The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently upheld the order of Commissioner of Income Tax (Exemptions) [CIT(E)], in verification of cancellation of the Income Tax registration of the assessee-Popular Front of India (PFI) under Section 12AA(3) of the Income Tax Act, 1961.
The assessee had contended in writing that, “order of CIT(E), Delhi dated 22.03.2021 under section 12AA(3)/section 12AA(4) rejecting appellant’s Application No. IT(EXEMPTION), DELHI/2020-21/12AA/11940 is perverse, bad in law and void ab-initio.”
The appeal was first listed before the tribunal on 10.08.2022, on which date none appeared on behalf of the assessee and the appeal was adjourned with a direction to issue fresh notice.
The matter was taken up for ex-parte hearing by the tribunal bench of Judicial Member Kul Bharat and Accountant Member N K Billaiya, in the absence of representation.
Section 12AA(3) states that, “where a trust or an institution has been granted registration under clause (b) of sub-section (1) 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 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 canceling the registration of such trust or institution.”
Upon perusal of the objects of the Memorandum of Association of the assessee, the tribunal observed that the assessee society is created to promote national integration, communal amity and social harmony and uphold the democratic set up, secular order and rule of law in the country.
However, the Ministry of Home Affairs, by Notification dated 27.09.2022 published in the Gazette of India dated 28.09.2022, notified that the the PFI is involved in several criminal and terror cases and shows sheer disrespect towards the constitutional authority of the country and with funds and ideological support from outside it has become a major threat to internal security of the country. The said notification was relied upon by the department representative, Commissioner of Income Tax, M Baranwal.
In the Gazette notification, it was stated that, “the sources of deposits on behalf of PFI with respect to its several bank accounts were not supported by the financial profiles of the account holders and the activities of PFI were not being carried out as per their declared objectives and therefore, the Income Tax Department canceled the registration granted to PFI under section 12A or 12AA of the Income Tax Act, 1961 (43 of 1961). The Income Tax Department also canceled the registration granted to Rehab India Foundation under section 12A or section 12AA of the Income Tax Act, 1961.” In view of the above Gazette notification, the appeal of the assessee-Popular Front of India to restore the Income Tax registration was dismissed by the Income Tax Appellate Tribunal.
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