TMI Blog2023 (1) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... order u/s 12A for registration or cancellation is not within the jurisdiction or power of an Assessing Officer. Hence registration u/s. 12A can be withdrawn only by the Prescribed Authority who has been empowered to grant the same and by the Notification dated 22.10.2014 the ld.CIT(Exmp.) has empowered for the same, hence the Pr.CIT (Central) cannot cancel the same. In assessee s case, the case u/s 127 was transferred to the Central Circle for limited purpose of Co-Ordinate assessment admittedly which do not mean that the Section 12A proceeding has been transferred to the Pr. CIT(Central) automatically, when both the proceedings are separately or independent and also has to be done or conducted by the different rank Authorities. More particularly when for the purpose of Exemption cases or 12A registration a Separate Commissioner of Income Tax has been Authorized for whole of Rajasthan by the CBDT by its Notification dated 22.10.2014. Also Pr.CIT (Central) cancelled such approval from A. Y. 2014-15, though the assessee has already assessed from A.Y. 2014-15 u/s 143(3)/148 of the Act. It is also settled legal position of law that Registration cannot be cancelled from retro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case as well as in law the Ld. Principal Commissioner of Income Tax (Central), Jaipur, had no jurisdiction to cancel the registration granted to the appellant Society (granted as per order dated 10th October 2002 by the Commissioner of Income Tax, Udaipur) by invoking provision of section 12AA(3) which is applicable with effect from 1st June 2010 according to which any registration granted prior to 1st October 2004 cannot be retrospectively withdrawn. That while refusing registration under section 12AA(3) of the Income Tax Act, 1961, the Ld. Principal Commissioner of Income Tax (Central), Jaipur, failed to bring on record two basic conditions namely, Activities of the Institute are not genuine or are not being carried out in accordance with the objects of the Society or Institution. 4 4.1 That on the fact and circumstances of the case as well as in law the Ld. Principal Commissioner of Income Tax (Central), Jaipur, further grossly erred in withdrawing the registration under section 12AA(4) of the Income Tax Act, 1961, with effect from 1st April 2009 on the ground that activities of the Society are being carried out contrary to the provision of Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (4) of the Income Tax Act, 1961, completely failed to appreciate that the education and research society exists for the purpose of imparting education since last more than 20 years in various disciplines having substantial investment in land and buildings and other infrastructures, team of learned faculties known in the State of Rajasthan and not meant for the purpose of earned of profit. This aspect remains to be considered by the Principal Commissioner of Income Tax (Central), Jaipur. ITA NO. 05/JODH/2020 : 1. That on the fact and circumstances of the case as well as in law the impugned order dated 26th December 2019 passed by the Principal Commissioner of Income Tax (Central), Jaipur, resulted into withdrawal of the approval granted under section 10(23C)(vi) of the Income Tax Act, 1961, with effect from 1st April, 2009 is bad in law, unjustified, based on assumption and presumption for want of adequate and reasonable opportunity of being heard. 2. That on the fact and circumstances of the case as well as in law the impugned order dated 26th December 2019 passed by the Principal Commissioner of Income Tax (Central), Jaipur, who assumed jurisdiction to initiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 10(23C)(vi) of the Income Tax Act, 1961, completely failed to appreciate that the education and research society exists for the purpose of imparting education since last more than 20 years in various disciplines having substantial investment in land and buildings and other infrastructures, team of learned faculties known in the State of Rajasthan and not meant for the purpose of earned of profit. This aspect remains to be considered by the Principal Commissioner of Income Tax (Central), Jaipur. 6. That on the fact and circumstances of the case as well as in law the withdrawal of approval under section 10(23C)(vi) of the Income Tax Act, 1961 with effect from 1st April 2009 is also bad in law as the reason assigned by the Principal Commissioner of Income Tax (Central), Jaipur, in order so passed is exactly repetition of the fact which is also the subject matter/part of Writ filed before the Honorable High Court of Rajasthan in case of compulsory Audit under section 142(2)A of the Income Tax Act, 1961. 7. That on the fact and circumstances of the case as well as in law the Principal Commissioner of Income Tax (Central), Jaipur, to justify as to take action as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Pacific Academy of Higher Education Research University 5. Pacific Institute of Hotel Management AICTE, New Delhi Affiliation with Pacific Academy of Higher Education Research University 6. Pacific Institute of Business Studies Affiliation with Pacific Academy of Higher Education Research University 7. Pacific Institute of Journalism Mass Communication Affiliation with Pacific Academy of Higher Education Research University 8. Pacific Institute of Law Bar Council of India, New Delhi Affiliation with Pacific Academy of Higher Education Research University 9. Pacific Institute of Fire Safety Management Affiliation with Pacific Academy of Higher Education Research University 10. Pacific College of Social Science Humanities Affiliation with Pacific Academy of Higher Education Research University 11. Pacific School ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were seized. Statement of Rahul Agarwal, Secretary of the society was recorded wherein he confirmed that the documents seized relates to PAHER University and its college i.e. Pacific Dental College. The Ld. PCIT on the basis of these documents issued show cause notice dated 03.12.2019 (reproduced at Pg 06-24 of the order). The issues raised in the show cause notice are summarized as under:- (a) Certain pages contain details of admission along with the name of students and their packages in the first year of BDS course for academic year 2012- 13, 2013-14 2014-15. The total amount of the respective years is Rs.1569.76 lakhs, 1920.60 lakhs, 1677.95 lakhs. The relevant pages are reproduced in the assessment order at Pg 40-47. As the same did not reconcile with the books of account, these amounts were considered as unaccounted capitation fees received by the society. (b) An excel sheet found containing the details of the fees of the 2nd, 3rd 4th year of BDS from BDS batch 2007-08 and the same remained unexplained by the assessee. The same is reproduced at Pg 48 of the order. (c) From Pg.no.23 to 25 of annexure A Exhibit-1 and Pg.no. 72 to 74, 76 80 of annexure A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said order, the legible copy of the seized document/ statement referred in the show cause notice be provided, there is no limitation prescribed for withdrawal of registration and therefore the proceedings for withdrawal are premature which may be kept pending. The Ld. PCIT however vide order dated 26.12.2019 without providing the required documents and adequate opportunity of hearing has withdrawn the registration already granted u/s 12AA of the Act and the approval given u/s 10(23C)(vi) of the Act with retrospective effect from 01.04.2009 for the reasons stated in Para 3 above. 2.3 Against the impugned order of the ld. Pr. CIT, the assessee has preferred the present appeals before us on the grounds mentioned hereinabove. 3. Ground No. 1 to 8 of the appeal are interrelated and interconnected and relates to challenging the order of the ld. Pr. CIT (Central), Rajasthan, Jaipur for cancelling the registration of the assessee Trust under section 12AA(3) and 12AA(4) of the Act, 1961, Therefore, we have decided to adjudicate these grounds by this common order. 4. Before us, the ld. Counsel for the assessee submitted in his written submissions as under : 1. At the ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 274 (Kar.) (HC) The held part is as under:- In the instant case, the material on record shows that the Trust has established educational institution and imparting medical education. Every year, students are admitted. Huge investment is made for construction of buildings for housing the college, hostel and to provide other facilities to the students who are studying in the College. The College is recognized by the Medical Council of India, State of Karnataka and all other statutory authorities. Therefore, it cannot be said that the Trust is not genuine. Admittedly, the students are being admitted every year. Students are studying in all courses. Thus the object of the constitution of the Trust namely imparting of education is going on uninterruptedly. Therefore, it cannot be said that the activities of the Trust are not being carried out in accordance with the objects of the Trust. When the aforesaid two conditions are fully satisfied, on the ground that the trustees are misappropriating the funds of the Trust the registration of the Trust cannot be cancelled. If the trustees are misappropriating the funds, if they are maintaining false accounts, it is open to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the registration under section 12AA, the scope of enquiry of the Commissioner would be limited to the aforesaid extent only. Rajasthan Vikas Sansthan Vs. CIT 78 DTR 411 (Raj HC ) The registration can be cancelled on the ground that the activity of the trust are not genuine or are not being carried out in accordance with the object of the trust. In case there are violations as mentioned in s. 11 and 13 of the Act, the AO while making assessment can deny the exemption to the trust. For getting the exemption u/s 11, registration is pre-requisite. However, registration is not a guarantee for exemption. In case the Trust fails to comply with the requirements as mentioned in s. 11 and 13 of the Act then exemption can be denied. In respect of failure mentioned in s. 11 and 13 in a particular year, it cannot be said that registration is to be cancelled. Surplus in educational activities is not relevant for cancelling the registration. The education itself is charitable object and if the surplus is utilized for the purpose of charitable activities then it cannot be said that registration is to be disallowed. The ground on which the registration cannot be refused, cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tuition Income Development Fees Hostel Fees Total BDS Batch(2012- 13) 2012-13 1,90,00,000(PB 98) 2,18,35,000(PB 99) 1,13,65,000(PB 100) 5,22,00,000 2013-14 1,90,00,000(PB 102 ) - 1,13,65,000(PB 104) 3,03,65,000 2014-15 1,90,00,000(PB 105) - 1,13,65,000(PB 106) 3,03,65,000 2015-16 1,90,00,000 - 1,13,65,000 3,03,65,000 Total 7,60,00,000/- 2,18,35,000/- 4,54,60,000/- 14,32,95,000/- (b) For Batch 2013-14 the total amount as per page 16 to 19 of Annexure A Exibhit-1 in respect of 103 students is Rs.1920.60 lakhs. However since the seats available is only 100, therefore 3 students out of this list were not given admission. The details of the 100 students who were given admission by whom amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived from the students and the allegation of the Ld. PCIT that the same is unaccounted capitation fees is incorrect and without any basis. (c) For Batch 2014-15 the total amount as per page 48 to 50 of annexure A Exhibit 3(PB 114-116) in respect of 101 students is Rs.1706.50 lakhs. However since the total seats available is only 100, one of the student was not given admission. It can be noted that the 100 students to whom admission was given, the total fees of 4 years after considering the scholarship of Rs.55.50 lakhs given to 48 students works out to Rs.1651 lakhs against which the fees pertaining to FY 2014-15 including Tuition Fees Hostel fees is Rs.440.50 lakhs (400+40.50) (PB 105-106). This fees is part of the total fees of various courses reflected in Sch.XIX under the head Fees received (PB 117-120).The remaining amount is received in subsequent years which is included in the Fees received from the students in the subsequent years as per the following table:- Batch/FY Tuition Income Hostel Fees Total BDS Batch(2014-15) 2014-15 40000000 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... package for 4 years for admission in MDS course for Batch 14-15 against which Rs.10lakhs was received on 20.09.2014. However the student did not took the admission and therefore the amount of Rs.10 lakhs received on 20.09.2014 was returned back on 09.10.2014 as is evident the ledger account placed at (PB 121-122) 24 Sangeeta Gurjar 33 plus Hostel 21 plus Fees 4+4+4+ Hoste No amount was received from her. She had only enquired about the fees structure which is noted on this paper. 25 Aadit B.Patel MDS in Prosthodontics 2012 21+F+H No amount was received from him. He had only enquired about the course and its fees structure which is noted on this paper. 72 The paper indicates the total package for 3 years for admission in Ortho/PDC course is Rs.30 lakhs i.e.10 lakhs per annum plus hostel fees. He has taken admission in 2015-16 and Rs.1 lakhs is received on 02.01.2016 through NEFT and the same is verifiable from the ledger copy which is enclosed at (PB 123-124). 73 Priyanka Meht ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oted. The noting mentioned therein is only about the enquiry made by the student in various branches of MDS course. These students have not taken any admission and there is also no indication that any of these students have made any payment. Hence no adverse inference on the basis of noting on this paper can be drawn against the assessee. (v) In Para 4.4 a reference is made to Q.No 16 to 19 of the statement of Sharad Kothari dt.08.12.2015. These questions have no relevance with the name of students mentioned at Page 49 of the order. In fact these questions are with reference to page 16-19 of Annexure A Exibhit-1 referred at page 42-45 of the order which has already been explained in para 2(1)(a) above. The receipt from the student as referred in Q.16 is duly recorded in the books of account. The students referred in Q.19 have not taken the admission as explained supra. Thus from this statement neither any indication nor any inference can be drawn that there is any unaccounted receipt taken from the students. (vi) In Para 4.5 the Ld. PCIT by referring to Page 88 of annexure A-3, observed that the same contains details of some flats with the name of M/s Kamal Propmart Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ger account itself (PB 177-178). Hence on the basis of this ledger account it cannot be inferred that it is unexplained application of money. (ix) In Para 4.8 the Ld. PCIT referred to the bank accounts of the assessee and observed that it contain voluminous transactions of debit and credits entered with Shri BR Agarwal and his family members. However no details are given. All the transaction in the bank account are duly incorporated in the books of accounts and therefore on the basis of these transactions no adverse inference can be drawn. From the above it can be noted that the issues raised by the Ld. PCIT for invoking section 12AA(3) and 12AA(4) is on incorrect appreciation of facts and is in fact a repetition of the order u/s 142(2A) passed for special audit (PB 62-92).Thus in fact the Ld. PCIT has not independently applied his mind and therefore the registration u/s 12AA withdrawn by him is not as per law. 3. The Ld. PCIT has cancelled the registration u/s 12AA(3) with effect from 01.04.2009 on the allegation that assessee trust is earning unaccounted income in the garb of capitation fees. It is submitted that registration u/s 12AA(3) can be cancelled only wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case the ground for cancellation has not arisen out of allegation of fraud, collusion or misrepresentation. Therefore, the cancellation of the assessee s registration under s. 12A if at all, could be done only prospectively and not retrospectively as had been done by the CIT in this case. 4. It is further submitted that the jurisdiction to grant/ withdraw exemption u/s 12AA lies with the CIT(E), Jaipur. The Pr. CIT (Central) Rajasthan, Jaipur has no jurisdiction to withdraw the exemption. This is because CBDT in pursuance to Sec. 120(3) vide Notification No. 52/2014 and 53/2014 both dated 22.10.2014 has given power to CIT (Exemption) Jaipur for the state of Rajasthan for all cases of persons in the territorial area specified in column (4) claiming exemption under clauses (21), (22), (22A), (22B), (23), (23A), (23AAA), (23B), (23C), (23F), (23FA), (24), (46) and (47) of section 10, section 11, section 12, section 13A and section 13B of the Income-tax Act, 1961 and assessed or assessable by an Income-tax authority at serial numbers 131 to 140 specified in the notification of Government of India bearing number S.O. 2752 dated the 22nd October, 2014.Thus, from the 22 Octob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral) was satisfied that activities of the assessee Trust are not being carried out according to the stated objectives. As such, the ld. Pr.CIT (Central) has cancelled the registration of the assessee Trust under section 12AA by invoking provisions of section 12AA(3). The ld. Pr.CIT (Central) has further observed that the activities of the assessee Trust are being carried out in a manner that provisions of section 11 12 do not apply to exclude the income of the assessee Trust due to operation of provisions of section 13(1). Accordingly, the registration of the assessee society u/s 12AA is hereby cancelled by invoking provisions of section 12AA(4) of the Act. 6. We have heard the ld. Counsels of both the parties and have perused the material placed on record. We have also deliberated upon the decisions cited in the orders passed by the authorities below as well as cited before us and we have also gone through the orders passed by the revenue authorities. From perusal of the record, we noticed that the assessee Society was registered under Rajasthan Society Registration Act, 1958 vide Registration No. 45/Udaipur/95-96 dated 17th October, 1995. The society changed its name to P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved by the society. (b) An excel sheet found containing the details of the fees of the 2nd, 3rd 4th year of BDS from BDS batch 2007-08 and the same remained unexplained by the assessee. The same is reproduced at Pg 48 of the order. (c) From Pg.no.23 to 25 of annexure A Exhibit-1 and Pg.no. 72 to 74, 76 80 of annexure A Exibhit-3 it is noted that Rs.34 lakhs in AY 2012-13, Rs.22 lakhs in AY 2013-14 Rs.45 lakhs in AY 2015-16 and Rs.20 lakhs in AY 2016-17 are in the nature of unaccounted capitation fees as the same remained unexplained. The relevant pages are reproduced at Pg 48-49 of the order. (d) From the pen drive seized it was found that it contained the names of students along with the amount totaling to Rs.540 lakhs from the branch of MDS courses during the academic year 2014-15. The same was considered as unaccounted capitation fees. The relevant pages are reproduced at page 49 of the order. (e) From the seized page no.88 of annexure A-3 it was observed that the same contain the details of some flats with the name of Kamal Propmart Pvt. Ltd along with amount of Rs.1,34,56,900/- and Rs.1,01,83,600/- and the difference of Rs.32,73,300/-. Further five ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both dated 22/10/2014. As per provisions of Section 120(3) of the Act, the criteria of Jurisdictions of Income Tax Authorities has been provided by the CBDT and as per provisions of Sec. 120(3) of the Act, there are four criteria for deciding the jurisdiction and the same are reproduced below: (3) In issuing the directions or orders referred to in sub-sections (1) and (2), the Board or other income-tax authority authorized by it may have regard to any one or more of the following criteria, namely: (a) territorial area; (b) persons or classes of persons; (c) incomes or classes of income; and (d) cases or classes of cases. Therefore, in furtherance of the said provisions, the CBDT vide notification Nos. 52/2014 and 53/2014 both dated 22/10/2014 had given powers to ld. CIT(Exemption) Jaipur for the State of Rajasthan for all cases of persons in the territorial area specified in column (4), claiming exemption under clauses (21), (22), (22A), (22B), (23), (23A), (23AAA), (23B), (23C), (23F), (23FA), (24), (46) and (47) of section 10, section 11, section 12, section 13A and section 13B of the Act and assessed or assessable by an Income-tax authority at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to another Assessing officer not from CIT to CIT. For ready reference, we reproduce Sec. 127 of the Act, which provides as under: 127. (1) The Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, transfer any case from one or more Assessing Officers subordinate to him (whether with or without concurrent jurisdiction) to any other Assessing Officer or Assessing Officers (whether with or without concurrent jurisdiction) also subordinate to him. (2) Where the Assessing Officer or Assessing Officers from whom the case is to be transferred and the Assessing Officer or Assessing Officers to whom the case is to be transferred are not subordinate to the same Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, (a) where the Principal Directors General or Directors General or Principal Chief Commissioners or Chief Commissioners o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neral or special order, and subject to such conditions, restrictions or limitations as may be specified therein, (a) authorise any Principal Director General or Director General or Principal Director or Director to perform such functions of any other income-tax authority as may be assigned to him by the Board; (b) empower the Principal Director General or Director General or Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to issue orders in writing that the powers and functions conferred on, or as the case may be, assigned to, the Assessing Officer by or under this Act in respect of any specified area or persons or classes of persons or incomes or classes of income or cases or classes of cases, shall be exercised or performed by an Additional Commissioner or an Additional Director or a Joint Commissioner or a Joint Director, and, where any order is made under this clause, references in any other provision of this Act, or in any rule made thereunder to the Assessing Officer shall be deemed to be references to such Additional Commissioner or Additional Director or Joint Commissioner or Joint Director by whom the powers and fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 120 and 127 the ld. CIT(Exmp.) cannot transfer or hand over or given his work or power or duties to the other same rank of CIT at all to cancel the Registration u/s 12AA. However, in case, if it is necessary to do so then there has to be proper proceedings in writing. As there has to be some order in writing from higher authorities i.e. from Chief Commissioner of Income Tax (Exmp.) Delhi or CBDT in writing and an opportunity of being heard is to be given to the assessee before transferring the case whereas all these are absent in the present case and nothing has been demonstrated by the department. 6.7 We further observe that Sec. 127 of the Act empower to transfer cases among Assessing Officers but not to Commissioners of Income Tax as CIT is not an Assessing Officer. In our view, to pass an order u/s 12A for registration or cancellation is not within the jurisdiction or power of an Assessing Officer. Hence registration u/s. 12A can be withdrawn only by the Prescribed Authority who has been empowered to grant the same and by the Notification dated 22.10.2014 the ld.CIT(Exmp.) has empowered for the same, hence the Pr.CIT (Central) cannot cancel the same. 6.8 In assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ters. The subordinate legislation can be given with retrospective effect if a power in this behalf is contained in the principle Act. In the absence of such conferment of power the Government the delegated authority has no power to issue a notification with retrospective effect. Therefore, in the absence of any provision contained in legislative Act the delegatee cannot make a delegated legislation with retrospective effect. When no power has been conferred by the act on the competent authority to withdraw the approval retrospectively, then the withdraw of the approval u/s 10(23C)(vi) of the Act can only be prospective. Hence such of approval gentled under section 12A from back date are also not according to the law and facts of the case and at the worst after the year of notice it can be done if any. In the case of Indian Medical Trust V/s PCIT (Central) 2019 (6) TMI 996 (Rajasthan) it has been held that: 28. Indisputably, the order dated 16th Jan, 2018, made by the Commissioner of Income Tax thereby canceling the registration granted under section 12A and withdrawing the approval given under section 10 (23C) (v) 10 (23A) (via) of the Act of 1961, to the petitioner Tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the facts and circumstances of the case, we hold that the order dt. 9th March, 2004, passed by the CIT (Annex. No. 15 to the writ petition) as per the then law is without power and jurisdiction and therefore, it is liable to be set quashed. 27. Accordingly, the impugned order dt. 9th March, 2004, passed by opposite party No. 2 withdrawing/rescinding the order granting registration on 1st April, 1999, to the petitioner's society under Section 12A of the Act, is quashed. Consequently, the registration granted to the petitioner's society on 1st April, 1999, stands restored for the assessment years under consideration. Thus, keeping in view the above discussion, we are of the opinion that in the present case the ld. Pr.CIT(Central) has no jurisdiction to pass the impugned order. Accordingly, we quash the same. Even otherwise we are also of the view that no retrospective cancellation could be made as neither in the Sec. 12AA(3) nor in Sec. 12AA(4) it has been provided or is seen to have explicitly provided to have a retrospective character or intend. Therefore, without a specific mention of the amended provisions to operate retrospectively no cancellation for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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