HYDERABAD SCIENCE SOCIETY,HYDERABAD vs. DCIT., EXEMPTION CIRCLE 1(1), HYDERABAD

3 ITA.No.1128/Hyd./2024 3.4. The Ld. CIT(E) has erred in passing of order u/s 12AB(4), on the already decided issue, which is against all the procedures/norms and judicial discipline.

4.1. The Ld. CIT(E) ought not to have cancelled the registration u/s 12A of the appellant, second time, when ITAT sustained the registration and even when the appeal of Dept. against such ITAT order is subjudice before hon'ble High Court.

4.2. The Ld. CIT(E) ought to have fairly appreciated the legal and judicial discipline that no Administrative or Executive Authority can ignore or sit on the judgement of higher Judicial forum, except filing an appeal before still higher Judicial Authority.

4.3. The Id. CIT(E) has erred in revisiting the issue of Registration u/s 12A of the Act, when the ITAT order is already existing and especially when the appeal of dept., against such ITAT order is pending disposal before hon'ble High Court.

5.1. The Ld. CIT(E) has erred in fairly appreciating the legal position when the issue has been already decided by the Hon'ble ITAT, lower authority cannot review the decision of higher authority by ignoring the provisions of the Act.

4 ITA.No.1128/Hyd./2024 5.2. The Ld. AO erred in relying on provisions of section 143 of the Act and referred the case to CIT(E) which is not the direction given by the Hon'ble ITAT in its order dt. 26.10.2022.

6. Without prejudice to any other grounds, the Ld. CIT(E) ought to have appreciated that the provision u/s 143(3) of the Act i.e, the Finance Act 2022, w.e.f 01-04-2022 does not have any retrospective effect for the AY 2015-16.

7. Without prejudice to any other grounds, the Ld. CIT(E) ought to have appreciated that provisions of section 12AB(4) (ii) of the Act wef 01.04.2022 cannot be applied retrospectively for the AY 2015- 16.

9.1. The assessment is barred by limitation on 31.03.2024 itself as the AO has not passed any consequential order. Assessment order, if any passed now for the year would be beyond jurisdiction.

9.2. The Ld. CIT(E) had erred in admitting a reference u/s 12AB(4) without considering the limitation of time (i.e, basing on time barring assessment proceedings) and passing an order u/s 12AB(4) of the Act, dt. 30.09.2024 by cancelling the registration u/s 12A of the Act, second time.

3. The assessee society was granted registration u/sec.12AA vide order dated 24.08.2006 which was cancelled by the learned CIT(E) vide Order dated 31.12.2018. However, this Tribunal vide Order dated 07.09.2021 in ITA.No.361/2019 quashed the said Order of the learned CIT(E) dated 31.12.2018 and thereafter, the learned CIT(E) passed the consequential Order dated 08.06.2022 restoring the registration u/sec.12AA of the Act. The assessee also challenged the Order of the learned CIT(A) for the assessment year 2015-2016 before the Tribunal arising from the assessment order passed u/sec.143(3) of the Act dated 16.12.2017 whereby the Assessing Officer disallowed the claim of exemption u/secs.11 and 12 of the Act on the same grounds as considered by the learned CIT(E) while passing the Order dated 31.12.2018 cancelling the registration u/sec.12AA of the Act. Since the registration was restored by 6 ITA.No.1128/Hyd./2024 the Tribunal and consequential order was also passed by the learned CIT(E) on 08.06.2022, this Tribunal vide Order dated 26.10.2022 set aside the Order of the learned CIT(A) and remanded the matter to the Assessing Officer for fresh adjudication in the light of the restoration of the registration. In the set aside proceedings, the Assessing Officer again made a reference for cancellation of the registration to the learned CIT(E) and consequently, the learned CIT(E) has passed the impugned order whereby the registration of the assessee has been again cancelled with effect from the assessment year 2015-2016 onwards. Aggrieved by the impugned order, the assessee has filed the present appeal.

4. Before the Tribunal, the learned Authorised Representative of the Assessee has submitted that the impugned order passed by the learned CIT(E) as per the reference made by the Assessing Officer is not sustainable in law when the Tribunal has already quashed the earlier Order of learned CIT(E) based on the identical reference made by the Assessing Officer. The learned Authorised Representative of the Assessee has submitted that the 2nd proviso to 7 ITA.No.1128/Hyd./2024 sec.143(3) has been introduced by the Finance Act, 2022 w.e.f. 01.04.2022 and therefore, the reference made by the Assessing Officer as per the 2nd proviso to sec.143(3) of the Act cannot be the basis for cancellation of registration with retrospective effect and particularly, with effect from the assessment year 2015-2016 as this amendment is not retrospective but it is prospective. The procedure adopted by the Assessing Officer as well as the learned CIT(E) u/sec.12AB(4) of the Act does not confer the power to the learned CIT(E) to withdraw or cancel the registration with retrospective effect and specifically prior to the said amendment brought into the statute. He has referred to the following decisions: i. Judgment of Hon’ble Delhi High Court in the case of Centre for Policy Research vs. Pr. CIT (Central) [2024] 461 ITR 540 (Del.); ii. Order of ITAT, Bangalore Bench in the case of Amala Jyothi Vidya Kendra Trust vs. Pr. CIT (Central) [2024] 204 ITD 605 (Bangalore-Tribu.);

8 ITA.No.1128/Hyd./2024 iii. Order of ITAT, Bangalore Bench in the case of Islamic Academy of Education vs. Pr. CIT (Central) [2024] 160 taxmann.com 217 (Bangalore-Tribu.); iv. Order of ITAT, Delhi Bench in the case of Lakhmi Chand Charitable Society vs. Pr. CIT, Central [2024] 166 taxmann.com 324 (Delhi-Tribu.); v. Order of ITAT, Cuttack Bench in the case of Maa Jagat Janani Seva Trust vs. CIT (Exemption) [2024] 208 ITD 120 (Cuttack – Tribu.); vi. Order of ITAT, Cuttack Bench in the case of People Forums vs. CIT (Exemptions) [2024] 162 taxmann.com 673 (Cuttack-Tribu.); vii. Order of ITAT, Bangalore Bench in the case of Amala Jyothi Vidya Kendra Trust vs. Pr. CIT (Central) [2024] 206 ITD 601 (Bangalore-Tribu.); 4.1. The learned Authorised Representative of the Assessee has further submitted that even the Assessing Officer has not completed the assessment after the set aside of the matter by this Tribunal vide Order dated 26.10.2022 and therefore, the said assessment completed by the 9 ITA.No.1128/Hyd./2024 Assessing Officer on 12.12.2024 is barred by limitation provided u/sec.153 of the Act. Thus, the reference made by the Assessing Officer in the assessment proceedings is invalid being barred by limitation and cannot be a basis for cancellation of the registration as per provisions of sec.12AB(4) of the Act. Thus, the learned Authorised Representative of the Assessee has submitted that the show cause notice issued by the learned CIT(E) u/sec.12AB(4) r.w.s.12AB(5) of the Act for cancellation of the registration is not valid. He has further contended that the learned CIT(E) has proceeded to issue the show cause notice as well as passed the impugned order which is against the judicial discipline when this Tribunal has already quashed the earlier order of the learned CIT(E) and the department has already filed an appeal before the Hon’ble High Court which is pending adjudication. Thus, the learned Authorised Representative of the Assessee has submitted that the learned CIT(E) could have waited for the outcome of the appeal filed by the department before the Hon’ble High Court and cannot cancel the registration on the same basis without

10 ITA.No.1128/Hyd./2024 any new development or new facts. He has pointed out that the Assessing Officer was supposed the pass the consequential order u/sec.143(3) r.w.s.254 of the Income Tax Act, 1961 on or before 31.03.2024. However, the Assessing Officer passed the consequential order only on 12.12.2024 which is barred by limitation and therefore, when the assessment order itself is invalid, then, the reference made by the Assessing Officer and consequential Order passed by the learned CIT(E) also not sustainable in law and liable to be quashed. In support of his contention, he has relied upon the following Judgments: i. Judgment of Hon’ble Delhi High Court in the case of Aircom International India (P) Ltd., [2024] 159 taxmann.com 148 (Delhi.); ii. Judgment of Hon’ble Karnataka High Court in the case of DCIT vs. Biesse India (P) Ltd., [2025] 178 taxmann.com 282 (Karnataka) (HC); iii. Order of ITAT, Delhi Bench in the case of Hitachi Astemo Haryana Private Ltd., Faridabad vs. ACIT,

11 ITA.No.1128/Hyd./2024 Circle-10(1), New Delhi in ITA.No.3353/Del./2024 dated 03.09.2025; iv. Judgment of Hon’ble Karnataka High Court in the case of Wipro Ltd., vs. JCIT, Special Range-7, Bangalore [2021] 438 ITR 581 (Karnataka); 4.2. The learned Authorised Representative of the Assessee submitted that the Hon’ble High Courts as well as this Tribunal has held that the limitation for passing the consequential order is provided u/sec.153 of the Act and therefore, the Order passed by the Assessing Officer beyond the limitation period is barred by limitation and hence, the same is invalid and nullity.

5. On the other hand, the learned DR has submitted that the learned CIT(E) has initiated the proceedings for cancellation of the registration as per the reference/proposal sent by the Assessing Officer in terms of second proviso to sec.143(3) r.w.s.12AB(4) of the Act. Thus, the proceedings initiated by the learned CIT(E) are strictly as per the provisions of the Act and therefore, the impugned order passed by the learned CIT(E) is strictly in accordance with the 12 ITA.No.1128/Hyd./2024 provisions of the Act as well as based on the facts reported by the Assessing Officer and examined by the learned CIT(E) while passing the impugned order. The learned DR has pointed out that this Tribunal vide Order dated 07.09.2021 quashed the earlier Order of the learned CIT(E) dated 31.12.2018 on technical ground of invalid show cause notice u/sec.12AB(4) of the Act. He has pointed out that the Tribunal has noted that the show cause notice was not issued by the learned CIT(E) but it was issued by DCIT (Exemption). Therefore, there is no bar for issuing fresh valid show cause notice by the learned CIT(E) for cancellation of the registration u/sec.12AB(4) of the Act. The learned DR has further submitted that sec.12AB(4) of the Act contemplates that after granting the registration if the Commissioner noticed occurrence of one or more specific violations during any previous year, the Commissioner after calling such documents or information or making such enquiry as he think necessary, has to satisfy himself about the occurrence or otherwise of any specific violation, pass an Order in writing cancelling the registration, after affording a reasonable

13 ITA.No.1128/Hyd./2024 opportunity of being heard to such trust or institution for such previous year and all subsequent previous year. Thus, the learned DR has submitted that the cancellation will be with effect from previous year in which the Commissioner found the occurrence or otherwise any specified violation committed by the trust or institution and hence, there is no bar for cancellation of registration for the assessment year prior to 2022. The Commissioner has recorded the specific violations of the assessee for diversion of the funds and involvement in non-genuine activities of providing commission based bogus donations as it was detected during a survey conducted in the case of M/s. Matriveni Institute of Experimental Research & Education. It was also found that another donation to Vichar Manch is also a Kolkata based and was involved in process of money laundering. The assessee has failed to explain the above violation of involvement of the assessee in allowing its bank account to transfer the fund in the guise of donation received and donation paid. He has relied upon the impugned order of the learned CIT(E) as well as the Judgment of Hon’ble Supreme

14 ITA.No.1128/Hyd./2024 Court in the case of ITO vs. Vikram Sujitkumar Bhatia in Civil Appeal No.911 of 2022 [SLIP (C) No.29096 of 2019] dated 06.04.2023 and submitted that the Hon’ble Supreme Court has observed that it is the duty of the Court while interpreting the machinery provisions of taxing statute to give effect to its manifest purpose. Wherever the intention to impose liability is clear, the Courts ought not be hesitant in espousing a commonsense interpretation to the machinery provisions so that the charge does not fail. Thus, the learned DR has submitted that the provisions of sec.12AB(4) should be given a meaning so as to achieve its purpose and not to make it redundant.

15 ITA.No.1128/Hyd./2024 was quashed by this Tribunal vide Order dated 07.09.2021 in ITA.No.361/Hyd./2019 in Para nos.3 and 4 as under:

“3. We have given our thoughtful consideration to rival contentions against and in support of the correctness of the CIT(E)'s order under challenge cancelling the assessee's Section 12AA registration. We find no reason to express our agreement with the Revenue's arguments supporting the same. This is for the precise reason that the CIT(E) passed his impugned order in furtherance to the corresponding show cause notice dt.08-02-2018 (page Nos.20 to 22) which had in fact been issued by the DCIT(E) only. This latter authority has nowhere been vested any jurisdiction to issue such a show cause notice u/s.12AA of the Act. Case law CIT Vs. Modern School Society (2020) [114 taxmann.com 587] (SC) holds that whilst affirming the corresponding hon'ble high court's judgment (2018) [99 taxmann.com 379] (Raj) that any order passed under the provisions of the Act by an authority without having any jurisdiction is a non est action only.

4. Learned CIT-DR fails to dispute that the CIT(E) had not issued any other show cause notice proposing to finalise the impugned action. We therefore hold that the CIT(E)'s impugned order is not sustainable on law since based on an invalid show cause notice. Quashed accordingly.”

6.1. Thus, it is clear that the earlier Order passed by the learned CIT(E) cancelling the registration of the assessee was quashed by the Tribunal on the ground of invalid show cause notice issued by the DCIT (Exemption) and not by the 16 ITA.No.1128/Hyd./2024 learned CIT(E). The Revenue has filed an appeal before the Hon’ble High Court against the said Order of the Tribunal which is pending adjudication. Pursuant to the said Order of the Tribunal dated 07.09.2021 the learned CIT(E) then restored the registration u/sec.12AA of the Act vide Order dated 08.06.2022. In the meantime, the Assessing Officer has passed the assessment order denying the exemption u/secs.11 and 12 of the Act to the assessee which was challenged before the learned CIT(A). However, the learned CIT(A) has dismissed the appeal of the assessee vide Order dated 09.06.2022 on the basis of the reasons given by the Assessing Officer as well as learned CIT(E) for cancellation of the registration u/sec.12AA(3) of the Act. On further appeal against the Order of the learned CIT(A), this Tribunal vide Order dated 26.10.2022 in ITA.Nos.268 & 269/Hyd./2022 for the assessment years 2015-2016 and 2016-2017 set aside the Order of the learned CIT(A) and remanded the matter to the record of the Assessing Officer with a direction to grant one more opportunity to assessee to substantiate its case and decide the issue as per facts and 17 ITA.No.1128/Hyd./2024 law. The relevant finding of the Tribunal in Para no.11 is as under:

11. We find the Assessing Officer in the instant case denied exemption u/s 11 for the impugned A.Y and following this order he also rejected the claim of benefit u/s 11 of the I.T. Act. for the A.Y 2016-17. After the orders passed by the Assessing Officer for the A.Ys 2015-16 and 2016-17, the Pr.CIT cancelled the registration issued to the assessee u/s 12A of the I.T. Act. We find on appeal by the assessee, the Tribunal vide dated 7.9.2021 restored the registration u/s 12AA of the I.T. Act and the CIT vide order dated 8.6.2022 has given the appeal effect and has granted registration u/s 12AA of the I.T. Act. Under these circumstances, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to grant one more opportunity to the assessee to substantiate his case and decide the issue as per fact and law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes.

6.2. Though the learned Authorised Representative of the Assessee has forcefully contended that the Assessing Officer has not passed the consequential order u/sec.143(3) r.w.s.254 of the Act within the period of limitation prescribed u/sec.153 of the Act, however, we are of the view that the validity of the assessment order being barred by limitation is not the subject matter of the present appeal and the same

18 ITA.No.1128/Hyd./2024 has been challenged by the assessee before the learned CIT(A). Therefore, we refrain from expressing any view on the said point.

6.3. As regards the validity of the impugned order for cancellation of the registration with effect from the assessment year 2015-2016, we find force in the arguments of the learned Authorised Representative of the Assessee as fortified by various decisions of Hon’ble High court as well as this Tribunal. In the case of Amala Jyothi Vidya Kendra Trust vs. PCIT (supra), the ITAT, Bangalore Bench has considered an identical issue and held in Para nos.6 to 8 as under:

“6. We have heard the rival submissions and perused the materials available on record. The main contention of the Id. A.R. is that the Id. PCIT has cancelled the registration granted to the assessee w.e.f. the previous year Le. 2020-21 relevant to assessment year 2021-22 by applying the provisions as stood on 12-5-2023, which cannot be applied for the violations of the provisions of section 12AA or 12AB of the Act. According to the Id. A.R., the Id. PCIT has cancelled the registration granted to the assessee since the Id. PCIT was satisfied that one or more specified violations have taken place. The specified violations are mentioned in explanation to section 12AB(4) of the Act as follows:

19 ITA.No.1128/Hyd./2024 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 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.

20 ITA.No.1128/Hyd./2024 6.1. Thus, the contention of the Id. 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 2020-21 relevant to assessment year 2021-22, these provisions cannot be applied to the assessee's case. For clarity, we will go through the relevant provisions applicable to previous year 2020-21 relevant to assessment year 2021-22 as follows:

"12AB(4): Where registration of a trust or an institution has been granted under clause (a) or clause (b) of sub-section (1) and subsequently, the Principal Commissioner or Commissioner is satisfied that the activities of such trust or institution are not genuine or are not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution after affording a reasonable opportunity of being heard." 6.2. This section has been amended by Finance Act, 2022 w.e.f. 1-4-2022 as follows:

12AB(4): Where registration or provisional registration of a trust or an institution has been granted under 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 21 ITA.No.1128/Hyd./2024 (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 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 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 separate books

22 ITA.No.1128/Hyd./2024 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 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 (1) 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. 6.3. As per section 12AB(4) of the Act as applicable to assessment year 2021-22, the Id. PCIT if he is satisfied that activities of the Trust or institution are not genuine or not being carried out in accordance with the objects of the trust or institution, as the case may be, he shall pass an order in writing cancelling the registration of such trust or institution after affording reasonable opportunity of being heard. As per section 12AB(5) of the Act, when trust or institution complied wholly or in part of the income of such trust or institution in violation of section 13(1) of the Act or if they complied with any other law, for the time being in force by the trust or institution as are material for the purpose of 23 ITA.No.1128/Hyd./2024 achieving its objectives as mentioned in section 12AB(1)(b)(ii) (B) of the Act. However, in the present case, the Id. PCIT invoked the provisions of section 12AB(4)(a)(ii) of the Act as stood in the assessment year 2022-23. The objection of the Id. A.R. is that for the cancellation of registration for the assessment year 2021-22, he could not invoke the provisions of section 12AB(4)(ii) of the Act which is introduced by Finance Act, 2022 w.e.f. 1-4-2022 and applicable for the assessment year 2022-23 onwards. 6.4. In the case of Isthmian Steamship Lines reported in 20 ITR 572 (SC) wherein the Hon'ble Supreme Court held that "it is a cardinal principle of the tax law that law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication". 6.5. In the case of Karimtharuvi Tea Estate Ltd. v. State of Kerala [1964] 51 ITR 129 (SC) the same view was taken by the Hon'ble Supreme Court. 6.6. Further, the Hon'ble Supreme Court in the case of Shree Choudhary Transport Corpn. v. IΤΟ [2020] 118 taxmann.com 47/272 Taxman 472/426 ITR 289 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 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";

24 ITA.No.1128/Hyd./2024 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 assessment year unless otherwise stated or implied." This decision and various other decisions were considered by the Constitution Bench of this court in the case of Karimtharuvi Tea Estate Ltd. v. State of Kerala (1966) 60 ITR 262 (SC) and the principle were laid down in the following terms (at pages 264- 266 of 60 ITR):

"Now, it is well-settled that the Income-tax, as it stands amended on the first day of April of any financial year must apply to the assessments of that year. Any amendments in the Act which come into force after the first day of April of a financial year, would not apply to the assessment for that year, even if the assessment is actually made after the amendments come into force......

The High Court has, however, relied upon a decision of this court in CIT v. Isthmian Steamship Lines 3 where it was held as follows:

'It will be observed that we are here concerned with two datum lines: (1) the 1st of April, 1940, when the Act came into force, and (2) the 1st of April, 1939, which is the date mentioned in the amended proviso. The first question to be answered is whether these dates are to apply to the accounting year or the year of assessment. They must be 25 ITA.No.1128/Hyd./2024 held to apply to the assessment year, because in income- tax matters the law to be applied is the law in force in the assessment year unless otherwise stated or implied. The first datum line therefore, affected only the assessment year of 1940-41, because the amendment did not come into force till the 1st of April, 1940. That means that the old law applied to every assessment year up to and including the assessment year 1939-40.

This decision is authority for the proposition that though the subject of the charge is the income of the previous year, the law to be applied is that in force in the assessment year, unless otherwise stated or implied. The facts of the said decision are different and distinguishable and the High Court was clearly in error in applying that decision to the facts of the present case." (Emphasis Supplied)

17.6. We need not multiply on the case law on the subject as the principles aforesaid remain settled and unquestionable. Applying these principles to the case at hand, we are clearly of the view that the provision in question, having come into effect from April 1, 2005, would apply from and for the assessment year 2005-06 and would be applicable for the assessment in 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.

26 ITA.No.1128/Hyd./2024 6.7. Being so, we find force in the argument of Id. 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, Id. 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 could be made. In this regard, it is appropriate to place reliance on the judgement of Hon'ble Madras High Court on the question as to whether the cancellation will operate from a retrospective date in the case of Auro Lab v. ITO [2019] 102 taxmann.com 225/261 Taxmann 364/411 ITR 308 (Mad.) wherein held as under:

"20. On the second question as to whether the cancellation will operate from a retrospective date, it was held that the amendment to section 12AA(3) is prospective and not retrospective in character. The courts reasoned that even when Parliament had plenary powers to enact retrospective legislation in matters of taxation, the amended section is not seen to have explicitly provided to have a retrospective character or intend. Therefore, without a specific mention of the amended provisions to operate retrospectively, the cancellation cannot operate from a past date.

27 ITA.No.1128/Hyd./2024 21. On the third question of the effective date of operation of the cancellation order, it was held that the cancellation will take effect only from the date of the order/notice of cancellation of registration. Since the act of cancellation of registration has serious civil consequences and the amended provision is held to have only a prospective effect the effect of cancellation, in' the event the pending tax appeal is decided in favour of the Revenue, will operate only from the date of the cancellation order, that is December 30, 2010. In other words, the exemption cannot be denied to the petitioner for and up to the assessment year 2010-11 on the sole ground of cancellation of the certificate of registration." 6.9. In this case, the Id. PCIT has cancelled the registration under the new provisions of the Act Le. 12AB(4) (ii) of the Act, which specifically provides that cancellation can be done for such previous year and all subsequent previous years, which makes it clear that the cancellation cannot be retrospective, therefore, in view of the above discussion, we are of the opinion that cancellation of registration with retrospective effect is invalid in these cases. Since the Id. PCIT invoked the provisions of section 12AB(4)(ii) of the Act, which has been introduced by the Finance Act, 2022 w.e.f. 1/4/2022 so as to cancel the registration with retrospective effect from assessment year 2021-22, which is bad in law. We also note that same view has been taken by Coordinate bench of Mumbai in the case of Heart Foundation of India v. CIT [IT Appeal No. 1524 (Mum.) o 2023, of vide order dated 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

28 ITA.No.1128/Hyd./2024 the primary ground nos.2, 3, 5 & 12 and order of Id. PCIT passed u/s 12AB(4)(ii) of the Act is quashed. 7. In view of our findings in ground Nos.2, 3, 5 & 12, the grounds of appeal in Ground Nos. 4,6,7,8,9,10,11,13 & 14 have become infructuous as the order of Id. PCIT itself has been quashed.

8. In the result, appeals of the assessee are allowed.”

6.4. Thus, the Tribunal has held that no retrospective cancellation could be made u/sec.12AB(4) of the Act as it has not been provided in the said provision or intended by the legislature in the absence of any specific mention of retrospective application of the said provision. The Tribunal has relied upon various decisions including the Judgment of Hon’ble Madras High Court in the case of Auro Lab vs. ITO 411 ITR 308 (Mad.) wherein the Hon’ble Madras High Court has held that the cancellation will take effect only from the date of order/notice of cancellation of registration. Similar view was taken by the Bangalore Benches of the Tribunal in the case of Islamic Academy of Education vs. PCIT (supra). This Tribunal has taken a consistent view of this issue as the Delhi Benches of this Tribunal in the case of 29 ITA.No.1128/Hyd./2024 Lakhmi Chand Charitable Society vs. PCIT (supra) has also considered an identical issue in Para nos.18 to 22 as under:

“18. Having regard to the judgment as relied upon by the Ld. A.R we are of the considered opinion that the reference made in terms of 2nd proviso of Section 143(3) of the Act to the PCIT to whom the AO was subordinate is not permissible rather it is the CIT(E) Delhi, having territorial jurisdiction specified in Column 4 of the Notification Nos. 52/2014 and 53/2014 both dated 22.10.s2014 from whom exemption inter/alia under Section 12A of the Act is being claimed is the appropriate authority. In fact by and under the said notification the CIT(Exemption) has been constituted separately for the purposes mentioned therein. In that view of the matter the order passed by the PCIT cancelling registration of the appellant society on the reference made by the Assessing Officer is found to be flawed and without jurisdiction.

30 ITA.No.1128/Hyd./2024 20. So far as the provision of Section 12AB(4) of the Act as exercised by the PCIT is concerned the Ld. A.R relied upon a judgment passed by the Banglore Bench in the case of Islamic Academy of Education v. Pr. CIT (Central) in 160 taxmann.com 217 (Bangalore-Trib.) for Assessment Year 2021-22, a copy whereof has also been annexed to the paper book filed before us by the appellant. While dealing with this particular aspect of the matter the Bench has been pleased to observe as follows:

"8.1.9. Registration Before the amendment by the Finance Act, 2022, Section 12AB(4) provided for cancellation of registration in case of any violation under Section 13. The amended Section 12AB(4) does not consider a violation of Section 13(1)(c) and Section 13(1)(d) as specified violations. Consequently, the registration cannot be cancelled on the ground that the assessee has violated Section 13(1)(c) or Section 13(1)(d).

8.1.10. The Finance Act 2023 has inserted clause (g) in Explanation to Section 12AB(4) to provide that giving incomplete, false, or inaccurate information in a registration application under Section 12A(/)(ac) will be deemed as a "specified violation" that can lead to the cancellation of registration.

8.2. Thus, it means that the following registration could be cancelled:

8.2.1. The PCIT/CIT can cancel the following registrations granted to a trust or institution:

(a) Final registration or provisional registration granted under section 12AB(1)(a)/(b)/(c);

31 ITA.No.1128/Hyd./2024 (b) Final registration granted under section 12AA(1). The erstwhile provision did not cover cases of provisional registration granted under section 12AB(1)(c). Now, the provisional registration granted for the first time can also be cancelled by the authorities.

8.3. As seen from the above, since the assessee has secured the registration u/s 12A of the Act dated 4.6.1992, which was effective till the date of 23.9.2021 and this registration granted u/s 12A cannot be cancelled u/s 12AB(4)(ii) of the Act for the previous year 2020-21 covering the assessment year 2021-22. On the other hand, he could cancel the registration from assessment year 2022-23 onwards u/s 12AB(4) (ii) of the Act. In our opinion, if there is any violation in the previous assessment year 2020-21 relating to the assessment year 2021-22, this cannot be reason to cancel the registration granted for the assessment year 2022-23 to 2026-27 as the assumption of jurisdiction u/s 12AB(4)(ii) of the Act is itself wrong on the reasons discussed herein above. The specific violation committed by the assessee in any of these assessment years is to be considered independently and not the violation committed in assessment year 2021-22 for cancelling the registration granted u/s 12AB of the Act for the assessment year 2022- 23 to 2026-27. As such, we make it clear that the Id. PCIT at liberty to pass the fresh order of cancellation independently u/s 12AB(4)(ii) of the Act for these assessment years le. 2022-23 to 2026-27, if so advised. Accordingly, we allow this ground taken by the assessee. Ordered accordingly."

32 ITA.No.1128/Hyd./2024 21. We find inspiration from the essence of the ratio laid down in the above judgment and observe that in view of the provision of Section 12AA(5) of the Act as the provision of Section 12AA cannot be applied on order after 01.04.2021 the show cause notices issued by the PCIT to the appellant dated 05.07.2023 and 16.08.2023 are, thus, found to be erroneous and therefore liable to be quashed. Once the show cause is found to be non est in the eyes of law, the entire proceeding is naturally found to be on a wrong foundation of law and thus, liable to be set aside. Similarly, invoking the provision of Section 12AB(4) of the Act by the PCIT to cancel registration for specified violation is also not permissible at the same has not seen the light of day prior to 01.04.2022; the same is therefore, not applicable to Assessment Years 2015-16 to 2021-22 as wrongly has been applied in the case in hand.

6.5. Thus, it is held in the above cited Judgment of Hon’ble High Court and Orders of the Tribunal that the provision of sec.12AB(4) for specific violation do not permit the cancellation of registration with retrospective effect but 33 ITA.No.1128/Hyd./2024 the said provision is only prospective operation and application for cancellation with effect from date of issuing the show cause notice or order of cancellation. The Cuttack Bench of the Tribunal in the case of People Forums vs. CIT(E) (supra) has also considered this issue in Para nos.19 and 20 as under:

“19. We have considered the rival submissions. Admittedly, the proceedings for cancellation of the registration u/s.12A to the assessee had been initiated by the Id 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 1 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 Id 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 (1) whether the activity of the assessee is business activity or charitable activity. Admittedly, this has reached finality for the assessment year 2009-10 to 2011-12, wherein, the Co-

34 ITA.No.1128/Hyd./2024 ordinate Bench of this Tribunal have held the issue in favour of the assessee. The second issue is in regard to donation to Aids Awareness Trust of Orissa and the questioned the existence of the trust. The assessee has produced the assessment order in the case of said trust and the assessment order passed also refers to its registration by the Id CIT(A). Therefore, the second issue could fall to the ground on account of the act of the department itself in regard to the assessment and in regard to registration by the Id CIT(E). It is also admitted by ld CIT(E) that there are no common trustees nor any related trustee between the assessee trust and Aids Awareness Trust of Orissa. In any case, both the issue had been raised by the Id CIT(E) in its original show cause notice which had been culminated in the orders served on the assessee. A new issue which has been raised by the Id CIT(E) in the show cause notice dated 6.10.2022 is the details of the corpus donation. Admittedly, this was the subject matter of 263 proceedings and that the issue had been considered by the Hon'ble Jurisdictional High Court and the Hon'ble High Court had found the orders of Id CIT to be un-sustainable and also quashed the same. Thus, all the issues on which the Id CIT(E) has raised the show cause notice for the purpose of cancellation of registration u/s.12A have already been decided by the Appellate Authority and same has also reached finality. The Id CIT(E) by his order dated 20.6.2023 being the impugned order has tried to unsettle issues which are already settled in the case of the assessee. This is not permissible. This being so, as it is noticed that all the issues on the basis of which, ld CIT(E) has cancelled the registration u/s.12A granted to the assessee has already been settled by various appellate authorities on earlier occasion and the issue had reached finality, same cannot be used for cancelling the registration of the assessee. This being so, on merits also, the order passed u/s.12AB(4) by the Id

35 ITA.No.1128/Hyd./2024 CIT(E) on 20.6.2023 cancelling the registration granted to the assessee stands quashed. 20. We are not going into the issue as to whether the registration can be cancelled retrospectively though we are of the view that retrospective cancellation w.e.f. 1.1.2014 is erroneous as we have already quashed the cancellation of registration.”

6.6. This view has been reiterated by the Bangalore Bench of the Tribunal in the case of Amala Jyothi Vidya Kendra Trust vs. PCIT (supra) in Para nos.6.8 to 6.10 as under:

“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 could be made. In this regard, it is appropriate to place reliance on the judgement of Hon'ble Madras High Court on the question as to whether the cancellation will operate from a retrospective date in the case of Auro Lab Ltd. v. ITO [20191 102 taxmann.com 225/411 ITR 308/261 Taxman 364 (Madras) therein held as under:

"20. On the second question as to whether the cancellation will operate from a retrospective date, it was held that the amendment to section 12AA(3) is prospective and not retrospective in character. The courts reasoned that even when Parliament had plenary powers to enact retrospective legislation in matters of taxation, the amended section is not seen to have explicitly

36 ITA.No.1128/Hyd./2024 provided to have a retrospective character or intend. Therefore, without a specific mention of the amended provisions to operate retrospectively, the cancellation cannot operate from a past date.

6.10. It is noted that coordinate bench of this Tribunal in both assessee's case for AY 2021-22 has taken similar view and as quashed the retrospective applicability of the new amended provision u/s 12AB(4)(if) of the Act. We also note that same view

37 ITA.No.1128/Hyd./2024 has been taken by Coordinate bench of Mumbai in the case of Heart Foundation of India in vide order dated 27.7.2023, wherein held that registration granted u/s 12A of the Act dated 21.7.1989 cannot be cancelled by Id. 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.”

6.7. Accordingly, in the facts and circumstances of the case and in view of the precedents as cited above, we hold that the impugned order passed by the learned CIT(E) cancelling the registration granted u/sec.12AA under the provisions of sec.12AB(4) r.w.s.12AB(5) with effect from assessment year 2015-2016 onwards is not sustainable in law and the same is set aside.

Order pronounced in the open Court on 11.03.2026.