Cancellation of Registration of Charitable Trust u/s 12 AB(4) of Income Tax Act by PCIT not having Jurisdiction is Invalid: ITAT [Read Order]

The Mumbai Bench of I Income Tax Appellate Tribunal (ITAT) held that the Principal Commissioner of Income Tax (PCIT) does not have the jurisdiction to cancel the Charitable Trust under Section 12 AB of the Income Tax Act.

The assessee Heart Foundation of India is a charitable trust set up vides trust deed. The Trust was granted registration under Section 12A of the Income Tax Act, 1961. The assessee has been carrying on its activities in accordance with the trust deed since its inception.

There was a search in the case of M/s.Emcure Pharmaceuticals group and its associate concerns. Simultaneously there was a survey under Section 133A of the Income Tax Act in the case of assessee and accordingly the case of the assessee and co-ordinate investigation was centralised with the Assistant Commissioner of Income-tax, Central Circle, Pune (the Assessing Officer). The Assessing Officer (AO) made a reference to the PCIT (Central), Pune under second proviso to sub section (3) of Section 143 of the Income Tax Act for cancellation of registration under Section 12AB(4) of the Income Tax Act.

The PCIT, based on the statements recorded from one of the trustees and on perusal of various other documents came to the conclusion that the activities of the trust are neither genuine nor being carried out in accordance with the objects of the trust.

 It was further held that the assessee has violated other laws while carrying out the activities which are in the nature of specific violations specified in clause (e) and clause (f) of Explanation below Section 12AB(4) of the Income Tax Act. The PCIT accordingly withdrew and cancelled the registration granted to the assessee with effect from Assessment Year (A.Y). 2016-17.

The assessee filed an appeal before the Tribunal against the retrospective cancellation of registration.The Authorised Representative of the assessee (AR) submitted that the PCIT, Central Circle is not the prescribed authority and is not the authority for granting registration or cancellation of the registration. It is submitted that the jurisdiction lies with the Commissioner of Income Tax (Exemption) [CIT(E)] who is the prescribed authority in this connection.

It further referred to the CBDT Notification No.52 & 53 of 2014 notifying the prescribed authorities for various territorial areas. The AR submitted that for the territorial area of Greater Mumbai and Navi Mumbai (serial No.12), the CIT (A), Mumbai is the prescribed authority for the purpose of Sections 11 & 12 of the Income Tax Act.

The Departmental Representative (DR) submitted that the PCIT is an authority above the CIT and, therefore, has jurisdiction over the CIT (E). Therefore the PCIT has correctly exercised his jurisdiction in passing the order cancelling the registration of the assessee trust.

The bench comprising of relied on the decision of the Jodhpur Bench of the Tribunal in the case of Pacific Academy of Higher Education and Research Society vs. PCIT, where it was laid down,

 “In the search case when the case is centralized it is for the purpose of assessment only. The CIT(Exemption) who is having the jurisdiction to handle cases claiming exemption under section 11 and 12 cannot transfer or hand over or give his work or power or duties In case, if it is necessary to do so then there has to be proper proceedings in writing. In assessee's case the facts are identical where the assessment is centralized and there was no proceeding or communication to the assessee that the CIT (Exemptions) has transferred his power to PCIT. ”

The Tribunal held that the PCIT does not have the jurisdiction to cancel the registration under Section 12 AB of the Income Tax Act, hence the appeal of the assessee is allowed.

To Read the full text of the Order CLICK HERE

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