In absence of jurisdiction CIT cannot withdraw Section 10(23C)(vi) exemption

Aurora Educational Society Vs PCIT (ITAT Hyderabad)

Conclusion: CIT had erred in law and as on facts in withdrawing assessee’s approval granted u/s.10(23C)(vi) as the impugned entire exercise to withdraw assessee’s approval suffered from inherent lack of jurisdiction.

Held: The issue arose for consideration was that the order of CIT withdrawing the exemption granted u/s.10(23C)(vi), was arbitrary, erroneous, without proper reasons and bad in law. It was held that CIT initial show cause notice dt.16-09-2019 itself forming basis of the impugned entire exercise to withdraw assessee’s approval suffered from inherent lack of jurisdiction as per his own clarification that the CBDT’s notification No. S0 3215(E)/No.60/2019 in F.No.370142/14/2018 – TPL was issued much later i.e., on 05-11-2019 only. PCIT had erred in law and on facts not only in assuming his Section 10(23C)(vi) jurisdiction on 16-09-2019 (before having being confirmed the prescribed authority’s jurisdiction to this effect on 05-11-2019) but also he had wrongly withdrawn assessee’s approval with effect from the date it had been granted the same. And that the latter action also involved illegality since this approval had come way back in the year 2009 as against the search carried out almost after a decade i.e., 23-03-2018. It was concluded that the impugned order withdrawing assessee’s approval was not sustainable for want of the CIT’s jurisdiction. CIT’s order had withdrawn assessee’s approval from the day which was granted the very relief i.e., from 27-03-2008 turning out to be well beyond the period of show cause notice itself. And that too, without even indicating as to how assessee had violated the conditions of its approval granted earlier in all these intervening assessment years wherein it had also been assessed without any violation of the approval’s conditions. Thus, CIT had erred in law and as on facts in withdrawing assessee’s approval granted u/s. 10(23C)(vi).

FULL TEXT OF THE ITAT JUDGEMENT

These four assessees’ appeals arise against the Pr.CIT(Central), Hyderabad’s separate orders; all dated 26-12­2019 withdrawing their respective approvals in proceedings u/s.10(23C)(vi) of the Income Tax Act, 1961 [in short, ‘the Act’]. Heard all assesses as well as the department through Mr.Murali Mohana Rao and learned CIT-DR. Case files perused.

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