INDIAN ASSOCIATION OF CARDIOVASCULAR THORACIC ANAESTHESIOLOGISTS (IACTA),NEW DELHI vs. CIT(E), NEW DELHI

The learned CIT(Exemption) erred in fact and in law in not taking into account the detail reply filed on 26.11.2014 hence, the order passed is not only illegal but also against the facts and circumstances of the case.”

The only issue involved in this appeal is that the Ld. CIT(E) has withdrawn the exemption already granted to the assessee under section 12 A of The Income Tax Act by passing an order under section 12 AA (3) of The Income Tax Act, 1961. The assessee is challenging the action of the Ld. CIT.

The Ld. authorized representative submitted that the registration already granted to the assessee was t withdrawn without any valid reason. Merely for the reason that activities of the society are not genuine and not as per its objects of the society, the ld CIT for the simple reason that some information was received that the society is though no longer approved for exemption under section 80 G however, it continues to use its earlier approvals of certificate while issuing receipt to its donors stating that it is approved for exemption under section 80 G. It was further alleged that such receipts are being issued by Society and its chapters which organize annual conference on its behalf. He submitted that there is no such misuse of any such recognition granted to the trust. He further submitted that there is no change in the object of the society and it continues to carry on the same object of the society. He therefore submitted that the action of the Ld. CIT (Exemption) in withdrawing the exemption under section 12 A of the act of the society is not sustainable in law. 5. The Ld. CIT DR vehemently supported the order of the Ld. CIT Exemptions stating that assessee is not carrying on activities according to its object and the society’s activities are also not genuine and therefore the registration already granted to the assessee trust under section 12 A of the act was correctly withdrawn by invoking the powers contained under subsection 3 of that section. He supported the order withdrawing the exemption. 6. We have carefully considered the rival contention and perused the orders of the ld CIT. The brief facts show that the assessee is a society registered under The Societies Registration Act and as well as was Page | 2 granted recognition under section 12 A of The Income Tax Act on 31/3/1998. The assessee was also granted approval under section 80 G from time to time and the last approval was granted on 20/4/2005 for the period 01/04/2005 to 31/ 3/2008. Subsequently the CIT Exemption received some information that society is issuing exemption certificates under section 80 G despite exemption lapsed on 31/3/2008. Therefore, show cause notice was issued this was replied by the assessee. The main contention of the Ld. CIT was that the assessee is organizing a conference and earning profit there from it is also publishing a Journal. Further, with respect to the misuse of certificate of approval issued under section 80 G of the income tax act assessee did not reply. Therefore the Ld. CIT further issued a show cause notice on 05/06/2014 in which it was alleged that that the conferences were organized and the nature and the details of the profit thereon was not given. It was therefore stated that the society is carrying on the activities in a commercial fashion and therefore it is no longer a charitable within the meaning of provisions of section 2 (15) of The Income Tax Act, 1961. Further the assessee has shown receipt of Rs. 11, 79, 958/– because of publication of the journal and details of the same have not been filed. It was further mentioned that the society though not approved under section 80 G, it has come to the notice of the income tax Department that such receipts are being issued citing the earlier exemption number whenever the conferences are organized. The assessee replied by letter dated 20/6/2014 clarified that assessee is carrying on the same activities, which it was carrying on prior to that. It was further stated that the profit that arise in because of conference is merely a surplus which has been used for the purpose of the charities and the object of the trust. Further the Ld. CIT Exemption further stated that assessee has not filed any reply with respect to the misuse of certificate issued under section 80 G. Despite repeated opportunities the reply was not forthcoming from the assessee and therefore the Ld. CIT applied the provisions of section 12 AA (3) held that for the reason that society is misrepresenting its status to its donors by continuing to use the certificate issued by the office which was valid up to Page | 3 31/3/2008 even after that and therefore it is a clear-cut case of society’s activities not being genuine. He therefore held that the assessee society is not eligible for registration granted by this office and therefore it is liable to be withdrawn. He further referred to the provisions of section 12 AA (3) and stated that there are adequate provisions in the law for withdrawal of the certificate already granted under section 12 AA (3) of the act. Therefore he held that the activities of the society are not genuine and not as per its objects therefore the registration granted under section 12 A is withdrawn w.e.f. 1/4/2009. According to the provisions of section 12 AA (3) “[(3) Where a trust or an institution has been granted registration under clause (b) of sub-section (1) 29[or has obtained registration at any time under section 12A [as it stood before its amendment by the Finance (No. 2) Act, 1996 (33 of 1996)]] and subsequently the 25[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: Provided that no order under this sub-section shall be passed unless such trust or institution has been given a reasonable opportunity of being heard.]”

On reading of the above section it is clear that the activities of the institution or trust are not found genuine or not being carried out in accordance with the object of the trust or institution then only the Ld. CIT – E is empowered to pass an order in writing cancelling the registration of such trust or institution. On reading of the order of the Ld. CIT – E we did not find that there is any finding that the activities of the trust are not genuine and further it was also not found by him that the duties are not carried out in accordance with the object for which the assessee trust was formed. Further there are no such instances in the order also which shows that assessee has issued certificate to the donors saying that donation given to the society are tax deductible u/s 80 G of the act. Therefore we are not inclined to uphold order of the Ld. CIT – E passing an order under section 12AA (3) in cancelling the registration granted to the assessee trust under section 12 A of the act. Page | 4