Ram Saran Das Kishori Lal Charitable Trust Vs CIT (Exemption) (ITAT Delhi)
Cancellation of Registration Quashed as 12AB(4) Cannot Apply Retrospectively & No “Specified Violation” Established
In this appeal filed Trust, the issue concerned the cancellation of long-standing registration of the Trust by invoking powers u/s 12AA(3)/12AB(4) through order dated 26.09.2024, cancelling registration retrospectively from 01.04.2002. The Trust, established in 1967, originally registered u/s 12A in 1975, had run a recognised charitable hospital & later leased the premises before ultimately selling the property in 2015. The Trust’s earlier cancellation in 2008 had already been quashed by the Hon’ble Punjab & Haryana High Court in 2023 on the ground that CIT had no jurisdiction prior to 01.06.2010 to cancel registration. The Trust thereafter obtained fresh registration u/s 12A(1)(ac)(i) on 29.03.2022. The CIT(E), Delhi, however, proceeded to cancel registration citing leasing of premises, alleged illegal kidney transplant activities in the early 2000s, & alleged fraudulent filing of ITR-7 & application for registration.
Tribunal examined the entire factual matrix & found that the cancellation was founded exclusively on alleged acts & events that occurred prior to 01.04.2022, whereas “specified violations” under the new regime of s.12AB(4) were inserted only w.e.f. 01.04.2022. Tribunal held that the statutory scheme is clear: the word “subsequently” in s.12AB(4) refers to violations occurring after grant of registration under the new regime. Alleged violations in the past—leasing of hospital building in 2005, kidney transplant issues of doctors between 1997–2003, or filing of ITR-7 during pendency of litigation—cannot be treated as “specified violations” for the purpose of cancellation. Tribunal further found that the show-cause notice dated 14.03.2024 itself was fundamentally defective, since it did not specify which clause of the Explanation to s.12AB(4) was invoked, nor did it propose retrospective cancellation or indicate any violation arising after 01.04.2022. It was only in the final order that the CIT(E) invoked Explanation (a), (b), (e), (f) & (g), which is impermissible because the competent authority must specify the precise violation at the stage of show-cause. Tribunal noted that none of the activities of the Trust post 01.04.2022 were found to be non-genuine or contrary to its charitable objects, & that income from leasing was applied to charitable purposes, which is permissible. Tribunal also agreed that criminal liability of doctors cannot be vicariously imposed on the Trust, especially when neither the Trust nor its Trustees were ever charged.
