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Facts
The assessee, Sinhagad Technical Education Society, had its Section 12A registration cancelled for FY 2007-08, which was upheld by the ITAT. Subsequently, the assessee obtained a new registration for AY 2022-23 to 2026-27 under the new regime, during which time the appeal against the prior cancellation was still pending. The PCIT cancelled this new registration, alleging the assessee provided false information by not disclosing the prior cancellation, invoking Explanation (g) to Section 12AB(4).
Held
The Tribunal found that Explanation (g) to Section 12AB(4), used for cancellation, came into effect after the assessee's application and grant of registration, and thus could not be applied retrospectively. It also noted that the previous cancellation was under appeal, meaning it had not attained finality when the new application was made. The Tribunal quashed the PCIT's cancellation order and remanded the issue back to the PCIT for a fresh examination to determine if the assessee is currently carrying out genuine charitable activities post-registration in 2021.
Key Issues
Whether a cancellation of registration based on furnishing false information can be retrospectively applied when the relevant legal provision came into effect after the application and grant of registration; and whether an assessment/registration attains finality when an appeal against a previous cancellation order is still pending.
Sections Cited
12A, 12A(1)(ac), 12A(1)(ac)(i), 12AA, 12AA(3), 12AA(4), 12AB, 12AB(1)(b)(ii)(B), 12AB(4), 12AB(4)(a)(ii), 12AB(4)(g), 12AB(4)(i), 12AB(4)(ii), 12AB(5), 11, 11(2), 12, 13(1), 13(3), 10(23A)(via), 10(23C)(v), 10(23C)(vi), 132, 143(3), 148, 2(9), 2(15), 3, 4, 254
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
This appeal filed by the assessee is directed against the order dated 05.02.2025 of the Ld. PCIT(Central), Pune cancelling the registration granted to the assessee by CPC u/s 12A of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) for the period from assessment year 2022-23 to 2026-27.
Facts of the case, in brief, are that the assessee Sinhagad Technical Education Society (in short referred as 'STES') had filed its returns of income for assessment years 2019-20 to 2024-25 representing itself as a registered trust and claiming the benefit of exemptions under Sections 11 and 12 of the Income-tax Act, 1961 (hereinafter referred to as „the Act'). A search & seizure operation was conducted under section 132 of the Act on 06.08.2013 in the case of STES and Maruti Nivruti Navale group, Pune. The Ld. PCIT noted that as per the examination of the seized material and post-search enquiries conducted, it was gathered that STES had indulged in activities which were not in accordance with the objects specified in the trust deed and the spirit of charitable activity. Moreover, there were strong evidences gathered during search action leading to the conclusion that STES is not existing solely for the purpose of charitable activity of education but is indulging in activities for the purpose of earning profit since it was found to be accepting cash donations/capitation fees for admitting the students under the management quota in the educational institutions run by it. Further such donations/capitation fees were kept outside the books of accounts of STES. The cash so collected was being siphoned off by the Chairman & Founder Trustee Shri M.N. Navale for his personal enrichment. Accordingly, it was held that the assessee trust was being used for the purpose of earning profit from activities which are beyond the stated objects of the trust and therefore, is not entitled to registration under the provisions of section 12A of the Act.
3. Accordingly, vide order dated 09.05.2018, the registration granted u/s 12A of the Act to the assessee trust was cancelled w.e.f. financial year 2007-08. Further, the above mentioned cancellation of registration of the assessee u/s 12A of the Act was subsequently upheld by the Tribunal in its order dated 07.02.2023, confirming that the assessee has had no valid registration w.e.f. financial year 2007-08. Subsequently, under the new registration regime, effective from 01.04.2020, the assessee obtained registration under clause(i) of Section 12A(1)(ac) of the Act, which is applicable to trusts that held a valid registration under the previous system (i.e. prior to 01.04.2020). However, despite not having a valid registration at that time, the assessee obtained a new registration under clause (i) of Section 12A(1)(ac) of the Act from the CPC, by presenting incorrect facts. In light of the above facts, the Ld. PCIT noted that the assessee is not entitled to claim the exemptions u/s 11 and 12 of the Act and registration granted to the assessee by the CPC under clause (i) of section 12A(1)(ac) is liable to be cancelled. He further noted that as per clause (g) of the Explanation to section 12AB(4), the assessee has made specified violation as mentioned therein by furnishing false / incorrect information. He accordingly issued a notice dated 23.01.2015 asking the assessee to explain as to why the registration granted to the assessee trust by the CPC vide order dated 31.12.2021 u/s 12A(1)(ac)(i) of the Act from assessment year 2022-23 to 2026-27 should not be cancelled.
The assessee in response to the same filed a detailed reply, the gist of which is reproduced by the Ld. PCIT at pages 2 to 12 of his order. However, the Ld. PCIT was not satisfied with the arguments advanced by the assessee and cancelled the registration granted to the assessee by the CPC u/s 12A(1)(ac)(i) of the Act vide order dated 31.12.2021 from assessment year 2022-23 to 2026-27 by observing as under:
―9. On perusal of the submission of the assessee, it is observed that the assessee acknowledged that the registration granted to it under Section 12A was cancelled vide order dated 09.05.2018, effective from the financial year 2007-08. The assessee also acknowledged the fact that the appeal filed by the assessee against the order dated 09.05.2018 was dismissed by the Hon'ble ITAT on 07.02.2023 and accordingly, the cancellation of the registration of the assessee trust was upheld by the Hon'ble ITAT. The assessee has further stated that at the time of filing application i.e. 27.11.2021, cancellation order was still under appeal at that time. In this context, it is pertinent of mention here that by merely filing of appeal before Hon'ble ITAT the assessee does not get entitled to any relief and hence order of Pr.CIT(C), Pune dated 09.05.2018 was in force on 27.11.2021, i.e. date of filling of application in Form 10A before CPC for registration under the new provisions. Thus, as on 27.11.2021 i.e. date of filing of application in Form 10A, the assessee was not having any registration u/s 12A of the Act. Therefore, the contention of the assessee is incorrect and not acceptable and accordingly, the assessee furnished false information while filing application for registration u/s 12A(1)(ac)(i) of the Act. 9.1 The assessee has also contended that the allegation that the Society's application contained false or incorrect information is not true. The assessee further contended that clause (g) of the explanation to section 12AB(4) of the Act, came into effect from 01.04.2023, whereas the Society applied for registration in Form 10A on 27.11.2021 and was granted registration on 31.12.2021 and as per ITAT Hyderabad's ruling in the case of Myadam Kishan Rao Charitable Trust this amendment cannot be applied retrospectively to cancel a registration granted before its enactment. In this context, for reference, relevant portion of section 12AB(4) of the Act, is reproduced below: "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- the Principal Commissioner or Commissioner shall- (i) ….. (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; ---------- Explanation - For the purposes of this sub-section, the following shall mean "specified violation"- (a) –
(b) – (c) – (d) – (e) – (f) – (g) the application referred to in clause (ac) of sub-section (1) of section 12A is not complete or it contains false or incorrect information.]" It is pertinent to mention here that clause (g) of the Explanation to Section 12AB(4) (inserted by the Finance Act, 2023) which came into effect from 01.04.2023, is a procedural amendment and thus applicable in the case of assessee in the current proceedings. Further, the facts and circumstances of the case Myadam Kishan Rao Charitable Trust are totally different to the case of the assessee and in the said case Hon'ble ITAT, Hyderabad had not held that clause (g) of the explanation to section 12AB(4) of the Act, cannot be invoked retrospectively to cancel a registration granted before its enactment. Thus, contention of the assessee is incorrect and not acceptable. 9.2 The assessee further submitted that the assessee trust applied for registration in 2021, declaring its charitable activities, financial compliance, and adherence to its stated objects and the trust's activities since 2021 have been focused solely on its charitable purpose. In addition to above, the assessee submitted that CPC, after due verification, granted registration for the period from A.Y. 2022-23 to A.Y. 2026-27. It is pertinent to mention that the assessee applied for registration u/s 12A(1)(ac)(i) of the Act. It is to be observed that provisions of section 12A(1)(ac)(i) of the Act, are applicable for the assessee, where the trust is already registered u/s section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996] or under section 12AA (as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act. 2020]. Section 12A(1)(ac)(i) reads as under "(ac) notwithstanding anything contained in clauses (a) to (ab), the person in receipt of the income has made an application in the prescribed form and manner to the Principal Commissioner or Commissioner, for registration of the trust or institution- (i) where the trust or institution is registered under section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)] or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (38 of 2020)], within three months from the first day of April, 2021;‖ On plain reading of the provisions of section 12A(1)(ac)(i) of the Act, it can be noticed that an assessee can apply for registration under this section only if the assessee was already registered either u/s section 12A [as it stood immediately before its amendment by the Finance (No. 2) Act, 1996) or under section 12AA [as it stood immediately before its amendment by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020].
However, in the case of the assessee, as already discussed above, the registration of the assessee u/s 12A was already cancelled by this office vide order dated 09.05.2018, which is also upheld by the Hon'ble ITAT vide order dated 07.02.2023. Thus, on the date of filing of application in form 10A, the assessee did not have registration. In view of the above, the submission filed by the assessee in this regard is not found tenable and hence, it is established that the assessee obtained registration u/s 12A(1)(ac) (i) of the act by furnishing false information.
10. Further, it is noticed that the facts of the judicial pronouncements on which the assessee has placed its reliance are different from the case of the assessee, as in the instant case the assessee obtained the deemed registration from CPC u/s 12A(1)(ac) of the Act, on the basis of the false information. Hence, these judicial pronouncements quoted by the assessee are not applicable in the case of the assessee.
11. In view of the above facts, it is observed that the assessee had applied for registration as trust u/s 124(1)(ac)(i) of the Act on the pretext that the assessee was registered as Trust u/s 12A of the Act, despite the fact that the assessee was aware that its registration u/s 12A was already cancelled vide this office order dated 08.05.2018. Therefore, it is evident that the assessee obtained registration u/s 124(1)(ac) of the Act on the false information that it was registered u/s 12A of the Act, which amounts to specific violation by the assessee as mentioned in clause (g) of Explanation to section 12AB(4) of the Act. Accordingly, I, therefore, in exercise of the powers vested in me under sub-section (4) of section 12AB of the Act, hereby cancel the registration granted to assessee by CPC us 12A(1)(ac) of the Act, vide order dated 31.12.2021, for the period from A.Y 2022-23 to 2026- 27.‖
5. Aggrieved with such order of Ld. PCIT, the assessee is in appeal before the Tribunal by raising the following grounds:
On facts and in law
1. Violation of principles of natural justice 1.1 The Ld. PCIT has erred in passing the impugned order without properly considering and appreciating the submissions made by the appellant. 1.2 The Ld. PCIT erred in not offering the opportunity to the appellant to rebut the findings and also failed to consider the detailed submissions made by the appellant on 28.01.2025 and 01.02.2025. 1.3 The cancellation order passed u/s 12AB(4) of the Act is passed in an arbitrary manner and without application of independent mind to the facts and circumstances of the case and thereby violating the principle of natural justice.
1.4 The Ld. PCIT has grossly erred in cancelling the appellant trust's registration u/s 12A(1)(ac)(i) of the Act solely on the ground that the appellant obtained the registration on the basis of false information as registration of the appellant trust was cancelled vide order dated 09.05.2018.
2. Erroneous Application of Section 12AB(4) of the Act 2.1 The Learned PCIT erred in invoking Section 12AB(4) on the incorrect premise that the appellant had furnished false or incorrect information while applying for registration under Section 12A(1)(ac)(i) vide application dated 27.11.2021. 2.2 The appellant had a reasonable and bona fide belief that it was eligible for re-registration under Section 12A(1)(ac)(i) since at the time of applying for the registration the cancellation of its prior registration was under the appeal before the Hon'ble Pune ITAT. 2.3 The Ld. PCIT failed to undertake an independent inquiry into whether the appellant trust currently meets the eligibility criteria for registration u/s 12A of the Act without appreciating the genuineness of the activities of the appellant for the year under consideration. 2.4 The appellant had duly complied with all procedural requirements and the registration was granted after due verification by the CPC. Hence, cancellation under clause (g) of Explanation to Section 12AB(4) is unwarranted.
Incorrect Retrospective Application of Finance Act, 2023 Amendment 3.1 The Ld. PCIT has erred in applying the clause (g) of explanation to section 12AB(4), which was introduced by the Finance Act, 2023 w.e.f. 01.04.2023, retrospectively to an application made in 2021 and registration granted in 2021. 3.2 The action of cancellation based on a provision that was not in force at the time of application is legally untenable and against settled principles of law.
4. Erroneous Interpretation of Section 12A(1)(ac)(i) 4.1 The Ld. PCIT erred in holding that the appellant was ineligible for registration under Section 12A(1)(ac)(i) due to prior cancellation of its registration.
4.2 The appellant had filed the application within the prescribed timeline and met all procedural requirements, and the registration was granted after due verification by the CPC. 4.3 The impugned order overlooks the fact that the appellant has been continuously carrying out charitable activities and fulfilling the conditions necessary for exemption under Sections 11 and 12 of the Act.
No Finding on Charitable Activities Conducted Post-Registration 5.1 The Ld. PCIT failed to examine or make any adverse finding on the actual charitable activities carried out by the appellant post-registration in 2021. 5.2 Even if there were prior alleged violations, the activities of the appellant post-registration were in full compliance with the provisions of the Act, making cancellation unwarranted. 5.3 In absence of any adverse finding on the nature and genuineness of the activities, the cancellation of registration is arbitrary and unjustified.
6. Reliance on Alleged Past Violations Without Any New Findings 6.1 The cancellation of registration has been based entirely on past allegations that led to the cancellation of registration in 2018, which has already been adjudicated upon. 6.2 No fresh violations or contraventions have been established post- registration in 2021, and hence, the cancellation order is based on irrelevant and extraneous considerations.
7. The Appellant prays that the Hon'ble Tribunal may: a. Quash and set aside the order passed by the Ld. PCIT under Section 12AB(4) cancelling the registration of the appellant under Section 12A(1)(ac)(i). b. Restore the registration granted to the appellant under Section 12A(1)(ac) (i) by the CPC vide order dated 31.12.2021.
c. Grant any other relief that the Hon'ble Tribunal may deem just and proper in the interest of justice.
The Ld. Counsel for the assessee strongly challenged the order of the Ld. PCIT in cancelling the registration granted to the assessee by the CPC u/s 12A of the Act. He submitted that the assessee trust was established in the year 1993 and is engaged in imparting technical education through various institutions. Its primary objectives include establishing educational institutions, conducting seminars, publishing research, and promoting research and development in the field of education. It operates across 12 campuses covering 500 acres in Maharashtra, employing 7,000 + staff members and educating over 70,000 students across 85 institutes and 26 schools. Each institute is accredited by the NBA, approved by AICTE and affiliated with Savitribai Phule Pune University. The trust also runs Smt. Kashibai Navale Medical College and Hospital, which is 1,000 bedded hospital in Pune and which serves approximately 1,500 OPD patients daily. The trust has invested nearly Rs.500 crores in the hospital and medical college infrastructure, which includes a nursing college and physiotherapy college.
Referring to pages 46 to 50 of the paper book, he submitted that the assessee trust applied for registration in Form 10A on 27.11.2021. Referring to pages 12 to 14 of the paper book, he submitted that the registration was granted in Form 10AC by the Ld. PCIT on 31.12.2021. He submitted that the Ld. PCIT issued notice on 23.01.2025 and cancelled the registration vide order u/s 12AB(4) on 05.02.2025.
Referring to page 47 of the paper book, he submitted that in Form 10A, the assessee indicated “No” in response to the question “whether any application for registration made by the applicant in the past has been rejected”. Referring to pages 34 to 45 of the paper book, he submitted that at the time of application on 27.11.2021 the assessee was already in appeal before the Tribunal against the previous cancellation order dated 09.05.2018 and the appeal was disposed of only on 07.02.2023. He submitted that since the matter had not attained finality at the time of fresh application the assessee was justified in applying for new registration.
Referring to the decision of the Hon‟ble Gujarat High Court in the case of CIT vs. Mayur Foundation (2005) 274 ITR 562 (Guj), he submitted that the Hon‟ble High Court in the said decision has held that Assessment proceedings remain pending until the Tribunal disposes of the appeal and its order is given effect by the assessing authority. Hence, a proceeding cannot be considered complete until the appeal process is exhausted.
Referring to the decision of the Hon‟ble Patna High Court in the case of CIT vs. Jhaberbhai Biharilal & Co. (1988) 171 ITR 362 (Pat), he submitted that the Hon‟ble High Court in the said decision has held that If the quantum appeal is pending, penalty proceedings cannot be concluded. If the appeal results in deletion, there can be no penalty. The assessment attains finality only after the appeal process is complete. He accordingly submitted that by applying this principle the assessee‟s registration could not have been considered final at the time of fresh application on 27.11.2021 since the 2018 cancellation order was still under appeal before the Tribunal.
The Ld. Counsel for the assessee referring to the amendment to section 12AB(4) submitted that the said amendment cannot be applied retrospectively. He submitted that the Ld. PCIT invoked clause (g) of section 12AB(4) which was introduced only from 01.04.2023. However, the registration in question was granted on 31.12.2021 which was much before this amendment came into effect. He submitted that a substantive provision cannot be applied retrospectively as held in the various judicial precedents. The Ld. Counsel for the assessee referring to the provisions of section 12AB(4) of the Act submitted that the specified violations as mentioned in the said provision came into effect only on 01.04.2022 which is after the assessee‟s application dated 27.11.2021 and registration on 31.12.2021.
12. The Ld. Counsel for the assessee referring to pages 6 to 11 and 25 to 33 of the paper book, submitted that the assessee has consistently complied with all statutory requirements and submitted all the relevant documents before the Ld. PCIT. He submitted that law mandates that the registration should be granted based on the genuineness of present activities rather than past disputes. He submitted that the assessee‟s registration was granted before the amendment to section 12AB(4). The assessee was fully justified in applying afresh while the previous cancellation was under appeal. He also relied on the CBDT Circular No.7/2024, dated 25.04.2024.
13. Referring to the following decisions he submitted that the assessment does not attain the finality unless the matter has been decided by the Tribunal: (i) Commissioner of Income-tax v. Mayur Foundation (2005) 274 ITR 562 (Gujarat HC) (ii) Commissioner of Income-tax v. Jhaberbhai Biharilal & Co (1988) 171 ITR 362 (Patna HC)
14. Referring to the following decisions he submitted that the registration should not be cancelled on the basis of violations in earlier years: (i) M.M. Patel Charitable Trust v. PCIT (Central), vide order dated 21.02.2025 (ii) Akash Education & Development Trust v. PCIT (Central), vide order dated 02.02.2024 (iii) Centre for Development Communication Trust v. Commissioner of Income- tax, Exemption (2024) 168 taxmann.com 90 (Jaipur – Trib.)
Referring to the decision of the Pune Bench of the Tribunal in the case of Inclusive Recycling Foundation v. Commissioner of Income-tax, Exemption (2025) 171 taxmann.com 386 (Pune – Trib.), he submitted that the registration cannot be rejected on the basis of error in application form without giving adverse finding on merits. He accordingly submitted that the cancellation of registration u/s 12AB(4) by the Ld. PCIT be set aside.
The Ld. DR on the other hand heavily relied on the order of the Ld. PCIT cancelling the registration u/s 12AB of the Act.
We have heard the rival arguments made by both the sides, perused the order of the Ld. PCIT and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the registration granted to the assessee u/s 12A of the Act was cancelled by the PCIT vide order dated 09.05.2018 effective from financial year 2007-08. The assessee filed an appeal against the order dated 09.05.2018 of the PCIT which was dismissed by the Tribunal on 07.02.2023. In the meantime, in view of the amended provisions of the Income Tax Act, 1961 the assessee applied for fresh registration in Form 10A on 27.11.2021 and the Ld. PCIT / CPC vide order dated 31.12.2021 granted registration to the trust u/s 12A. We find the Ld. PCIT when noticed that the assessee was not having any registration u/s 12A on the date of filing of application in Form 10A on 27.11.2021 however, has indicated “No” in response to the question “whether any application for registration made by the applicant in the past has been rejected” held that the assessee has given false information that it was registered u/s 12A of the Act. He, therefore, held that the assessee obtained the registration u/s 12A(1)(ac)(i) on false information that it was registered u/s 12A which amounts to specific violation by the assessee as mentioned in clause (g) of Explanation to section 12AB(4) of the Act.
It is the submission of the Ld. Counsel for the assessee that the registration granted to the assessee by the CPC on 31.12.2021 was before the amendment to section 12AB(4) of the Act. It is his submission that the assessee was justified in applying afresh as per the amended provisions and the previous cancellation was under appeal. It is his submission that according to the judicial precedents, the assessment / registration proceedings do not attain finality until the appeal process is completed and the Ld. PCIT‟s retrospective application of section 12AB(4) is legally untenable.
We find some force in the above arguments of the Ld. Counsel for the assessee. We find the provisions of section 12AB(4) read as under: ―12AB(1)…. …… (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 (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) …… (g) the application referred to in clause (ac) of sub-section (1) of section 12A is not complete or it contains false or incorrect information.‖
20. A perusal of clause (g) of Explanation to section 12AB(4) shows that the same was inserted by the Finance Act, 2023 w.e.f. 01.04.2023. We, therefore, find force in the arguments of the Ld. Counsel for the assessee that the amendment to section 12AB(4) cannot be applied retrospectively as it has not been provided or seen to have explicitly provided to have retrospective character or intention.
We find an identical issue had been decided by the Bangalore Bench of the Tribunal in the case of Akash Education & Development Trust vs. PCIT (supra) holding that provisions of section 12AB(4) has no retrospective application. We find the Tribunal after considering the various decisions has observed as under: ―5. We have heard the rival submissions and perused the materials available on record. In this case, registration has been granted u/s 12AA of the Act vide registration No.DIT(E)BLR/12AA/A-1202/AACTA7888E/ITO(E)-1/Vol 2010-11 dated 7.3.2011. Subsequently, post insertion of section 12AB of the Act w.e.f. 1.4.2021, the assessee was granted registration u/s 12AB of the Act vide registration No.AACTA7888EF20211 dated 30.11.2022. Now the issue before us is that registration for the previous 2020-21 relevant to assessment year 2021-22 was granted u/s 12AA of the Act could be cancelled u/s 12AB(4)(ii) of the Act vide order dated 27.9.2023 of the Act. 5.1 The main contention of the ld. A.R. is that the ld. PCIT has cancelled the registration granted u/s section 12AA or 12AB of the Act to the assessee w.e.f. the previous year i.e. 2020-21 relevant to assessment year 2021-22 and for subsequent assessment years by applying the provisions u/s 12AB(4)(ii) of the Act as stood on 27.9.2023, which cannot be applied by noticing the specified violations of the provisions in assessment year 2021-2022. According to the ld. A.R., the ld. PCIT has cancelled the registration granted to the assessee since the ld. PCIT was satisfied that one or more specified violations mentioned in section 12AB(4)(ii) of the Act have taken place during the previous year 2020-21 relevant to assessment year 2021-22. 5.2 Thus, the contention of the ld. A.R. is that the provisions of section 12AB(4)(ii) of the Act have been inserted by Finance Act, 2022 w.e.f. 1.4.2022 and if there is a specified violation in previous year 2020-21 relevant to assessment year 2021-22, these provisions cannot be applied to the assessee‘s case for AY 2021-22 and also the specified violation as stated in section 12AB(4)(ii) of the Act cannot be reason to cancel the registration u/s 12AA/12AB of the Act granted to the assessee in AY 2021-22 and onwards as this section 12AB(4)(ii) of the Act have no retrospective application. 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.‖ 5.3 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 subsection (1) or clause (b) of sub-section (1) of section 12AA, as the case may be, and subsequently,-- a) The Principal Commissioner or Commissioner has noticed occurrence of one or more specified violations during any previous year; or b) The Principal Commissioner or Commissioner has received a reference from the Assessing Officer under the second proviso to sub-section (3) of section 143 for any previous year; or c) Such case has been selected in accordance with the risk management strategy, formulated by the Board from time to time, for any previous year; The Principal Commissioner or Commissioner shall— (i). call for such documents or information from the trust 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 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. 5.4 As per section 12AB(4) of the Act as applicable to assessment year 2021-22, the ld. 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 achieving its objectives as mentioned in section 12AB(1)(b)(ii)(B) of the Act. However, in the present case, the ld. 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 ld. 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 this provisions of section 12AB(4)(ii) of the Act is applicable for the assessment year 2022-23 and onwards and have no retrospective application. 5.5 At this point of time, it is relevant to place reliance on the judgement of Hon‘ble Supreme Court 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‖. 5.6 Further, in the case of Karimtharuvi Tea Estate Ltd. Vs. State of Kerala reported in 51 ITR 129 (SC) the same view was taken by the Hon‘ble Supreme Court. 5.7 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 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 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, 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 held to apply to the assessment year, because in incometax 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.‖ 5.8 Being so, we find force in the additional grounds raised by assessee 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. 5.9 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. Vs. ITO (2019)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.
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.‖ 5.10 In this case, the ld. PCIT has cancelled the registration under the new provisions of the Act i.e. 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 ld. 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. 5.11 We also note that same view 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 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. 5.12 We also place reliance on the earlier order of the coordinate bench in the case of M/s. Amala Jyothi Vidya Kendra Trust and Others in and in case of M/s. Adarsh Vidya Kendra Trust in ITA No.459/Bang/2023 dated 1.12.2023 wherein, in similar circumstances, the Tribunal has quashed the order passed by ld. PCIT for the AY 2021-22 by invoking the provisions of section 12AB(4)(ii) of the Act holding that this provision
is not retrospective in nature as the provision has been introduced by Finance Act, 2022 w.e.f. 1.4.2022. 5.13 Further, same view was taken in the case of Pacific Academy of Higher Education & Research Society in dated 25.1.2023 wherein held as under: ―6.9 We further observe that the ld. Pr.CIT (Central) cancelled such approval from A. Y. 2014-15, though the assessee has already assessed from A.Y. 2014-15 under section 143(3)/148 of the Act. It is also settled legal position of law that Registration cannot be cancelled from retrospective effects. In this regard, the ld AR has relied on the decision of the Hon'ble Supreme Court in case of State of Rajasthan and others vs Basant Agrotech India Ltd. and other 388 ITR 81(SC) wherein it has been decided that ―only a legislation can make a low retrospective and prospectively subject justifiability and acceptability within the constitutional parameters. The subordinate legislation can be given with retrospective effect if a power in this behalf is contained in the principle Act. In the absence of such conferment of power the Government the delegated authority has no power to issue a notification with retrospective effect. Therefore, in the absence of any provision contained in legislative Act the delegatee cannot make a delegated legislation with retrospective effect. When no power has been conferred by the act on the competent authority to withdraw the approval retrospectively, then the withdraw of the approval u/s 10(23C)(vi) of the Act can only be prospective. Hence such of approval gentled under section 12A from back date are also not according to the law and facts of the case and at the worst after the year of notice it can be done if any.‖ In the case of Indian Medical Trust V/s PCIT (Central) 2019 (6) TMI 996 (Rajasthan) it has been held that: 28. Indisputably, the order dated 16th Jan, 2018, made by the Commissioner of Income Tax thereby canceling the registration granted under section 12A and withdrawing the approval given under section 10 (23C) (v) & 10 (23A) (via) of the Act of 1961, to the petitioner Trust with retrospective effect from the date of 01st April, 2006, was arbitrary in the face of the provisions of the Act of 1961; and therefore, cannot be deemed to be in consonance with any possible interpretation to be valid or legal. This court is of the opinion that the provisions of section 12AA (3) of the Act of 1961, empowers the Commissioner of Income Tax to initiate steps for cancellation of the registration of a Trust, but, the legislation had no intention of giving the said provision, a retrospective effect. For in such a situation, the same would have been clearly specified in the said provision. Interpretation of the said provision has to be harmonious rather than being prejudicial to the institutions as it would instigate and create a fear of the Income Tax Department. I find support in my opinion from the following cases with reference to the issue of cancellation or withdrawal of registration with retrospective effect: In the case of Oxford Academy for Career Development Vs. Commissioner of Income Tax: (2009) 315 ITR 382, it was thus observed that: 16. In the instant case, the petitioner is a registered society, which was earlier granted registration under Section 12A on 1-4-1999. A survey was conducted at the business premises on 20-9-2002, from where documents were impounded. The registration was cancelled for the assessment years 2000-01 and 2001-02 for the reasons that the surplus was quite heavy. In the impugned order, it was mentioned by the CIT that there was an unusual huge margin and the petitioner was engaged in the commercial activities rather than charitable. As per the balance-sheet, huge amount from the student was charged. The profit margin embodied in the charges taken from the students are so huge and it proves the profit motive of the petitioner. The funds were misused by the president and his family members of the petitioner.
The expression "charitable purpose" is defined in Section 2(15) of the IT Act, 1961. It is of inclusive nature as revealed in the language. Earlier the words "the advancement of any other object of general public utility" in this definition were succeeded by the words "not involving the carrying on of any activity for profit". These words were omitted by the Finance Act, 1983, w.e.f. 1st April, 1984.
In the light of the above discussion and by considering the totality of the facts and circumstances of the case, we hold that the order dt. 9th March, 2004, passed by the CIT (Annex. No. 15 to the writ petition) as per the then law is without power and jurisdiction and therefore, it is liable to be set quashed.
Accordingly, the impugned order dt. 9th March, 2004, passed by opposite party No. 2 withdrawing/rescinding the order granting registration on 1st April, 1999, to the petitioner's society under Section 12A of the Act, is quashed. Consequently, the registration granted to the petitioner's society on 1st April, 1999, stands restored for the assessment years under consideration.‖ Thus, keeping in view the above discussion, we are of the opinion that in the present case the ld. Pr.CIT(Central) has no jurisdiction to pass the impugned order. Accordingly, we quash the same. Even otherwise we are also of the view that no retrospective cancellation could be made as neither in the Sec. 12AA(3) nor in Sec. 12AA(4) it has been provided or is seen to have explicitly provided to have a retrospective character or intend. Therefore, without a specific mention of the amended provisions to operate retrospectively no cancellation for the past years could be ordered. In this regard, the Hon‘ble Madras High Court on the question as to whether the cancellation will operate from a retrospective date has dealt in the case of Auro Lab vs. ITO (2019) 411 ITR 0308 (Mad) 20 wherein it was held as under: ―The amendment to Section 12AA(3) is prospective and not retrospective in character. The courts reasoned that even when the 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.
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 30.12.2010. 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. Also refer Indian Medical Trust v/s Pr. CIT & ors 182 DTR 252(Raj.) is held that cancellation of registration with retrospective effect is invalid.‖ Therefore, in view of the decision of Hon‘ble High Court, we are also of the view that cancellation of registration with retrospective effect is invalid in the present case. 6.10 We also noticed that the ld. Pr. CIT (Central) has stated that the assessee trustees involved in earning of illegal/unaccounted income in the garb of capitation fees which is against public policy and income of the trust has been applied for the benefit of the persons referred to in section 13(3) of the IT Act which cannot be covered within the meaning of charitable activities. Since we have quashed the order of the Ld. PCIT (Central), there is no necessity to adjudicate these issues.‖ 5.14. Further, in the present case, ld. PCIT has 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 AY 2021-22 and onwards, which is bad in law. As such, assumption of jurisdiction for cancelling the registration of subsequent to AYs 2021-22 is also bad in law. If there is any specified violation in subsequent assessment years from AY 2021-22 and onwards, which could be cancelled by the ld. PCIT on pointing out the specified violation noticed in the subsequent assessment years only and not on the basis of violation in assessment year 2021-22. As such, we make it clear that ld. PCIT is at liberty to pass fresh order of cancellation independently u/s 12AB(4)(ii) of the Act for the subsequent assessment year 2021-22 onwards, if so advised and not on the basis of violation noticed in the assessment year 2021-22. Accordingly, we allow the additional grounds raised by the assessee, order of ld. PCIT dated 27.9.2023 passed u/s 12AB(4)(ii) of the Act is quashed.‖
Further, we find that on the date of application on 27.11.2021 the appeal of the assessee was pending before the Tribunal. It has been held by the Hon‟ble Gujarat High Court in the case of CIT vs. Mayur Foundation (supra) that the assessment does not attain the finality unless the matter has been decided by the Tribunal. The relevant observations of the Hon‟ble High Court read as under: ―10. In the case of Rambhai Jethabhai Patel v. Commissioner of Income Tax, Gujarat-I, (1977) 108 ITR 771, this Court was called upon to decide the question as to till what point of time an assessment can be said to be pending. This Court referred to various interpretations of the word "pending" at page 784 of the reported decision, and ultimately relied upon the decision of the Apex Court in case of Asgarali Nazarali v. State of Bombay, AIR 1957 SC 503, to hold that it can safely be said that a matter can be said to be pending in a court of justice when any proceedings can be taken in it and that is the test to be applied. In Stroud's Judicial Dictionary, fourth edition, volume 4, at page 1975, it is stated : "A legal proceeding is "pending" as soon as commenced and until it is concluded, i.e. so long as the court having original cognizance of it can make an order on the matters in issue, or to be dealt with, therein." 11. Applying the aforesaid principle, can it be stated that when the matter is pending before the Tribunal by way of an appeal, the assessment proceeding is pending? The answer has to be in the affirmative. The assessing authority is empowered and is duty bound, to pass order giving effect to the order of the Tribunal for the purposes of assessing the tax liability of an assessee for the assessment year which was under consideration before the Tribunal. In these circumstances, it cannot be contended on behalf of the revenue that the assessment proceedings come to an end when the assessment order is framed. The contention on behalf of the revenue to equate the assessment order with assessment proceeding is based on a fallacious premise.
The aforesaid view that this Court is taking finds support from the decision of the Apex Court in case of National Thermal Power Co. Ltd. v. Commissioner of Income Tax, [1998] 229 ITR 383. The Apex Court held that the Tribunal has jurisdiction to examine a question of law which arose from the facts as found by the income tax authorities and having a bearing on the tax liability of the assessee. The powers of the Tribunal under Section 254 of the Act and the discretion that the Tribunal has to entertain or not entertain a new ground have been explained in the following words, in the aforesaid decision : "Under Section 254 of the Income Tax Act, 1961, the Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The powers of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of the item. There is no reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal / cross-objections before the tribunal. The Tribunal should not be prevented from considering questions of law arising in assessment proceedings, although not raised earlier. The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) is too narrow a view to take of the powers of the Tribunal. Undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee."
Thus, the proceedings before the Tribunal are meant to correctly assess the tax liability of an assessee. If this be so, it follows that the assessment proceeding cannot be said to be complete and is pending till the appeal is heard and disposed of by the Tribunal and the order of the Tribunal is given effect to by the assessing authority by computing the correct tax liability of an assessee. In other words, whether an assessee is required to pay tax or becomes entitled to a refund, would be ascertained by the assessing authority after giving effect to the order of the Tribunal.
In these circumstances, in the present case, the Tribunal was well within its jurisdiction to entertain the new ground by which the assessee claimed the benefit under Section 11(2) of the Act and adjudicate the tax liability of the assessee. As already noticed hereinbefore, the Tribunal has categorically found that "the additional ground involves the question relating to interpretation of Section 11(2) and the facts on the basis of which such a decision is to be given regarding interpretation of Section 11(2) are not at all in dispute". In the circumstances, there is no infirmity in the order of the Tribunal, holding that the assessee is entitled to benefits allowable under Section 11(2) of the Act.
15. The question referred to the Court is accordingly answered in light of the opinion expressed hereinbefore in favour of the assessee and against the revenue. There shall be no order as to costs.‖
Since the assessee in the instant case has applied for registration in Form 10A on 27.11.2021 on which date the order cancelling the registration granted earlier was pending before the Tribunal for adjudication, therefore, the assessment has not attained finality and since the provisions of clause (g) to Explanation to section 12AB(4) of the Act were inserted by the Finance Act, 2023 w.e.f. 01.04.2023, therefore, we are of the considered opinion that the Ld. PCIT should not have cancelled the registration merely on the ground that the assessee has made specific violation as mentioned in clause (g) of Explanation to section 12AB(4) of the Act.
We find the Co-ordinate Bench of the Tribunal in the case of Inclusive Recycling Foundation vs. CIT (supra) has held in light of the Circular No.7/2024 issued by the CBDT on 25.04.2024 i.e. after the filing of application by the assessee wherein the issue of mentioning wrong section code has been addressed / considered as a common and frequent error and since the Ld. PCIT in the instant case has not given any finding on any other violation except that the assessee obtained the registration on the basis of false information that its registration has not been cancelled, therefore, considering the totality of the facts of the case and in the light of the decisions cited (supra), we deem it proper to restore the issue to the file of the Ld. PCIT with a direction to examine as to whether the assessee is in fact carrying out any charitable activities post registration in 2021 and decide the issue as per fact and law. In our opinion, even if there were prior alleged violations, however, if the activities of the assessee trust post registration are in full compliance with the provisions of the Act, cancelling the registration, in our opinion, is not in accordance with law since the assessee is making a fresh application as per the amended provisions of the Act. The Ld. PCIT shall verify the records / submissions made by the assessee and while adjudicating the issue, he will examine if there are any violations of activities post registration in 2021 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.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 29th May, 2025.