9911796707
TMI Blog2024 (6) TMI 1053X X X X Extracts X X X X X X X X Extracts X X X X ..... ster itself under the new regime u/s.12AA of the Act and the assessee had been granted registration in Form No.10AC on 24.9.2021 from the assessment years 2022-23 to 2026-27. The assessee had also been granted registration u/s.80G vide order dated 24.9.2021 from A.Ys 2022-23 to 2026-27. It was the submission that subsequently, the ld CIT(Exemptions) issued a show cause notice to the assessee on 6.10.2022, copy of the show cause notice was placed at page 50 to 53 of PB. The assessee had replied to the show cause notice and the ld CIT(Exemptions) had vide order dated 20.6.2023 cancelled the registration to the assessee u/s.12AA w.e.f. 1.4.2014. It was the submission that the impugned appeal was against the said cancellation of the registration u/s.12AA by an order u/s.12AB(4). 6. It was the submission that the appeal filed by the assessee is delayed by 97 days. It was submitted that on receipt of the order of the ld CIT(Exemptions), the assessee had filed writ petition before the Hon'ble Jurisdictional High Court of Orissa and subsequently with the permission of the Hon'ble High Court, the writ petition was withdrawn with a liberty to the assessee to file an appeal to the Tribunal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment by a retention order passed by the CIT(E) and even today, the retention continues. Ld AR drew our attention to pages 11 to 13 of the PB, which was a retention order dated 19.4.2021. It was the further submission that on 18.10.2016, the ld CIT(E) issued a show cause notice u/s.12AA(3), wherein, there was a proposal to withdraw the registration granted u/s.12A of the Act. Copy of the show cause notice dated 18.10.2016 was placed at pages 14 to 15 of PB, which reads as follows: "GOVERNMENT OF INDIA Ministry of Finance, Income Tax Department Office of the Commissioner of Income Tax (E) Annex, Aayakar Bhavan, Basheerbagh, Hyderabad-500 004 Tei: 040 23426031,32 Fax: 040 23426033 F. No. CIT(E)/Hyd/12A/Cancellation/04/2016-17 dt,.18.10.2016 To M/s. People Forum,44, Dharma Vihar, Khandagiri, Bhubaneswar. Sir, Sub: Show cause notice u/s.1AA(3) of the I.T. Act, 1961 for cancellation of registration u/s.12A of the IT Act, 1961 in the case of M/s. People Forum (PAN :AAATP 2214R), Bhubaneswar, Odisha- calling for explanation-Reg. Please refer to the subject mentioned above. 2. Earlier, the Society in your case was granted registration 12A of the Income tax Act, 1961 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rther submission that in the said show cause notice on 18.10.2016, the issue raised was that the activity of the assessee amounts to business activity and the second issue is in regard to donation of Rs. 2.00 crores given to Aids Awareness Trust of Orissa, whose physical existence was questioned. It was the submission that for assessment years 2009-2010 to 2013 - 2014, the Assessing Authority had treated the micro finance activity of the assessee as commercial activity and denied the assessee the benefit of exemption u/s.11 & 12 of the Act. The said assessment orders were subject matter of appeal before the ld CIT(A), who had allowed the claim of the assessee and had held the issue in favour of the assessee. The orders of the ld CIT(A) allowing the assessee's appeal for the assessment years 2009 - 2010 to 2013-14 are placed at pages 223-299 of PB. The revenue filed appeal against the orders of ld CIT(A) to the ITAT and the ITAT vide its order in ITA No.81/CTK/2016 and C.O. 02/CTK/16 dated 30.11.2016 had held the issue in favour of the assessee and upheld the orders of the ld CIT(A) and dismissed the revenue's appeal. Copy of the orders of the Tribunal in ITA No.325/CTK/2015 and C.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d and the proceedings had been dropped. It was the submission that the new show cause notice issued on 6.10.2022, which is placed at pages 50 to 53 of PB shows seven grounds. Copy of the show cause notice is extracted below: "GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTMENT CIT EXEMPTION HYD AT BBN PAN: dated DIN & Letter No AAATP2214R 06/10/2022 ITBA/COM/F/17/2022-23/1046190758(1) Sir/ Madam/ M/s, Subject: Online service of Orders - Letter Sub: Show-cause notice u/s 12AA of the Income-tax Act, 1961 for cancellation of registration granted u/s 12A of the Income Tax ACT.1961 in the case of People's Forum (AAATP2214R) - Issue o f - Regarding. On verification of records of the department following facts/discrepancies relating to M/s People's Forum (AAATP2214R) have been noticed. i) People's Forum was granted registration u/s 12A w.e.f 01.01.1996 & 80G w.e.f 20.10.2006 ii) A survey operation u/s 133A was conducted on 09-9-2016 in the premises of People's forum and Aids Awarene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature of commercial activity for consideration or service charges would not qualify to be Charitable in nature. In view of the facts stated above, the assessee trust does not qualify for exemptions available under the Income tax Act and do not entitle for Registration u/s 12AA of the Income tax Act, 1961. Section 12AB(4) explicitly provides as under: 4) Where registration or provisional registration of a trust or an institution has been grant* 'clause (a) or clause (b) or clause (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA. as the case may be, and subsequently,- (a) the Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or (b) the Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of Section 143 for any previous year, or (c) such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year, the Principal Commissioner or Commissioner shall- (i) call for such documents or information from the trust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of Sec. 11 of the Income tax Act, 1961 and same are treated as "Specified violations" as specifically mentioned in the explanation to the Provisions of Sec. 12AB(4) of the Income Tax Act and I, the Commissioner of Income tax (Exemptions), Hyderabad, Competent Authority, propose to cancel the Registration granted u/s 12AA of the Act. Therefore, you are requested to show cause why the Undersigned should not cancel the Registration granted u/s 12AA of the Act. For this purpose, in term of provisions of Sec. 12AB (4)(ii) of the Act, opportunity of being heard is accorded to file your objection for the proposed cancellation of registration u/s 12A. For this purpose your case is posted for hearing on 18.10.2022 at 11 A.M. It may please be noted that in case of failure to respond or failure to furnish any explanation, it will be presumed that you have no valid explanation to offer and matter will be decided on merits of the case. BALA KRISHNA BATTULA CIT EXEMPTION HYD AT BBN" 14. It was the submission that the first is not an issue for cancellation of registration, second refers to the contribution towards corpus funds received by the assessee, third refers to Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115-BBC(3), in claiming exemption of the donations from being chargeable to income tax. 7. Facts found by the Commissioner and the Tribunal clearly show that the assessee had furnished record of the identities indicating name and address of persons making the contributions. Revenue has not been able to demonstrate further requirement by prescribed particulars, as mentioned under sub-section (3) in section 115-BBC. As such, we answer the question in the negative and in favour of appellant (assessee). 8. The appeal is allowed. The orders of Tribunal and the Commissioner are set aside and quashed." Copy of the order is placed at pages 44 to 49 of PB. 15. It was the submission that clearly all the details were produced and even the Hon'ble High Court have been convinced by all the facts and proceedings quashed. It was the submission that the order of the Hon'ble High Court has also become final. 16. In regard to fifth issue, it was submitted that Shri Govinda Chandra Pattnaik, who is the Secretary of the assessee trust was a Director of Annapurna Microfinance Pvt Ltd., and that there is no bar in regard to holding the Directorship by any of the trustee. In Item No.6, what is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had been initiated by the ld CIT(E) as early as on 18.10.2016 being after a reasonable period from the date of the survey on the assessee. Admittedly, the assessee had responded to the same and it is an admitted fact that the proceedings did not continue after the show cause notice and reply filed by the assessee. The provisions of section 12AB(4) provide for the time limit in regard to passing of an order in respect of cancellation of the registration but the said provision refers to the first notice to be issued on or after 1st April, 2022. There is no saving provision in regard to the proceedings initiated prior to 1st April, 2022 and which admittedly being not calumniated into an order being served on the assessee. A perusal of the show cause notice issued by the ld CIT(E) on 6.10.2022 admittedly also does not refer to a show cause notice having been issued on 18.10.2016 and, therefore, it cannot be treated as a continuation of the proceedings either. The main crux of the cancellation of the registration is (i) whether the activity of the assessee is a business activity or charitable activity. Admittedly, this has reached finality for the assessment year 2009-10 to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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