National Institute of Construction Management And Research Vs DCIT (ITAT Mumbai)
Cancellation Beyond the Show-Cause Fails: ITAT Restores 12A Registration Issue for Fresh Decision
The Mumbai Bench of the Income Tax Appellate Tribunal set aside the order of the CIT(E) cancelling registration under section 12A of the National Institute of Construction Management and Research (NICMAR) and remitted the matter for de novo adjudication, holding that the cancellation suffered from violation of principles of natural justice.
The CIT(E) had cancelled the registration under section 12AB(4) on the ground that activities such as Company Based Programmes (CBP), Management Development Programmes (MDP), research and consultancy were commercial in nature and that the assessee had not maintained separate books of account, thereby constituting a “specified violation” under clause (b) of the Explanation to section 12AB(4).
The Tribunal noted that the show-cause notice issued to the assessee primarily alleged that the activities were “not genuine”, which, if at all, would fall under clause (e) of the Explanation. No specific allegation or opportunity was given to the assessee regarding non-maintenance of separate books under clause (b), yet the registration was cancelled on that very ground. Such action, the Tribunal held, was impermissible.
While rejecting the assessee’s contention that the Assessing Officer must grant a hearing before making a reference under the second proviso to section 143(3), the Tribunal clearly held that the CIT(E) cannot cancel registration on grounds not put to the assessee in the show-cause notice. Since additional evidence relating to maintenance of books was also produced before the Tribunal, the matter was restored to the CIT(E) for fresh consideration after granting full and proper opportunity of hearing.
Accordingly, the appeal was partly allowed for statistical purposes, with all issues kept open for adjudication afresh.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
