ADVANTAGE INDIA,NEW DELHI vs. PR.CIT (CENTRAL)-II, NEW DELHI

ITA 634/DEL/2019Status: DisposedITAT Delhi18 September 202561 pages
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What did the Tribunal hold?

The Tribunal decided to adjudicate the issue of assumption of jurisdiction first, as it goes to the root of the matter. The Tribunal acknowledged the assessee's argument that Section 127 of the Income Tax Act pertains to the transfer of jurisdiction between Assessing Officers and not between Commissioners. The assessee also relied on CBDT Notifications No. 52 and 53 of 2014, which indicated that jurisdiction over trust cases, including those claiming exemption under Section 11 and 12, lay with the CIT(Exemption). The Tribunal noted the assessee's reliance on various ITAT decisions supporting the view that the assumption of jurisdiction by the Pr. CIT(Central) was illegal. Regarding the retrospective cancellation, the Tribunal held that while the Pr. CIT(C)'s cancellation order was retrospective from 27.09.1999, the registration could not be cancelled from a period prior to 01.10.2004, when the express power to cancel was granted. The Tribunal found that the assessee was in cohorts with its ex-president in acting as a conduit for commission/liasoning fees and converting them into cash by taking bogus bills/entries since June 2012. The assessee failed to discharge its onus to demonstrate genuine activities. Consequently, the Tribunal modified the Pr. CIT(C)'s order, making the withdrawal of registration effective from June 2012 (FY 2012-13) instead of 27.09.1999, until the date of the cancellation order. Grounds 1 to 3 were dismissed, and Ground 4 was partly allowed.

What were the facts?

The assessee, Advantage India, filed an appeal against the order of the Pr. CIT(C)-2, New Delhi, dated 21.12.2018, which cancelled the registration granted to the assessee. The assessee had originally filed grounds of appeal and later sought to admit substituted grounds. The substituted grounds challenged the assumption of jurisdiction by the Pr. CIT(Central)-II under Section 127(2) of the Income Tax Act, 1961, for invoking Section 12AA(3) to cancel the registration. The assessee argued that Section 127 pertains to the transfer of jurisdiction between Assessing Officers, not between Commissioners, and that the order of cancellation was void ab initio. The assessee also contended that the Pr. CIT(Central) erred in invoking Section 12AA(3) without fulfilling the requisite preconditions and based on irrelevant considerations for cancellation.

What were the issues?

1. Whether the Principal Commissioner of Income Tax (Central) erred in law and on facts by initiating proceedings based on a defective notice that did not specify the section invoked for cancellation of registration, thereby violating principles of natural justice and acting without proper jurisdiction? 2. Whether the assumption of jurisdiction by the Pr. CIT(Central)-II under Section 127(2) of the Income Tax Act, 1961, for the purpose of cancelling registration was bad in law, considering that Section 127 deals with the transfer of jurisdiction between Assessing Officers and not between Commissioners? 3. Whether the Principal Commissioner of Income Tax (Central) erred in law and on facts by invoking Section 12AA(3) of the Act for cancelling registration without fulfilling the requisite preconditions, and whether the reasoning provided was valid for invoking the section at that time, particularly in light of CBDT Circular 21 of 2016? 4. Whether the cancellation of registration was based on considerations not relevant for cancellation under Section 12AA(3), such as issues of income and application of funds, which are matters of assessment? 5. Whether the Principal Commissioner of Income Tax (Central) erred in law and on facts by invoking Section 12AA(3) based on findings that provisions of Section 13(1)(c)(ii) were applicable to the assessee? 6. Whether the order of cancellation of registration, being a quasi-judicial order with serious civil consequences, could be passed by the CIT with retrospective effect, given the absence of an express provision in the section? Assessee's Contentions: - The notice was defective, violating natural justice and jurisdiction. - Section 127(2) does not empower a CIT to transfer jurisdiction to another CIT for cancellation of registration; it applies only to Assessing Officers. - The Pr. CIT(E) only has jurisdiction over trust cases as per CBDT Notifications No. 52 and 53 of 2014. - The cancellation was based on irrelevant considerations for Section 12AA(3). - The invocation of Section 12AA(3) was premature and lacked preconditions. - The cancellation order cannot be retrospective as there is no express provision for it. - Relied on ITAT decisions in Agarwal Vidya Pracharni Sabha, M/s Wholesale Cloth Merchant Association, Pacific Academy of Higher Education and Research Society, and Gyan Sagar Education & Charitable Trust. Revenue's Contentions: - Not recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 127,Section 127(2),Section 12AA(3),Section 12A,Section 13(1)(c)(ii),Section 11,Section 13,Section 120,Section 12AB,Section 12AB(4)

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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,

Before: SHRI VIKAS AWASTHY & SHRI NAVEEN CHANDRA

For Appellant: Shri Sanjay Mehra, FCA
For Respondent: Shri Javed Akhtar, CIT [DR]
Hearing: 24.06.2025Pronounced: 18.09.2025

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:

-

This appeal by the assessee is preferred against the order of the PCIT(C)-2, New Delhi, dated 21.12.2018 cancelling the Registration

granted to the assessee (hereinafter called as Society). Advantage India Vs.PC.I.T

2.

The assessee originally filed grounds of appeal in Form 36. Later it filed an additional ground under Rule 11 of ITAT Rules, vide letter dated 24.04.2023. Subsequently, it filed a letter dated 23.01.2024 seeking admittance of substituted grounds of appeal as under:

1.

“The Ld. Pr. CIT (Central) grossly erred in law as well as on the facts of the case in initiating proceedings on the basis of a defective notice, no

The order continues below.

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