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1. Sri Chaitanya Educational 1. CIT has no power to cancel the Committee v. CIT (2007) 109 TTJ registration under Section 12A earlier (Hyd) 359: (2007) 106ITD 256 (Hyd) granted.

2. Welham Boys' School Society v. 2. Incorporation of Section 12AA(3) from CBDT 1st Oct., 2004 and grant of registration made under Section 12AA had not extended inherent power to revoke/withdraw.

7. Further in order to make the issue concise one, reframe the issue to be decided by the Bench the issue involved pertains to the fact as to whether the CIT can utilize its power under Section 12AA(3) of the Act after a search and seizure proceeding before completion of the search and seizure assessment. When an assessment proceeding after the search and seizure operation is continuing whether the CIT can utilize his power under Section 12AA(3) for cancellation of registration. This is the crux of the issue in our considered view. Therefore, we outright reject of the case laws cited by both the parties in their favour with all respect to the orders decided by different Benches of the Tribunal. In our view those orders are in different context altogether which do not have a particular bearing in the present context of the situation. It is a case of search and seizure. The search and seizure proceeding has not yet been completed. It is still continuing on one hand. On the other hand the CIT issued show-cause notice under Section 12AA(3) proposing for cancellation of registration and proceeded on the same apprehending that if the registration is continued there will be mis-utilisation of funds further. Prior to insertion of Section 12AA(3) there was no power of cancellation in the hands of the CIT. Section 12AA{3) w.e.f. 1st Oct., 2004 has given an unbridled power of cancellation of registration in the hands of the CIT. The CIT is empowered to do so as and when he feels so or is satisfied that as per the provision of Section 12AA(3) things are not going in consonance with the said provision. For better appreciation of facts and law Section 12AA(3) is quoted below:

Section 12AA(3) : Where a trust or an institution has been granted registration under Clause (b) of Sub-section (1) and subsequently the CIT 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.

8. In the present case certain papers and documents have been impounded. Assessment proceedings after the search is in process. The CIT in his show-cause notice under Section 12AA(3) has mentioned as follows vide paras 2 and 9 as follows:

11. In our considered opinion both the cancellation as well as continuance of registration will have an effect and a bearing on the assessment proceeding. It does not mean that the assessment proceeding being a quasi judicial proceeding should be interfered like the present one. Rather in all fairness the CIT should have taken precaution to complete the assessment expeditiously and then should have arrived at the conclusion of proposed cancellation of registration. The present act of the CIT amounts to interruption in the assessment proceeding. The power under Section 12AA(3) has been enunciated under the Act is an unbridled power in the hands of CIT to safeguard the interest of Revenue as and when he is satisfied to do so. It does not mean that this unbridled power given by the Act after much deliberation in the Parliament should be utilized without clear cut satisfaction. As per strict judicial discipline we consider that power of punishment is a unbridled power like the present power of cancellation envisaged under Section 12AA(3). But such unbridled power should be utilized quite cautiously and consciously. With the aforesaid findings we are of the considered opinion that the order of the CIT is a prematured one which has been utilized at a prematured stage in haste. Accordingly the assessee succeeds in its appeal regarding continuance of registration. Before parting with our order it will not be out of place to mention here that our order has nothing to do with the search and seizure assessment proceedings. The concluding finding in the search and seizure assessment proceeding may be utilized by the Revenue or by the assessee in their respective favour accordingly. Again we reiterate that this order is given considering the present facts and circumstances of the case in cancellation of registration only and it has got no bearing to any other activity arising out of said proceedings.