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Showing contexts for: amendment of trust in M/S Truba Education Society ,Bhopal vs Principal Commissioner Of Income Tax ... on 24 April, 2025Matching Fragments
obtained registration at Commissioner or section (1) or clause (b) of sub-
Page 10 of 71M/s Truba Education Society any time under section Commissioner is satisfied that section (1) of section 12AA, as 12A [as it stood before the activities of such trust or the case may be, and its amendment by the institution are not genuine or subsequently,-- Finance (No. 2) Act, are not being carried out in (a) the Principal 1996 (33 of 1996)] and accordance with the objects of Commissioner or subsequently, the the trust or institution, as the Commissioner has noticed Principal Commissioner case may be, he shall pass an occurrence of one or more or Commissioner is order in writing cancelling the specified violations during satisfied that the registration of such trust or any previous year; or activities of such trust or institution after affording a institution are not reasonable opportunity of (b) the Principal genuine or are not being being heard. Commissioner or carried out in Commissioner has accordance with the received a reference objects of the trust or (5) Without prejudice to the from the Assessing institution, as the case provisions of sub-section (4), Officer under the may be, he shall pass where registration of a trust or second proviso to sub-
an order in writing an institution has been section (3) of section
cancelling the granted under clause (a) or 143 for any previous
registration of such trust clause (b) of sub-section (1) year; or
or institution. and subsequently, it is noticed (c) such case has been
that - selected in accordance
(a) the activities of such trust with the risk
Provided that no order or institution are being carried management strategy,
under this sub-section out in a manner that the formulated by the Board
shall be passed unless provisions of section 11 and from time to time, for any
such trust or institution 12 do not apply to exclude previous year,
has been given a either whole or any part of the
reasonable opportunity the Principal Commissioner or
income of such trust or Commissioner shall,--
of being heard. institution due to operation of
sub-section (1) of section 13; or (i) call for such documents
or information from the
(4) Without prejudice to (b) the trust or institution has trust or institution, or
the provisions of sub- not complied with the make such inquiry as he
section (3), where a requirement of any other law, thinks necessary in
trust or an institution as referred to in item (B) of order to satisfy himself
has been granted sub-clause (i) of clause (b) of about the occurrence or
registration under sub-section (1), and the order, otherwise of any
clause (b) of sub-section direction or decree, by specified violation;
(1) or has obtained whatever name called, holding
registration at any time that such non-compliance has (ii) pass an order in writing,
under section 12A [as occurred, has either not been cancelling the
it stood before its disputed or has attained registration of such trust
amendment by the finality, or institution, after
Finance (No. 2) Act, affording a reasonable
then, the Principal opportunity of being
1996 (33 of 1996)] and Commissioner or the
subsequently it is heard, for such previous
Commissioner may, by an year and all subsequent
noticed that-- order in writing, after affording previous years, if he is
(a) the activities of the a reasonable opportunity of satisfied that one or
trust or the institution being heard, cancel the more specified violations
are being carried out registration of such trust or have taken place;
in a manner that the institution."
provisions of sections (iii) pass an order in
M/s Truba Education Society
11 and 12 do not writing, refusing to
apply to exclude either cancel the registration of
whole or any part of such trust or institution,
the income of such if he is not satisfied
trust or institution due about the occurrence of
to operation of sub- one or more specified
section (1) of section violations;
13; or (iv) forward a copy of the
(b) the trust or order under clause (ii) or
institution has not clause (iii), as the case
complied with the may be, to the Assessing
requirement of any Officer and such trust or
other law, as referred institution.
to in sub-clause (ii) of Explanation.--For the
clause (a) of sub- purposes of this sub-section,
section (1), and the the following shall mean
order, direction or "specified violation",--
decree, by whatever
name called, holding (a) where any income
that such non- derived from property
compliance has held under trust,
occurred, has either wholly or in part for
not been disputed or charitable or religious
has attained finality, purposes, has been
applied, other than
then, the Principal for the objects of the
Commissioner or the trust or institution; or
Commissioner may, by
an order in writing, (b) the trust or institution
cancel the registration of has income from profits
such trust or institution: and gains of business
which is not incidental to
the attainment of its
Provided that the objectives or separate
registration shall not be books of account are not
cancelled under this maintained by such
sub-section, if the trust trust or institution in
or institution proves that respect of the business
there was a reasonable which is incidental to the
cause for the activities attainment of its
to be carried out in the objectives; or
said manner." (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 enure for the benefit
of the public; or
(d) the trust or institution
established for
charitable purpose
created or established
M/s Truba Education Society
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.
Note: The Ld. PCIT (Central)
has cancelled assessee's
registration on the basis of
reference received from AO
under 2nd provisi to section
143(3), by alleging
specified violations
contemplated in
Explanation (a) & (e) as
highlighted in bold terms]
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 ld. PCIT itself has been quashed."
[emphasis supplied]
(ii) ITAT, Jaipur in Centre for Development Communication Trust Vs. CIT, Exemption (2024) 168 taxmann.com 90 (Jaipur - Trib.), order dated 03.06.2024:
"12.3 Thus, on the second question as to whether the cancellation will operate from a retrospective date or prospective date. This issue is decided in the case of Auro Lab. (supra) holding that in the absence of specific mention of the amended provisions to operate retrospectively, the cancellation cannot operate from a past date and in this case from A. Y. 2017-18. Now the only limited question remained to be decided as to whether the payment made to specified persons warrants the cancellation of registration of the assessee trust or not. The Finance Act, 2021 and Taxation and Other Law (Relaxation and Amendment of Certain Provision) Act, 2020, one of key changes was that every trust or instigation registered under section 12AA of the Act required to re- register itself before the specified dates provided u/s 12A(1)(ac) of the Act and sunset clause has been inserted under section 12AA(5) w.e.f. 01.04.2021 and new section 12AB has been inserted. Thereafter vide Finance Act, 2022 new section for taxing the benefits provided to related persons treated as "specified income" and will be subjected to be taxed at the rate of 30% without any deduction under the newly inserted section 115BBI and will also be liable for penalty u/s. 271AAE.Further, the provision of making reference by Assessing Officer to the Principal Commissioner or Commissioner to withdraw the registration of trust or institution referred u/s 11 of the Act, if any specified violation has been done by these trusts or institutions, were inserted recently. The said power has been inserted by substituting the 2nd proviso to section 143(3) of the Act w.e.f. 01.04.2022. Earlier, there was no power under the law M/s Truba Education Society to make any reference to PCIT or CIT for withdrawal of registration for the trusts or institution referred u/s 11 of the Act. As it is clear from the facts recorded that the Id. CIT(E), Jaipur has initiated the impugned proceedings of cancellation of registration based on the reference received from Id. DCIT(E), Jaipur dated 06.02.2020 as evident from the Impugned Order itself i.e passed u/s 12AB(4)(b)(i) of the Act. As per the amended provision of section 12AB(4) of the Act, reference has to be after granting of the registration w/s 12AB(1)(a) as evident from the bare reading of the provision itself which states subsequently, if there is reference by Ld. AO, then only the Ld. PCIT/CIT can proceed further. Admittedly in the present case, there is no such reference after granting registration on 23.09.2021. Thus, when the provision for making the reference was inserted in law w.e.f. 01.04.2022 and when at the time of impugned reference, there was even no provision for making such reference under the 2nd proviso to section 143(3) of the Act for the trusts and institution referred under section 11 of the Act. Therefore, the reference itself is without the authority of any statutory provisions and there was no fresh reference by the Id. AO. Further the bench noted that the impugned reference upon which the addition was made and that order is pending for adjudication before ld. CIT(A) and there is no final finding on that aspect of the matter. The bench further noted that there was no intimation to the assessee that the Id. CIT(E) intend to proceeded with retrospective effect. Even nowhere in any of the communication to the assessee was allowed to defend their case and the importance of show cause notice has been emphasized by the Apex Court in case of Uma Nath Pandey v. State of UP [2009] 12 SCC 40 that "Notice is the first limb of this principle. It must be precise and unambiguous. It should appraise the party determinatively the case he has to meet. Time given the purpose should be adequate so as to enable him to make his representation. In the absence of a noti50 the kind and such reasonable opportunity, the order passed becomes wholly vitiated. Thus, it is but essential a party should be put on notice of the case before any adverse order is passed against him. "As we note at the Id. CIT(E), Jaipur has issued first show cause notice in which it has been show cause registration u's 12AA/12AB should be withdrawn due to violation of section 2(15) of the Act (para 5 on page no. 94 of PB) and due to trust money being allegedly mis utilized by specified person as mentioned u/s 13(3) of the Act (Para 6 on page no. 96 of PB). However, in the impugned order, Ld. CIT(E), Jaipur has invoked clauses (0). (b) and (e) of specified violation as defined under explanation to section 12AB(4) of the Act (which applies prospectively). Therefore, we note that the action of the Id. CIT(E) cancelling the registration of the trust we.f. A. Y. 2017-18 is beyond the scope of the show cause notice as the conditions for cancellation of registration on account of specified violation, which were not specified earlier in the law, have been inserted under section 12AB(4) of the Act w.e.f. 01.04.2022 and would accordingly apply prospectively being penal provision and having very harsh consequences. Thus, the action of the id. CIT(E) in the Impugned Order cancelling the registration of the Assessee retrospectively w.e.f. AY 2017-18 without any basis and without authority of the law as in AY 2017-18, there were no such conditions of specified violations in the law, therefore, Assessee cannot be penalized by reason of the amendment to the law effected subsequently. We derive support M/s Truba Education Society to reach to this conclusion from the decision of the Hon'ble Rajasthan High Court in the case of Indian Medical Trust v. Pr. CIT [2019] 108 taxmann.com 93/265 Taxman 473/414 ITR 296 (Rajasthan) where it has been held that: