M/S. KHUSIYAAN FOUNDATION,KOLKATA vs. CIT(EXEMPTION), , KOLKATA

Shri Sunil Surana, AR, AR represented on behalf of the assessee and Shri Subhendu Datta, CIT- DR represented on behalf of the revenue.

It was submitted by the ld. AR that the assessee is a new trust. The assessee came into existence vide deed of incorporation dated 05.05.2021. The assessee had admittedly applied for registration u/s 12A as an old trust originally by applying under the provisions of section 12A(1)(ac)(i) of the Act. It was the submission that after considering the application of the assessee, the ld. CIT(E) had originally granted the assessee registration u/s 12A(1)(ac)(i) vide an order dated 02.10.2021 for five years. It was the submission that subsequently for the purpose of renewal of registration, the assessee had applied for registration u/s 12A(1)(ac)(ii) of the Act. It was the submission that further the registration was rejected on the ground that the original application made by the assessee on 05.09.2021 was under the wrong provisions and consequently, the registration originally granted was erroneously granted. Consequently, the ld. CIT(E) cancelled the earlier registration treating it as void ab initio and denied the assessee the extension of the registration. It was prayed that the assessee has already enjoyed the registration for five years and what has already expired cannot be cancelled. It was further submitted that admittedly, the original registration was under the wrong section and even the registration was under the wrong section but the mistake was only in regard to the application of the section and not in regard to the activity of the trust.

A specific query has been raised whether the show-cause notice has been issued to the assessee before treating the original registration as invalid by the ld. CIT(E). The ld. AR submitted that no show-cause notice has been issued. It was then pointed to the ld. CIT-DR that the ld. CIT(E) has without issuing show-cause notice cancelled the registration already granted after the time for which the registration was granted and has also in the same order proceeded to deny the extension of the registration. The ld. CIT-DR submitted that the order is what it is.

We have considered the rival submissions. It is an admitted fact that once a registration has been granted to a trust, such registration cannot be withdrawn or cancelled without giving show-cause notice to the assessee. A perusal of the facts in the present case clearly shows that such show-cause notice has not been issued to the assessee. This being so, the action of the ld. CIT(E) treating the original registration granted to the assessee u/s 12A(1)(ac)(i) dated 02.10.2021 as void ab-initio stands reversed. We are live to the fact that the said registration has been granted to the assessee under the wrong section. However, the remedial action would have to be to cancel it during the period of its existence by following due process of law. This has not been done. As the original registration now would come into existence, obviously renewal of registration as made by the assessee u/s 12A(1)(ac)(ii) of the Act would be a valid application and as the same has not been considered by the ld. CIT(E), the issues in

ITA No.1336/Ko/2026 - As we have restored the issue of registration u/s 12A to the ld. CIT(E) for re-adjudication, the issues in this appeal in respect of recognition u/s 80G is restored to the file of the ld. CIT(E) for re-adjudication after considering the prayer for renewal of registration u/s 12A and after granting the assessee adequate opportunity of being heard.

In the result, both the appeals of the assessee are partly allowed for statistical purposes.