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TMI Blog2025 (2) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 12A cannot be shifted /transferred through any order u/s 127 of the ITA, 1961. 3. The Learned PCIT-Central Circle, Pune erred in law and on facts in cancelling registration u/s 12A/12AA for the period from 1/4/2019 to 31/3/2021 without any cogent reasons. 4. The registration u/s 12A r.w.s. 12AB for the period from 1/4/2021 onwards is cancelled without issuing show cause notice for the same and without any cogent reasons. 5. The Learned PCIT (Central), Pune erred in law and on facts in holding that, activities of the Appellant are not genuine and funds are deployed for personal benefit of its members. Learned PCIT (Central), Pune erred in keeping heavy reliance on the statements recorded during search, without appreciating fact that the statements were recorded under peculiar circumstances and despite the fact of their retraction thereafter. 6. The Learned PCIT (Central), Pune also erred in law and on facts in holding that retraction affidavits of various persons have no credence and that, these retractions are "planned". 7. The Learned PCIT (Central), Pune also erred in law and on facts in not considering the statement of Mehul Patel recorded during the course of sear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 21.07.2023 by ld.PCIT(C). In the said show cause notice, assessee was asked to reply about the issues arising out of the search proceedings which included partial receipt of staff salary doctors salary, PG stipend and capitation fee in cash by the trustee of the assessee trust. The details of the alleged cash receipt on account capitation fee, refund of staff salary, doctors salary, PG stipend and others during F.Yrs. 2019-20 to 2021.22 (A.Y. 2020-21 to 2022-23) are referred in the show cause notice which is appearing on page 7 of the impugned order. Reference was also made to the statements of various staff persons of the assessee trust recorded during the course of search where they have alleged to have admitted the fact of receiving cash towards capitation fee as well as the staff salary, doctor salary, PG stipend. Based on this information, assessee was asked as to why registration u/s. 12A of the Act granted on 16.02.2001 should not be cancelled. Assessee gave reply to the show cause notice making multifold contentions which mainly included that ld.PCIT had no jurisdiction to deal with the issue of cancellation of registration u/s. 12AB(4). It was submitted that any adverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter, satisfying itself about the objects and genuineness of the activities of the trust or institution registration can be granted. iii. If the concerned authority after granting registration is satisfied that either (a) the activities of such trust or institution are not genuine or (b) are not being carried out in accordance with the objects of the trust or institution, as the case may be, or on noticing the violations mentioned in section 12AA(4) of the Act, the registration of such trust or institution can be cancelled u/s 12AA(3)/12AA(4) of the Act. iv. W.e.f. 01/04/2021, section 12AB of the Act was introduced for fresh registration of a trust or institution. Similar conditions were imposed on authority for granting registration as they existed u/s 12AA of the Act. However, for cancellation of the registration, section 12AB of the Act has introduced certain 'specified violations' for trust or institution w.e.f. 01/04/2022 which are defined in Explanation to section 12AB(4) of the Act as follows: Explanation. For the purposes of this sub-section, the following shall mean "specified violation" : (a) where any income derived from property held under trust, wholly o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt then such activity involving application of income cannot be considered as genuine activity or an activity as per the objects of the trust or institution. Further, even if the application of income is genuine but the activity per se is not as per the objects of the trust or institution then in both the cases, the said trust or institution would be liable for cancellation of its status of exemption. vi. If it is a finding of fact that the trust or institution are involved in nongenuine activity or activity that is not as per the objects of the trust as well as specified violations u/s 12AB, then the trust or institution will have to face its consequences in terms of cancellation of registration as charitable entity." 5. Thereafter, ld. PCIT has dealt with the issue of incriminating documents found and seized during the course of search regarding receipt of cash back from salaries, PF stipend, receipt of capitation fee from students, statement of the employees recorded during the course of search, retraction of statements of the trust authority and denial of trustee of the trust Mr. Mehul B. Patel about the statements of the trust staff. Ld. PCIT also dealt with the issue of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... numbers of such cheques which were used during different months in a year would be consecutive. There is no denial of the fact that Institute may be disbursing the salary/stipend to the doctors, staff and the PG students. But the evidences collected clearly indicate that part of the salary was taken back by the Institute run by the assessee trust every month and actual salary paid to them was less than the amount which was entered in the books of accounts kept by the Institute. This clearly establishes that the funds of the Institute were misappropriated by the trustee Shri Mehul B. Patel and other trustees for their personal purposes. 6.2 Receipt of Capitation fee from students The other issue is related to the fact that the assessee trust is taking capitation fee from students in lieu of granting admission, which is in violation of various laws. Various incriminating documents have been found during search action to establish this fact. 6.2.1 During the search action at the residential premises of Shri Balaji Pandurang Alli, Chief Accountant of the assessee trust, a purple coloured pen drive was found. The data found in the pen drive was analyzed. This pen drive had various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atel. He also accepted that the cash was generated from capitation fee received from students of the Institute run by the assessee trust against Quota Seats. He also confirmed that cash amounting to Rs. 2,86,00,000/- as reflected in the excel sheet was received by him. In the light of the above facts, it is evident that the assessee trust had received capitation fee from students. 7. The assessee trust has made its submissions in response to the show cause notices as discussed above. After perusal of the submissions of the assessee trust, it is observed that the assessee trust has raised the following contentions: a) Challenge the jurisdiction of the Pr. CIT(C) to deal with the issue of cancellation of registration u/s 12AB(4). b) Retraction of statements of the trust authority and denial by the trustee Shri Mehul Patel from the statements given by the employees of the trust authority. Commissioner or c) Seized material and its evidentiary value cannot be conclusive proof without supporting of independent evidence. d) Challenge the retrospective cancellation of Registration of Trust u/s 12AA. e) Specific conditions being violated by the assessee trust have not been me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 241 as mentioned above. 7.1.5 The Notification No. 70/2014 dated 13.11.2014 provides for the jurisdiction of Principal Commissioner of Income-tax (Central), Pune. As per clause (b) of the notification, the Principal Commissioners/ Commissioners of Income-tax (Central) or Joint Commissioners of Income-tax subordinate to them, shall exercise powers and perform the functions as stipulated in the Income-tax Act, 1961 in respect of such cases or classes of cases or such persons or classes of persons, assigned to Assessing Officers subordinate to them, under section 127 of the said Act, from the date of publication of the notification. Explanation to section 127 of the Act reads as under: "In section 120 and this section, the word "case", in relation to any person whose name is specified in any order or direction issued there under, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year." 7.1.6 Reading of the notifications ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the exercise of the powers and performance of the functions by all or any of the other Income-tax Authorities who are subordinate to it. 7.1.7 Thus, it can be said that once an order u/s 127 of the Act is passed transferring the jurisdiction of the person, the transferee Income-tax Authorities as mentioned in section 116 of the Act shall exercise all the powers and perform the functions as stipulated in the Act in respect of all the proceedings which may be commenced after the date of such order in respect of any year and such power includes passing the order registering a trust and also cancelling the registration. 7.1.8 Further, the CBDT vide letter F.No.173/6/2024-ITA-I dated 19/01/2024 has explained that jurisdiction of the Matter pertaining to cancellation of registration u/s 12AA/10(23C) of the Income tax Act, 1961 in Trust cases by Pr.CIT other than CIT(Exemption) wherein stated as under: "by virtue of provisions of clause (b) of the notification no. 70/2014, S.O. 2915(E) dated 13.11.2014, the PCIT(C) has been empowered to perform/exercise powers and functions stipulated in the Act in respect of such cases or classes of cases or such persons or classes of persons, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently appearing in the excel sheet prepared by Shri Balaji Pandurang Alli, has also accepted the same modus operandi and has stated that Shri Pandurang kallepalli & Shri Umakant Dhange used to hand over the cash to him which was finally handed over to Shri Mehul B Patel or Shri Dhaval Patel (trustee of the assessee trust). The above facts are supported by the material evidences in the form of bank account statements and copies of bearer cheques issued by doctors, staff, PG students to Cosmos Bank which were obtained from the bank. It is also noted that numbers of cheques used for such withdrawal from the account of one doctor were consecutive, which indicated that cheque book was solely used to give back part of the salary in cash. Otherwise there is no reason as to why numbers of such cheques which were used during different months in a year would be consecutive. There is no denial of the fact that Institute may be disbursing the salary/stipend to the doctors, staff and the PG students. But the evidences collected clearly indicate that part of the salary was taken back by the Institute run by the assessee trust every month and actual salary paid to them was less than the amount wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allepalli & Shri Umakant Dhage used to hand over the cash to him on regular basis, which was collected by way of the above modus. (iii) During search u/s 132, the statements of four doctors, one staff and four PG students were recorded in which they accepted that they parted with a portion of their salary every month in favour of the management through bearer cheques. They have admitted giving cash back from salary/stipend during the search action u/s 132 of the I.T. Act, 1961 dated 25.08.2022. iv) The denial by other doctors, staff and students that they gave back the part of salary is incorrect on the face of it as during the post search investigation, cash withdrawals of specific amounts such as Rs. 68,800/- Rs. 34400/- Rs. 27,700/- Rs. 25000/-etc., were found from their bank account statements. It is a fact that livelihood of these doctors, staff was dependent on institute and its management. They cannot be expected to give a statement which might implicate the management and jeopardize their jobs. The retraction of their statements is naturally an afterthought and is not supported by the evidence gathered during search. v) A perusal of the Panchnama prepared at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee trust was indulging in specific violation as defined in Explanation to section 12AB(4) of the Act. Moreover, since the application of income earned as discussed above by the trust or institution has been found to be fraudulent, therefore, its activities cannot be considered to be carried out as per the objects of the trust. Accordingly, the trust is liable for cancellation u/s 12AA of the Act also for the registration granted u/s 12A. 7.3 Seized material and its evidentiary value cannot be conclusive proof without support of independent evidence. 7.3.1 The assessee trust raised the contention that the seized material and its evidentiary value cannot be conclusive proof without the support of independent evidence and submitted that seized material represents print out taken from the seized pen drive from the residential premises of Shri Balaji Pandurang Ali which cannot be independently verified and are not supported by any conclusive proof. The contention of the assessee is not acceptable due to the following reasons: (i) The assessee trust itself has not brought on record any document which ruled out the facts and evidence gathered by the investigation wing d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pies of bearer cheques which were used to withdraw cash from accounts of salaried doctors, salaried staff and PG students were obtained from respective Banks. Following facts were found from these bank statements and copies of bearer cheques: (a) There were regular cash withdrawals in the pattern of Rs. 68,800/- and Rs. 34,400/- in case of salaried doctors of the Institute run by the assessee trust. Also, regular cash withdrawals of Rs. 27,500/- were found in cases of salaried staff of the Institute run by the assessee trust. From the bank account statements of PG students of the Institute run by the assessee trust, periodic cash withdrawals of Rs. 10,000/- Rs. 30,000/- and Rs. 25,000/- were found. (b) These cash withdrawals were within 2-3 days after the credit of salary / stipend in their respective bank accounts. (c) Bearer cheques were used to withdraw cash. Signatures on the back side of bearer cheques were of persons i.e., Mr.Kisan Mittha, Mr.Narendra Irabatti, Mr.Mahesh Upase etc. These persons are the employees of the assessee trust. (d) In the bank account statement of Dr. Vinayak Dhotre & Dr. Surekha Kaladi, doctors working in the Institute run by the assessee tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00/- to Rs. 50,00,000/- on regular basis on instructions of Shri Mehul B. Patel, trustee of the assessee trust & Mr. Dhaval Patel and then he handed over the same cash to Shri Mehul B. Patel or Shri Dhaval Patel. He also accepted that the cash was generated from capitation fee received from students of the Institute run by the assessee trust against Quota Seats. He also confirmed that cash amounting to Rs. 2,86,00,000/- as reflected in the excel sheet was received by him. 7.3.2 Assessee has relied upon the case law of ITAT Mumbai in the case of Krishna D. Pawar vs ITO in which it has been held that statement of college authorities is not sufficient to make addition in the hands of person giving capitation fee. This case is not relevant in the assessee's case as search was conducted in the case of assessee trust itself and all the material evidences have been found from the premises covered under search action in its case only. Thus, the contention raised by the Assessee Trust that the seized material and its evidentiary value cannot be conclusive proof without support of independent evidence is not acceptable. These facts have been certified further by the statements given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I has observed as under: "As far as the withdrawal of the approval with effect from 01/04/2009 is concerned, even that cannot be assailed, because the evidence and material discussed in detail in the impugned order reflect such entries in the Books of Accounts which reflect illegality having existing on record right from the Financial Year 2010-11 onwards and therefore the illegalities and transactions offending the said provisions cannot be split or bifurcated for the period in question only after the search and seizure operations were carried out on 16.12.2015 and the illegality cannot be allowed to be perpetuated for the preceding periods for which such evidence pointing out the illegalities exist on record". (iv) In the case of U.P. Distillers Association (IT Appeal 830 of 2017), Hon'ble Delhi High Court has held that the cancellation can be made from the retrospective date. (v) Hon'ble ITAT Bangalore in the case of Vidya Sewa Sangathna v. CIT Hubli, 71 Taxmann.com 152 has held that by way of amendment introduced by Finance Act, 2010 with effect from 01.06.2010, Commissioner is empowered to cancel registration granted to assessee-trust under section 12A with retro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned part of salary in cash to the Institute /management. It was also confirmed that they had handed over the blank bearer cheques with their signatures to Shri Balaji Pandurang Alli. It is pertinent to mention here that same modus operandi was confirmed by Dr. Nilesh Madhav Bhosale & Dr. Abdul Kayyum Shaikh and they have not retracted their statements. The evidence gathered by the Investigation team during the post search enquiry found that there were regular cash withdrawals in the pattern of Rs. 68,800/- and Rs. 34,400/ in case of salaried doctors of the institute run by the assessee trust and also regular cash withdrawals of Rs. 27,500/- in case of salaried staff of the institute. Further, these cash withdrawal were made within 2-3 days after the credit of salary/stipend in their respective bank accounts. Moreover, it is also pertinent to mention here that in the assessment proceedings of these individual employees, the AO has observed that no evidence of cash received by these employees over and above their salaries from the assessee trust has been found. It is not mentioned that these employees have not paid back part of their salaries to the assessee trust. In view of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members. Therefore, its activities cannot be said to be genuine and it cannot be said that the assessee has carried out its activities in accordance with its objects. This fact makes the assessee trust liable for cancellation of registration as per the provisions of section 12AA(3) and 12AA(4) of the Act also(prior to 01/04/2021). 10. I am, therefore, of the considered opinion that the activities of the assessee trust cannot be held genuine as there is found to be diversion of income of the assessee trust for purposes other than the Objects of the trust. Moreover, there is violation of other laws as already discussed above. All these violations clearly come within the ambit of provisions of section 12AA(3) and 12AA(4) and clauses (a), (e)(ii) and (f) of Explanation below section 12AB(4) of the Act. 11. In view of the above facts and the legal position as discussed above and after taking into consideration the submission of the assessee, it is held that the activities of the assessee trust are not genuine and there are violations of other laws along with diversion of income for the purposes other than that of the assessee trust. As the evidences and material discussed in detail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment proceedings were initiated. During the course of assessment proceedings, learned PCIT-CC initiated proceedings for cancellation of registration granted u/s 12A and 12AB. Replies of "a" were sought for. Appellant filed it's objections on technical aspects as well as on merits. However, learned PCIT-CC proceeded with the show cause notices and cancelled registration granted u/s 12A as well as u/s 12AB. 1.14. Challenge to cancellation Appellant has raised various grounds of appeal, challenging the order of learned PCIT(Central). In support of the various grounds of appeal, Appellant has raised various contentions, which can be considered in three main issues i.e.: a) Challenge to jurisdiction assumed by learned PCIT (not pressed) b) Challenge to powers available in section 12AB c) Challenge to cancellation of registration on merits of the Appeal 2. Powers u/s 12AB(4) [Key points/issues related to powers available u/s 12AB(4) are summarized as below] 2.1 Summary chart of original position of sections related to charitable trust, and changes in these sections from time to time, is enclosed herewith and marked as Annexure-1. 2.2 Earlier, Registration was grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Assessment proceedings (especially when, the Assessment proceedings are ongoing). Reason being that, issues of alleged irregularity gets elaborated /explained in detail during the scrutiny proceedings. Cancellation of registration, prior to completion of Assessment proceedings is premature step. 2.6. Key issue - Powers exercised and used by learned PCIT(Central) Learned PCIT(Central) has issued two (2) Show-Cause notices to the Appellant before proceeding to cancel the registration u/s 12A and u/s 12A(1)(ac) (i) of the ITA, 1961. While so doing, following fatal errors have crept into the actions/decisions of the learned PCIT(Central). For the sake of simplicity, these two notices are dealt with separately as follows: A. 1" notice issued u/s 12AB(4) dated 21/7/2023 Copy of the said notice is given at Page-8 of the Paper-Book. As per para-5 of the said notice, it appears, learned PCIT(Central) has alleged that "specified violations" enumerated u/s 12AB(4) have taken place in case of the Appellant. Now, as per facts, Appellant has received two registrations as under - (i) U/s 12A on 16/2/2001 (ii) U/s 12AB on 28/5/2021 No power to cancel registration u/s 12A dated 16/2/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eads as under "12AA(5) - Noting contained in this section shall apply on or after the 1st day of April 2021." From a literal reading of the above sub-section, it transpires that, the old procedure of registration/cancellation of registration, u/s 12AA, has ceased from 1/4/2021. Further, from reading of section 12AB, it transpires that, new procedure of registration / cancellation of registration has been triggered from 1/4/2021. In consonance with the above section, reference to section 12AB(4) also needs to be made. As per the said section 12AB(4), powers have been granted to cancel registration granted u/s 12AB(1) as well as u/s 12AA(1)(b) of the ITA, 1961. As such, all pending 12AA application cases get migrated u/s 12AB(4) as regards the aspect of cancellation of registration. It transpires thus that, all cases of cancellation of registration granted u/s 12AA have been specifically transferred to section 12AB(4). Now, once this new mechanism triggers from 1/4/2021; the use of powers u/s 12AA(3) and 12AA(4) by the PCIT(Central) is incorrect and besides the law. Secondly, the learned PCIT(Central) has made reference to "specified violations" u/s 12AB(4). The violations re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncellation of 12A registration of the appellant. It is submitted, learned PCIT ought to have considered various issues as will transpire from assessment proceedings. Now, in the assessment proceedings, additions can be made to the income of the appellant, if any irregularities emerge. Further, from a better perspective, such irregularities (if any), ought to be restricted only to the issue involved. And in no case, the remaining income of the trust/society should be affected by way of denying the benefit of exemption u/s 11 & 12 of the Act. In this regard, the appellant would like to place reliance on Shri Jairam Education Society vs Pr. CIT(Central)/ACIT(Central)-II (ITA Nos.90 & 548/Ind/2019) wherein the Hon'ble ITAT, Indore Bench have held as follows: 15d. In view of the above discussion with regard to ground no.1 2 & 6 of the assessee's appeal, in light of the judgments and decisions referred herein above settled and judicial principles, we are of the considered view that firstly, Ld. Pr. CIT erred in cancelling the registration with retrospective effect from 01.04.2008 and secondly, we are also of the view that Ld. Pr. CIT erred in cancelling the registration u/s 12A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.248/CTK/2023, dated 16.07.2024 5. Shri Shridevi Charitable Trust Vs. PCIT - ITA No.709/Bang/2023, dated 26.07.2024 10. On the other hand, ld. Departmental Representative apart from supporting the detailed finding of the ld.PCIT as extracted supra has also referred to the following case law compilation in favour of the Revenue : 1. Siddharth Gupta Vs. Principal Commissioner of Income-tax (2023) 150 taxmann.com 399 (SC) 2. Principal Commissioner of Income-tax Vs. Mehndipur Balaji (2023) 147 taxmann.com 201 (Allahabad) 3. Commissioner of Income-tax Vs. MAC Public Charitable Trust (2022) 144 taxmann.com 54 (Madras) 4. Nayyar Patel Vs. Assistant Commissioner of Income-tax (2022) 137 taxmann.com 149 (Kerala) 5. Bannalal Jat Constructions (P) Ltd. Vs. Assistant Commissioner of Income-tax (2019) 106 taxmann.com 128 (SC) 6. Sri Vidyaranya Seva Sangha Vs. Commissioner of Income-tax (2016) 71 taxmann.com 152 (Bangalore-Trib.) 7. U.P. Distillers Association Vs. Commissioner of Income-tax (2018) 99 taxmann.com 389 (Delhi) 8. Sinhgad Technical Education Society Vs. Principal Commissioner of Income-tax (2023) 149 taxmann.com 227 (Pune Trib.) 9. Travancore Education Soc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d transaction in the statement given during the course of search. However, the assessee failed to succeed before ld.PCIT and now the assessee is in appeal before this Tribunal raising multifold contentions, mainly the following three issues : a) Challenge to jurisdiction assumed by learned PCIT b) Challenge to powers available in section 12AB c) Challenge to cancellation of registration on merits of the Appeal 12. Before us, ld. Counsel for the assessee has not pressed the issue challenging the jurisdiction assumed by ld.PCIT. Thus, Grounds of appeal No.1 and 2 raised by the assessee are dismissed as 'not pressed'. 13. Now we take up the second issue challenging the powers available in section 12AB of the Act. Ld. Counsel for the assessee while raising the issue of challenging the powers available in section 12AB of the Act made threefold contentions and the same are : (a) that in absence of express powers provided u/s. 12AB of the Act for cancelling the registration u/s. 12A of the Act, notice issued on 21.03.2023 u/s. 12AB(4) of the Act is invalid and void ab-initio. (b) that second notice issued on 20.03.2024 u/s. 12AA(3)/12AA(4) is also void ab-initio as nothing con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner shall,- (i) call for such documents or information from the trust or institution, or make such inquiry as he thinks necessary in order to satisfy himself about the occurrence or otherwise of any specified violation; (ii) pass an order in writing, cancelling the registration of such trust or institution, after affording a reasonable opportunity of being heard, for such previous year and all subsequent previous years, if he is satisfied that one or more specified violations have taken place; (iii) pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; (iv) forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation.-For the purposes of this sub-section, the following shall mean "specified violation",- (a) where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or (b) the trust or institution has income from profits and gains of bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Second, when the CIT grants registration certificate under Section 12A of the Act to the assessee, whether grant of certificate is his quasi judicial function and, if so, its effect on exercise of his power of cancellation of such grant of registration certificate? 19. Third, whether Section 21 of the General Clauses Act can be applied to support the order of cancellation of the registration certificate granted by the CIT under Section 12A of the Act, in case, if it is held that there is no express power of cancellation of registration certificate available to the CIT under Section 12A of the Act? and 20. Fourth, what is the effect of the amendment made in Section 12AA introducing sub-clause(3) therein by Finance (No-2) Act 2004 w.e.f. 01.10.2004 conferring express power on the CIT to cancel the registration certificate granted to the assessee under Section 12A of the Act. 21. In our considered opinion, the CIT had no express power of cancellation of the registration certificate once granted by him to the assessee under Section 12A till 01.10.2004. It is for the reasons that, first, there was no express provision in the Act vesting the CIT with the power to cancel the regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otification issued under Section 3 of the Commissions of Enquiry Act for reconstituting the commission by replacement or substitution of its sole member except applicable for a limited purpose for extending the time for completing the enquiry. (State of Madhya Pradesh v. Ajay Singh AIR 1993 SC 825). It is also held while construing the provisions of Citizenship Act that the certificate of registration of citizenship issued under Section 5(1) C of the Citizenship Act cannot be cancelled by the authority granting the registration by recourse to Section 21 of the General Clauses Act. (Ghaurul Hasan v. State of Rajasthan AIR 1967 SC 107 and Hori Shanker Jain v. Sonia Gandhi AIR 2001 SC 3689). And lastly, while construing the provisions of the Representation of People Act, it is held that the Election Commission cannot, by recourse to Section 21 of the General Clauses Act, deregister or cancel the registration of a political party under Section 29A of the Act for the decision of the Commission to register a political party under Section 29A(7) of the Act is a quasi judicial in nature. [See Indian National Congress(1) (supra)] 27. It is not in dispute that an express power was conferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act the registration granted u/s. 12A of the Act cannot be cancelled and the same ratio is applicable on the present set of facts where registration u/s. 12A has been cancelled in the proceedings carried out after 01.04.2021 u/s. 12AB(4) of the Act. As we have extracted section 12AB(4) of the act in the preceding para, the same clearly deals with the registration or provisional registration granted under clause (a) (b) or (c) of sub-section (1) or clause (b) of sub-section (1) of section 12AA, as the case may be and not section 12A of the Act. It means that there is no express power provided u/s. 12AB of the Act for cancelling the registration granted u/s. 12A of the Act. Very same issue came up for adjudication before the Coordinate Bench, Cuttack in the case of Maa Jagat Janani Seva Trust (supra) wherein it has been held as under : "5. We have considered the rival submissions. A perusal of the facts in the present case clearly shows that a show cause notice for the purpose of cancellation of registration u/s. 12AA of the Act came to be first issued by ld CIT(E) on 6.10.2022. A perusal of the order cancelling the registration shows that the ld CIT(E) has not given any reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment of its objectives; or c) The trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not ensure for the benefit of the public; or d) The trust or institution established for charitable purpose created or established after the commencement of this Act, has applied any part of its income for the benefit of any particular religious community or caste; or e) Any activity being carried out by the trust or institution- (i) is not genuine, or (ii) is not being carried out in accordance with all or any of the conditions subject to which it was registered; or f) The trust or institution has not complied with the requirement of any other law, as referred to in item (B) of sub-clause (i) of clause (b) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality. 6.1 The contention of the ld. A.R. is that, these provisions have been inserted by Finance Act, 2022 w.e.f. 1.4.2022 and if there is a violation in previous year 2017-18 relevant to assessment year 2018- 19, these pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if he is satisfied that one or more specified violations have taken place; iii. pass an order in writing, refusing to cancel the registration of such trust or institution, if he is not satisfied about the occurrence of one or more specified violations; iv. forward a copy of the order under clause (ii) or clause (iii), as the case may be, to the Assessing Officer and such trust or institution. Explanation: For the purposes of this sub-section, the following shall mean "specified violation", - a) Where any income derived from property held under trust, wholly or in part for charitable or religious purposes, has been applied, other than for the objects of the trust or institution; or b) The trust or institution has income from profits and gains of business which is not incidental to the attainment of its objectives or separate books of account are not maintained by such trust or institution in respect of the business which is incidental to the attainment of its objectives; or c) The trust or institution has applied any part of its income from the property held under a trust for private religious purposes, which does not ensure for the benefit of the public; or d) The tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ken by the Hon'ble Supreme Court. 6.6 Further, the Hon'ble Supreme Court in the case of Shree Chowdhary Transport Company Vs. ITO reported in 426 ITR 289 (SC) wherein held as under: 17.4 It needs hardly any detailed discussion that in income-tax matters, the law to be applied is that in force in the assessment year in question, unless stated otherwise by express intendment or by necessary of implication. As per section 4 of the Act of 1961, the charge of income-tax is with reference to any assessment year, at such rate or rates as provided in any central enactment for the purpose, in respect of the total income of the previous year of any person. The expression "previous year" is defined in section 3 of the Act to mean "the financial year immediately preceding the assessment year"; and the expression "assessment year" is defined in clause (9) of section 2 of the Act to mean "the period of twelve months commencing on the 1st day of April every year". 17.5 In the case of CIT v. Isthmian Steamship Lines (1951) 20 ITR 572 (SC), a 3-judge Bench of this court exposited on the fundamental principle that "in income-tax matters the law to be applied is the law in force in the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question. Putting it differently, the Legislature consciously made the said sub-clause (ia) of section 40(a) of the Act effective from April 1, 20056, meaning thereby that the same was to be applicable from and for the assessment year 2005-06; and neither there had been express intendment nor any implication that it would apply only from the financial year 2005- 06." 6.7 Being so, we find force in the argument of ld. A.R. that in income-tax matters, law to be applied is the law in force in the assessment year unless otherwise stated or implied. In the present case, ld. PCIT is cancelling the registration granted u/s 12AA/12AB of the Act w.e.f. previous year 2020-21 relevant to assessment year 2021-22. In our opinion, the law as stated in the assessment year 2021-22 is to be applied and not the law as stood in the assessment year 2022-23. 6.8 Thus, we are of the view that no retrospective cancellation could be made u/s 12AB(4)(ii) of the Act as it has been provided or is seen to have explicitly provided to have a retrospective character or intended. Therefore, without a specific mention of the amended provisions to operate retrospectively, no cancellation for the earlier years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has taken similar view and as quashed the retrospective applicability of the new amended provision u/s 12AB(4)(ii) of the Act. We also note that same view has been taken by Coordinate bench of Mumbai in the case of Heart Foundation of India in ITA No.1524/Mum/2023 vide order dated 17 27.7.2023, wherein held that registration granted u/s 12A of the Act dated 21.7.1989 cannot be cancelled by ld. PCIT (Central) vide order dated 6.3.2023 w.e.f. assessment year 2016- 17, by invoking the provisions of section 12AB(4)(ii) of the Act. Accordingly, we allow the primary ground nos.2, 3, 5 & 12 and order of ld. PCIT passed u/s 12AB(4)(ii) of the Act is quashed. " 6. Further, on perusal of provisions of section 12AB(4) of the Act shows that the said provision has been substituted by the Finance Act, 2022 w.e.f. 1.4.2022. Before 1.4.2022, the registration could have been cancelled u/s. 12AB(5). However, the provisions of section 12AA and Section 12AB came into effect from 1.4.2015. Before that registration was done under section 12A of the Act. One needs to understand that the provisions of section 12A of the Act was amended to 12AA and then 12AB because registration scheme for Trust was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich have been brought into Act w.e.f. 01.04.2021. Therefore, the show cause notice u/s. 12AA of the Act issued on 20.03.2024 for cancelling the registration u/s. 12AA(3) and 12AA(4) of the Act for the period 01.04.2019 to 31.03.2021 is invalid and ab-initio as the ld.PCIT (Central) has issued the show cause notice dated 20.03.2024 in a section already stood discontinued from 01.04.2021 onwards. Thus, the assessee succeeds on this second limb of its legal ground challenging the powers available in section 12AB of the Act for cancellation of registration. 19. Now we take up the third limb where it has been contended by the ld. Counsel for the assessee that in the show cause notice dated 21.07.2023 the ld. PCIT has referred to 'specified violation' committed by the assessee by virtue of which the assessee trust has not applied its income wholly and exclusively for the purpose for which it is established but using it directly or indirectly for the benefits of its trustees and other members of the trust. From perusal of section 12AB(4) of the Act extracted (supra) and specifically to section 12AB(4)(a)(ii) it has been provided that PCIT or CIT shall pass an order in writing cancelling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n granted registration under clause (b) of subsection (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 it is noticed that- (a) the activities of the trust or the institution are being carried out in a manner that the provisions of sections 11 and 12 do not apply to exclude either whole or any part of the income of such trust or institution due to operation of sub-section (1) of section 13; or (b) the trust or institution has not complied with the requirement of any other law, as referred to in sub-clause (ii) of clause (a) of sub-section (1), and the order, direction or decree, by whatever name called, holding that such non-compliance has occurred, has either not been disputed or has attained finality, then, the Principal Commissioner or the Commissioner may, by an order in writing, cancel the registration of such trust or institution: Provided that the registration shall not be cancelled under this subsection, if the trust or institution proves that there was a reasonable cause for the activities to be carried out in the said manner." 21. Now in the above sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to various documents in the impugned order which mainly includes the statement of various employees and also referring to Excel Sheet appearing in the Pendrive found at the residential premises of Mr. Balaji Pandurang Alli, Chief Accountant alleging that assessee trust has received following amounts in cash : Cash received during FY 2019-20 (in Rs. ) Capitation fee 1,72,75,000/- Staff salary 61,04,565/- Doctor salary 3,61,22,275/- PG stipend 22,44,836/- Other 1,69,43,799/- Total 7,86,90,475/- Cash received during FY 2020-21 (in Rs. ) Capitation fee 6,33,85,000/- Staff salary 61,43,730/- Doctor salary 5,67,76,964/- PG stipend 39,18,700/- Other 1,26,09,050/- Total 14,28,33,444/- Cash received during FY 2021-22 (in Rs. ) Capitation fee 5,19,40,000/- Staff salary 73,46,405/- Doctor salary 6,35,21,640/- PG stipend 61,61,191/- Other 2,82,75,300/- Total 15,72,44,536/- 25. Though during the course of search in the various statements of employees as well as Chief Accountant it was accepted that such type of transactions of receiving cash towards capitation fee and refund of cash in lieu of staff salary, doctor salary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that the statements of various doctors, student and employees were recorded during the course of post search enquiry. In the said statements they have denied or to have refunded money to the Trust. This direct evidence of the denial should be preferred against any opinion/surmise based on stray jottings/entries recorded in the pen drive. Copies of sample statements are enclosed as Annexure 3. 6. Retraction/explanation regarding the statement recorded during the course of search: Shri Balaji Alli in whose residential house the seized pen drive was found has explained in his statement and confessed that all the entries in the pen drive seized are not reflecting actual transactions. He further explained the purpose and need for making such memorandum/ hypothetical entries. In light of this statement of Shri Balaji Alli explaining his earlier statement read with the denial statement of Shri Mehul Patel recorded during the course of search leads to conclusion that the jotting/entries in the pen drive are not dependable/ records any transactions. Similarly, retraction statements of employees, doctors and students are enclosed herewith vide Annexure - 4. 7. Decision on Capitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions levelled by the search team based on the statements of staff members and Mr.Mehul B. Patel stated that no cash has been received back from the staff members out of the stipend and nor against capitation fee. So what remains is just the preponderance of probability and a theory based on statements which have been retracted and the seized material found from the premises of third person on the basis of which ld. PCIT has alleged that the assessee has made 'specified violation'. Apart from these observations, no other discrepancy has been noticed by ld. PCIT in the genuineness of activities carried out. Now the issues on merit are already pending before the AO in the regular course of assessment proceedings carried out before issuance of notice u/s. 153A of the Act. Before the conclusion of the assessment proceedings, ld. PCIT has proceeded to cancel the registration granted to the assessee u/s. 12A and 12AB of the Act referring to the seized document and alleged specified violation'. 27. It has been consistently held by the Hon'ble Courts and Coordinate Benches that if the activities of the assessee are found to be genuine and in accordance with the objects of the trust, if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntil and unless the activities are not found to be genuine, even if there are some instance of any violation giving rise to certain additions then the same can be taken care off by the AO in the assessment proceedings but registration u/s. 12A/12AB of the Act cannot be cancelled. Very same issue has been dealt by the Hon'ble Karnataka High Court in the case of CIT vs. Islamic Academic of Education reported in 229 Taxman 274 (Karn.) and the Hon'ble High Court has held as under : "The Hon'ble Karnataka High Court in the case of CIT Vs. Islamic Academic of Education reported in 229 Taxman 274 (Karn) held 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. Stud ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Academic Feast for UG student are as under: Sr.no Name of the Student Name of the Organizer Award Name Exam Year 1 Neelanjana Ghosh MUHS-Nashik First in Biochemistry-"Dr. Adinath Narayan Suryakar Gold Medal" 2015 2 Surbhi Pattanshetti MUHS-Nashik Fourth in I MBBS-in University 2016 3 Neelanjana Ghosh MUHS-Nashik First in F.M.T.-"Dr. Sudhakar Sane Gold Medal" 2016 4 Rushikesh Shinde MUHS-Nashik First in Microbiology & Third in II MBBS in University 2017 5 Ruta Gaddam MUHS-Nashik First in F.M.T.-"Dr. Sudhakar Sane Gold Medal" 2017 6 Alfiya Perampalli MUHS-Nashik Fourth in I MBBS-"Anandrao Bhauji Saindane Gold Medal" 2019 7 Sakshi Patil MUHS-Nashik First in F.M.T. & Third in II MBBS-"Dr. Sudhakar Sane Gold Medal" 2019 8 Suryawanshi Hrishikesh MUHS-Nashik First in ENT.-"Federation of Maharashtra State Branches of the Association of Otolaryngologists of India Gold Medal" & Dr. Subhash R. Pandey Gold Medal 2019 9 Alfiya Perampalli MUHS-Nashik First in F.M.T.-"Dr. Sudhakar Sane Gold Medal" 2021 1.5 Award of certificates to undergraduate medical students on Successful completion of Research projects are as under: Sr. No. Name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 2137 17118 335586 2019 71607 15801 12842 5334 42000 54073 43344 43846 17152 42979 2111 20003 371092 2020 47508 7815 6382 2903 23980 32337 26545 23491 9495 24359 819 18414 224048 2021 62630 11060 7768 3186 33383 44888 36680 35168 12822 34749 2481 21200 306015 2022 57637 16452 8646 5252 36917 45909 40075 35815 17422 39352 3604 23918 330999 2023 56964 24777 10915 7586 39341 48963 43080 29506 21507 43535 4654 28364 359192 2024 84196 29288 13282 19012 37107 68355 40126 30356 25336 40533 4753 32787 425131 Total 709877 174022 92975 58338 403479 552966 443089 412845 202082 419710 36345 243604 3749332 IPD Patient Statistics Year Gen. Medicine Skin & VD TB & Chest Psy Paediatrics Gen. Surgery Ortho Ophthal ENT OBGY Casualty Total 2012 3548 78 20 20 1398 2935 1308 1229 551 1789 2153 15029 2013 3566 311 238 187 1100 3275 1352 2035 624 1695 2067 16450 2014 3121 271 231 192 1189 3920 1524 2432 1224 2345 2586 19035 2015 4214 251 327 237 1960 4456 2254 1944 1418 2918 2556 22535 2016 5485 356 333 307 2903 5099 2812 1858 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ients Amt. Spent for Indigent Patients from IPF A/C No. of weaker Section Patients Amt. Spent for weaker Section Patients from IPF A/c Total No. of Indigent & Weaker Patients Total Amt. Spent From IPF A/c 2011-12 2,660 9,756,480 23 20,887 2,683 9,777,367 2012-13 3,978 12,181,510 3,552 11,242,615 7,530 23,424,125 2013-14 3,504 9,149,270 4,508 5,564,997 8,012 14,714,267 2014-15 2,232 7,415,880 4,528 5,529,400 6,760 12,945,280 2015-16 728 6,815,524 1,584 4,318,449 2,312 11,133,973 2016-17 822 3,57,378 219 1,355,362 1,041 4,925,740 2017-18 787 2,375,776 240 2,001,932 1,027 4,377,708 2018-19 965 1,986,263 359 3,903,973 1,324 5,890,236 2019-20 654 1,352,717 240 2,646,830 894 3,999,547 2020-21 324 1,098,614 3 17,250 327 1,115,864 2021-22 567 5,171,430 1 12,000 568 5,183,430 2022-23 527 3,916,801 1 7,950 528 3,924,751 2023-24 756 5,465,445 - - 756 5,465,445 1.8. Over and above the IPF scheme, the trust also provides healthcare services at free of cost or at discounted rates to the needy patients. The summery details of the same are as follows- Sr. No. Year General Concession Given to the Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act were initiated subsequent to search proceeding carried out on Ramani Group on 30th August 2016. Certain loose papers were found having some details of salary payments, calculation of higher salary, cash payment, hand written details of income and expenditure which have been claimed by the assessee to be dumb documents and the detailed discussion with regard to these documents will be dealt by us in the subsequent paras. Based on these documents Ld. Pr. CIT has alleged that the funds of the society have been used for the benefit of members of the society and bogus expenditure has been claimed. Apart from these allegation based on the alleged loose papers no doubt has been raised at any point of time by the revenue authorities about the genuineness of charitable activity carried out by the assessee and the activities of imparting education to the students. 15a. For granting registration u/s 12AA of the Act ld. Pr. CIT/CIT has to be satisfied that the trust of society or institutions is running for charitable objects and activities is carried out are genuine in nature. In the instant case, the seized material relied upon does not establish that the activities of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led against it in show cause notice. The assessee emphatically denied the allegations leveled against the assessee that it has received a donation of Rs. 1 crore through cheque after making payment of the same in cash to M/s Herbicure Health Care Bio Herbal Research Foundation. The reply filed by the assessee is available at pages 19 to 25 of the compilation of the assessee running into 7 pages and in para 8 of it, the assessee has specifically asked the Id. Commissioner of Income Tax that in case there is any authentic material available with him which could throw some light on this issue, the same may be given to the assessee so that specific' reply on the same could be submitted on it, besides denying the allegations leveled against him. For the sake of reference, we extract para 8 as under:- 8. That your goodself has, in your notice dated 13/11/2015, alleged that the assessee has received a donation of Rsl,00,00,000/- from M/s Herbicure Health Care Bio Herbal Research Foundation in the A/Y 2011-12 by paying an amount of Rs. 1,00,00,000/- in cash to M/s Herbicure Health Care Bio Herbal Research Foundation itself. This allegation is totally untrue as nothing of this sort ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant for the purpose of cancellation of registration u/s. 12AA(3) of the Act. Of course, such matters can be dealt with in the course of assessment proceedings and, in our view, the same ought to be dealt with, if the situation so warrants. Presently, we are confining ourselves with examining the efficacy or otherwise of the action of the Commissioner in invoking section 12AA(3) of the Act and we find that the reasons advanced by the Commissioner are not germane. On this point, the learned representative for the assessee has relied on the following decisions to say that section 12AA(3) cannot be invoked by Commissioner for cancellation of registration merely for violation of provisions of section 11 and 13 of the Act by the assessee :- * CIT v. Apeejay Education Society [2015] 59 taxmann.com 102 (Punj. Har.) * Cancer Aid & Research Foundation v. DIT (Exemption) 86/49 taxmann.com 537 (Mum. - Trib.) * CIT (Exemptions) v. Cancer Aid & Research Foundation Income Tax Appeal No.505 of 2015 * Prabodhan Shikshan Prasarak Sanstha v. Dy. CIT taxmann.com 33/[2015] 152 ITD 473 (Pune - Trib.) * Tamil Nadu Cricket Association v. DIT (Exemption) 633/221 Taxman 275/[2013] 40 taxmann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther outer source for refusing registration under section 12A. The issue of registration under section 12A and the scope of enquiry at the stage of section 12AA was discussed, it was categorically held in the said decision that section 12AA does not speak anywhere that the CIT, while considering the application for registration, shall also see that the income derived by the trust or the institution is either not being spent for charitable purpose or such institution is earning profit. Profit earning or misuse of the income derived by charitable institution from its charitable activities may be a ground for refusing exemption only with respect to that part of the income but cannot be taken to be a synonym to the genuineness of the activities of the trust or the institution. While considering the registration under section 12AA, the scope of enquiry of the Commissioner would be limited to the aforesaid extent only." (v) The decision of Krupanidhi Educational Trust Vs. DIT (E) - 152 TTJ 673, wherein it is held as under :- The DIT(E) in the order u/s 12AA(3) of the Act, do not make out any case, which can show the activities of the assessee are not genuine or that the activities of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urpose and for being brought to tax like provisions of Sec.13(1) (c) of the Act which restricts unreasonable and excessive payments to certain category of persons connected with a trust or other institution. In such circumstances, the order u/s 12AA(3) of the Act, cannot be sustained. (vi) The decision of Prabodhan Prasarak Shikshan Santhan Vs. DCIT-152 ITD 473 (Pune), wherein it is held as under :- The Hon'ble Bombay High Court in the case of Sinhagad Technical Education Society v. CIT (Central) 2012) 343 ITR 23 (Bom) has held that "Every statutory provision which operates in respect of a trust, which has already been registered in the past is not necessarily retrospective. A provision is retrospective when it takes away a right which has vested or accrued in the past. The effect of the provision is to empower the commissioner to cancel the registration of the trust where he is satisfied that the activities of the trust are not genuine or are not being carried out in accordance with the objects of the trust or Institution. This could not by any stretch of imagination be regarded as retrospective alternation of the law. In the case before us, as per the amendment by the Fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 be considered as a ground for cancelling the registration. (viii) The Co-ordinate Bench of Cochin in the Case of M/s Kunhitharuvai Memorial Charitable Trust, KMCT Corporate office, Malabur Christian College Cross Road, Calicut V CIT (Central), Kochi (Order dated 16/01/2017 in Appeal No. 246/Coch/14) it was held that :- Para 16. Having said so, let us examine the powers of the Commissioner to grant registration u/s 12AA and cancellation of registration u/s 12AA (3) of the Act. The power to cancel registration already granted u/s. 12AA of the Act is contained in Sec. 12AA(3) of the Act and it reads as follows: "(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) 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 instit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng educational institutions. In such circumstances, the action of cancellation of registration cannot be upheld. As far as the object of the assessee is concerned, this is not the case of the Revenue that the assessee was not imparting education. Since the question about the imparting of education has not been doubted or challenged by the Revenue, the impugned order passed by the CIT is unsustainable in law. Strange enough again, there is nothing on record to prove even sightlessly that the purpose of imparting education was not fulfilled by this institute, thus the Revenue Department has failed to establish that there was any illegal activity or infringement of law so as to doubt the genuineness of the activities. 38. On perusal of the judgments and decisions referred herein above, we find that they are squarely applicable on the facts of the instant appeal and the issue raised before us and thus favours the assessee. Before concluding we would like to summarise our findings and observations in following manner:- (i) As regards the alleged donations received from various concerns mentioned in the impugned order, we are satisfied with the identity of the alleged donors, genuine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the activities carried out by the appellant assessee society by way of running hospitals and medical colleges for the benefit of public at large and for the students are for charitable purposes only as provided in Section 2(15) of the Act. 39. We therefore in view of our above finding arrived at after examining the facts of the instant case and in the light of judgments referred herein above which are squarely applicable on the facts and issue raised before us are of the considered view that the impugned order of Ld. PCIT cancelling the assessee's registration granted u/s 12AA(1) of the Act deserves to be quashed. We accordingly order so and direct the revenue authorities to restore the registration u/s 12AA(1) of the Act granted to assessee society w.e.f. 1.4.2011. Accordingly all the grounds raised by the assessee are allowed. 15c. It is also a settled issue that the registration u/s 12AA cannot be cancelled from retrospective effect. For this view we place reliance on the judgment of Hon'ble Madras High Court in the case of Auro Lab v. ITO (2019) 102 taxmann.com 225 dated 23.01.2019 wherein Hon'ble Court held that "Since the act of cancellation of registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing the income and the additions involving such issues can be made but for the remaining income of the society, benefit of exemption u/s. 11 of the Act cannot be denied. 35. As far as the decisions relied on by the ld. Departmental Representative are concerned, we have gone through all those decisions carefully and find that the sole substantive aspect in all those decisions is about the genuineness of the activities carried out by the trust and only in case it is find that the activities are not carried out as per the objects then the registrations have been cancelled. However, in the instant case as we have elaborately discussed above that the activities of the assessee trust are fully satisfying that it is running for the objects of the trust for which it has been registered and therefore even if at the end of the assessment proceedings certain additions are made with respect to the alleged allegation about receiving cash from part of the expenses incurred towards stipend, doctors salary or capitation fees then the AO can deny the benefit u/s. 11 to the extent of such discrepancy but since in the present case considering the genuineness of charitable activities carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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