“Law to be applied is law in force in Assessment Year unless otherwise stated or implied in Income-Tax matters”: ITAT deletes  retrospectively canceled Trust registration [Read Order]

The Two member bench of Bangalore  Income Tax Appellate Tribunal ( ITAT ) while deleting the retrospectively canceled trust registration observed that  in income-tax matters, law to be applied is the law in force in the assessment year unless otherwise stated or implied.

The Assessee Amala Jyothi Vidya Kendra Trust has filed an application and registration was granted to it by DIT(CPC) on 6.4.2022 from assessment year 2022-23 to assessment year 2026- 27 so as to enable the earlier registration granted on 28.11.2007 to be continued.

When a search was carried out under Section  132 of the Income Tax Act in the office premises of assessee trust various incriminating materials were found which were confronted to Shri Rajeev Kumar Rai, the Trustee and the Chairman of the Trust and Nikita Rai, the Trustee and Secretary of the assessee trust and it is found that they are using the funds of the Trust for personal benefit.

Consequently, assessment proceedings for the assessment year 2018-19 were initiated by the AO in these cases by issuing notice u/s 143(2) of the Income Tax Act.Accordingly, predecessor of the present PCIT required the assessee to explain as to why the approval granted by the Director Income Tax (E) Bengaluru in both cases should not be canceled.

After considering the reply assessee cases, the PCIT canceled the registration granted to these assessee under Section 12AA/12AB of the Income Tax Act w.e.f. previous assessment year 2017-18 and that of subsequent years as per provisions under Section 12AB(4) of the Income Tax Act.

Aggrieved by the order the assessee filed an appeal before the CIT(A) who confirmed the cancellation . Hence the assessee filed another appeal before the tribunal. addition

During the adjudication C. Ramesh, the counsel for assessee submitted that assessment involved in appeal is A.Y.2018-19. The law relating to cancellation of registration has undergone changes in as much as the said provisions were different for the A.Y.2018-19 and for A.Y.2022-23. Further the Pr. Commissioner of Income Tax (Central) invoked the provisions which were applicable from A.Y.2022-23 for a default alleged to have occurred in A.Y.2018-19.

Subramanian S, Counsel for Revenue argued that the PCIT canceled the registration granted to the assessee under Section 12AA/12AB of the Income Tax Act vide order dated 29.12.2023. As such, provisions of section 12AB(4) of the Act as stood on this date has been applied and there is no error in applying the provisions of section 12AB of Income Tax Act as substituted by Finance Act, 2022 w.e.f. 1.4.2022.

After reviewing the facts the ITAT bench of Beena Pillai, (Judicial Member) and Laxmi Prasad Sahu (Accountant Member) observed that “it is a cardinal principle of the tax law that law to be applied is that in force in the assessment year unless otherwise provided expressly or by necessary implication”.

Therefore the bench confirmed that no retrospective cancellation could be made under Section 12AB(4)(ii) of the Income Tax Act as it has been provided or is seen to have explicitly provided to have a retrospective character or intended.

To Read the full text of the Order CLICK HERE

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