (2) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the show cause notice for cancellation of registration held that the contents of order dated 09.10.2007 passed by the Commissioner cancelling registration shall be treated as show cause notice to the appellant as extracted supra and this finding had not been reversed till date. In the interest of judicial discipline, the ld. PCIT is bound to obey the directions of Hon ble High Court and rightly cancelled the registration w.e.f. financial year 2007-08. There is yet another reason as to why we are upholding the validity of order with retrospective effect, the appellant right from the initial date of show cause notice issued on 11.03.2011 had been representing before the learned Commissioner that the proceedings be kept in abeyance till the disposal of Writ Petition by the Hon ble Bombay High Court and SLP by the Hon'ble Supreme Court. Thus, the appellant by his acts and conduct had acquiesced to the delay in completion of proceedings. On perusal of order sheet of file of learned PCIT, it would be apparent that proceedings are continuous, merely because on change of incumbent, fresh show cause notice was issued, it cannot be construed to mean that it is fresh show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ala Education Society - 20 SOT 353 is misplaced in as much as the PCIT erroneously holds that collecting of donation cannot be regarded as charitable activity, overlooking the fact that the Hon'ble Tribunal while disposing of Miscellaneous Application clarified that the exemption u/s 11 is denied not because of acceptance of capitation fees but because there was violation of section 13(1)(c). 5. On the facts and in the circumstances of the case and without prejudice to the above grounds the PCIT has no jurisdiction to cancel the registration of the appellant trust u/s 12A retrospectively from F.Y. 2007-08, in the light of the facts that the amendment to section 12AA(3) empowering the PCIT/CIT to cancel the registration granted u/s 12A is brought into effect from 01/06/2010 and that vide CBDT circular No.1/2011 F.No. 142/1/2011-SO(TPL), registration can be cancelled on fulfillment of the conditions mentioned in section 12AA(3), from A.Y. 2011-12. 6. On the facts and in the circumstances of the case the Id PCIT has erred in passing the impugned order despite being aware of the facts that appellant's appeal before the Supreme Court is pending, wherein the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being carried out in accordance with the object of the trust, to cancel the registration of such trust, which had obtained registration, at any time u/s 12A of the Act. Based on amended provision of law, Ld. PCIT had issued fresh show cause notice on 11.03.2011 proposing the cancellation of registration of the trust. On receipt of show cause notice, the appellant society had challenged the show cause notice before the Hon ble Bombay High Court challenging the constitutional validity of the provisions of sub-section (3) of section 12AA, as amended by the Finance Act, 2010 w.e.f. 01.06.2010 to the extent that provide for revocation of registration of trust granted u/s 12A of the Act. The Hon ble Bombay High Court vide order dated 01.02.2012 reported in (2012) 343 ITR 23 (Bom) had dismissed the above Writ Petition with following observations: 9 ..The notice which has been issued by the Commissioner is a notice to show cause and it would be open to the petitioner to submit a reply to the notice on all grounds, including those which are contained in the order dated October 9, 2007. In other words, the contents of the order dated October 9, 2007, shall be treated as a notice to sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide letter dated 29.01.2018 and submissions dated 02.05.2014. The gist of submissions made before the Ld. Commissioner are as under: (i) Categorically denied the allegation that the appellant trust has been indulging in collection of capitation fees in the absence of any complaint under Maharashtra Education Institution (Prohibition of Acceptance of Capitation Fee) Act 1987; (ii) The activities of the institution are genuine and are carried on in accordance with objects of the institution; and (iii) The ld. Commissioner has no power to cancel the registration with retrospective effect. 7. Considering the above submissions of the appellant trust, the Ld. Pr. Commissioner considering the order of CIT(A)-12, Pune vide order dated 26.04.2017, wherein the ld. CIT(A) confirmed findings of AO that the appellant trust had been indulging in collection of capitation fees and the capitation fees so collected was siphoned off by the trustees for their personal benefits, had proceeded to hold that there was ample material on record to establish that the appellant trust had been indulging in collection of capitation fees and therefore, cannot be said to be existing pure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ITA Nos.44 to 50, 54 to 59 1654/PUN/2017 for A.Ys. 2008-09 to 2014-15. Therefore, he submits that in view of the decision of Hon ble Madras High Court in the case of Vellore Institute of Technology vs. CIT (2021) 127 taxmann.com 106, the reasons assigned for the purpose of cancellation, undoubtedly goes to demonstrate that the activities of the trust are not genuine or are not being carried on in accordance with the objects of the trust and therefore, the Commissioner had rightly recorded satisfaction that it is a fit case for cancellation of registration of the trust. He also placed reliance on the decision of Hon'ble Supreme Court in the case of Karnataka Chamber of Commerce and Industry vs. CIT (2021) 126 taxmann.com 21 (SC) in support of the contention that where the documents seized during the course of search and seizure operations discloses receipt of capitation fees by educational institution for admission of students, the Hon'ble Supreme Court had upheld the action of Commissioner rejecting the application for grant of registration u/s 12A of the Act. Similarly, he also placed reliance on the decision of Hon ble Delhi High Court in the case of U.P. Distillers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t any time under section 12A [as it stood before its amendment by the Finance (No.2) Act, 1996 (33 of 1996) were inserted in sub-section 3 of section 12AA of the Act. Thus, after such amendment, section 12AA(3) reads as under: 12AA. (1) ..... (2) ..... (3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) or has obtained registration at any time under section 12A as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996) and subsequently the Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard. 13. At the first place, we shall proceed to examine whether the Commissioner was justified having regard to the facts of the present case in reaching satisfaction that the activities of the trust are not gen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant society are charitable and, therefore, the income of the appellant trust does not qualify for exemption u/s 11 of the Act. 15. The findings of ld. CIT(A) have been upheld by this Tribunal in assessment proceedings. In view of concurrent findings of Tribunal and CIT(A), the Ld. PCIT was justified in reaching a conclusion that the activities of the appellant trust are not genuine and are not being carried on in accordance with the objects for which it was established. Therefore, we are of the considered opinion that the Ld. PCIT had rightly cancelled the registration of appellant trust. 16. Then, the next question that comes up for our consideration is that whether or not Ld. PCIT was justified in cancelling the registration of trust with retrospective effect from financial year 2007-08. Without delving into the issue whether the Commissioner had been empowered to cancel registration with retrospective effect, it is suffice to hold that in the present case, Hon ble Bombay High Court in Writ Petition filed by the appellant challenging the show cause notice for cancellation of registration held that the contents of order dated 09.10.2007 passed by the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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