Registration Of The Assessee As Passed By The Commissionerof Income Tax (Exemptions) Under Section 12Aa On Relyingupon The Decision Of Hon’ble Madras High Court v. Dit, Ignoring The Factthat The Said Decision Has Not Been Accepted By The Revenueand Slp Has Been Filed Before Hon’ble Supreme Court Whichis Pending For Adjudic

IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE ITAT/226/2018IA NO:GA/2/2018(OLD NO.2064/2018) IN THE MATTER OF : :C.I.T. (EXEMPTION), KOLKATAVSGOVARDHAN FOUNDATION IN THE MATTER OF : : BEFORE :THE HON’BLE JUSTICE T.S.SIVAGNANAM A N DTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADATED : NOVEMBER 10, 2021. [Via Video Conference] Appearance :Mr. P.K. Bhowmick, AdvocateMr. Madhu Jana, Advocate …for the appellantNone appears …for respondent The Court :- This appeal by the revenue has been filedunder Section 260A of the Income Tax Act, 1961, (the Act in brevity)regarding correctness of the order dated 29[th] November 2017 passed by the Income Tax Appellate Tribunal, Kolkata “A” Bench in I.T.A. No.767/Kol/2017. The revenue has raised the following substantial questions oflaw for consideration :- a)Whether on the facts and in the circumstances of the caseand in law, the Learned Income Tax Appellate Tribunal is notcorrect in opining that the cancellation of the registration ofthe assessee by the Commissioner of Income Tax(Exemptions) by exercising jurisdiction under sub-section 3of Section 12AA of the Income Tax Act, was not maintainablethereby wrongly set aside the order of the Commissioner ofIncome Tax (Exemptions) ?and in law, the Learned Income Tax Appellate Tribunal is notcorrect in opining that the cancellation of the registration ofthe assessee by the Commissioner of Income Tax(Exemptions) by exercising jurisdiction under sub-section 3of Section 12AA of the Income Tax Act, was not maintainablethereby wrongly set aside the order of the Commissioner ofIncome Tax (Exemptions) ? b)Whether on the facts and in the circumstances of the caseand in law, the order passed by the Learned Income TaxAppellate Tribunal is not justified in setting aside the orderof the Commissioner of Income Tax (Exemptions) by ignoringthe fact that the assessee trust had made donations outsideIndia without taking prior permission of the CBDT byviolating provisions of sections 11(1)(a) and 11(1)(c) of theIncome Tax Act ?and in law, the order passed by the Learned Income TaxAppellate Tribunal is not justified in setting aside the orderof the Commissioner of Income Tax (Exemptions) by ignoringthe fact that the assessee trust had made donations outsideIndia without taking prior permission of the CBDT byviolating provisions of sections 11(1)(a) and 11(1)(c) of theIncome Tax Act ? c)Whether on the facts and in the circumstances of the caseand in law, the Learned Income Tax Appellate Tribunal is notjustified in setting aside the order of cancellation ofand in law, the Learned Income Tax Appellate Tribunal is notjustified in setting aside the order of cancellation of registration of the assessee as passed by the Commissionerof Income Tax (Exemptions) under section 12AA on relyingupon the decision of Hon’ble Madras High Court in the caseof Tamil Nadu Cricket Association Vs. DIT, ignoring the factthat the said decision has not been accepted by the revenueand SLP has been filed before Hon’ble Supreme Court whichis pending for adjudication? c)Whether on the facts and in the circumstances of the caseand in law, the Learned Income Tax Appellate Tribunal is notjustified in setting aside the order of cancellation ofand in law, the Learned Income Tax Appellate Tribunal is notjustified in setting aside the order of cancellation of registration of the assessee as passed by the Commissionerof Income Tax (Exemptions) under section 12AA on relyingupon the decision of Hon’ble Madras High Court in the caseof Tamil Nadu Cricket Association Vs. DIT, ignoring the factthat the said decision has not been accepted by the revenueand SLP has been filed before Hon’ble Supreme Court whichis pending for adjudication? We have elaborately heard Mr. Bhowmick, learned SeniorCounsel appearing for the appellant/revenue. The assessee is aregistered Trust and enjoyed a registration under Section 12A of the Acteversince 1995. The Commissioner of Income Tax (Exemptions), Kolkatahad opined that the assessee Trust had made donations to anorganisation which is not registered under Section 12A of the Act and isalso situated outside India. Further, it was observed that to makedonation beyond the border of India, the assessee Trust was required totake prior approval from the Central Board Direct Taxes (CBDT). In thisregard, the Commissioner referred to proviso to Section 11(1)(c) of theAct. The assessee filed their written submissions on 25[th] April, 2016,inter alia, contending that the donations were made to a school in Nepalin terms of the Clause 4(A) of the Trust Deed which does not prohibit theAssessee Trust from making such donations and Trust Deed is aregistered Deed under Section 12A of the Act. Further certain factualdetails were also given to justify the stand that Section 11 of the Act shall not apply to the assessee’s Trust. The copies of the Trust Deed, thereceipts for the donation paid, balance sheet and income andexpenditure account for the relevant years and the Trust Deed of theinstitution in Nepal were also appended with the submissions dated 24[th]April, 2016. The Commissioner thereafter issued show-cause noticedated 31[st] October, 2016 calling upon the assessee to explain as to whythe registration granted under Section 12A of the Act should not becancelled under Section 12AA(3) of the Act. The Commissioner was alsoof the opinion that the activities of the Assessee Trust were not genuine.The assessee did not submit a reply and, therefore, the Commissionerproceeded to pass the order during February 2017 holding that theactivities of the assessee are not genuine and are not being carried out inaccordance with the objects of the Trust and registration granted underSection 12A of the Act on 14[th] December 1995 was cancelled withretrospective effect from 1[st] April, 2011 i.e. from the financial year 2011-12 relevant to the assessment year 2012-13. Aggrieved by such an order the assessee preferred appeal beforethe Tribunal. The Tribunal has allowed the appeal and set aside theorder passed by the Commissioner and this is how the revenue is beforeus by way of this appeal raising the aforementioned substantialquestions of law. After elaborately hearing the learned standing Counsel for theappellant/revenue we find that Commissioner had committed a Aggrieved by such an order the assessee preferred appeal beforethe Tribunal. The Tribunal has allowed the appeal and set aside theorder passed by the Commissioner and this is how the revenue is beforeus by way of this appeal raising the aforementioned substantialquestions of law. After elaborately hearing the learned standing Counsel for theappellant/revenue we find that Commissioner had committed a fundamental error in cancelling the registration granted to the assesseeTrust under Section 12A of the Act as far back as during the year 1995by taking note of the activity of the Trust, which according to theassessee was in consonance with Clause 4(A) of the Deed of Trust. Thusit goes without saying that at the time when the registration was grantedat the first instance by the then Commissioner on 14[th] December, 1995,the clauses and covenants as contained in the Deed of Trust wereexamined and the activities of the trust were found to be genuine andafter recording satisfaction, registration has been granted. Therefore,such an issue could not have given rise to a cause of action forcancellation of the registration. The Tribunal had followed the decision ofthe High Court of Madras in the case of Tamil Nadu Cricket Association,368 ITR 633 (Madras) to hold that the issues relating to how the funds ofthe Trust were employed is not germane for considering the question asto whether the activities were genuinely carried out or not. The learnedSenior Standing Counsel for revenue submitted that revenue has notaccepted the decision in the case of Tamil Nadu Cricket Association and aSpecial Leave Petition has been filed before the Hon’ble Supreme Court.Be that as it may, on facts we are convinced that the reason cited by theCommissioner for cancellation of the registration could not be a groundto do so as it is admittedly an issue which could be dealt with by theAssessing Officer, during the course of assessment. That apart we findthat the Tribunal, which is the final fact finding authority, had examined the entire facts including the conditions contained in the Deed of Trustand recorded a findings in favour of the Assessee Trust. While weexercise jurisdiction under Section 260A of the Income Tax Act we arerequired to consider as to whether any substantial question of law arisesfor consideration and not to re-appreciate the factual position. Thus wefind that there is no error in the approach of the Tribunal nor theconclusion arrived at by the Tribunal. We also find that there is nosubstantial question of law arising for consideration in this appeal. Accordingly, the appeal fails and the same stands dismissed, soalso the connected stay application. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.)